UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
13D
Under
the Securities Exchange Act of 1934
(Amendment
No. 2)*
GOLD RESERVE
INC.
(Name of
Issuer)
Class
A Common
Shares
(Title of
Class of Securities)
38068N108
(CUSIP
Number)
John
Maynard
West Face
Capital Inc.
2 Bloor
Street East, Suite 810
Toronto,
Ontario M4W 1A8
647-724-8911
(Name,
Address and Telephone Number of Person
Authorized
to Receive Notices and Communications)
November
3, 2009
(Date of
Event which Requires Filing of this Statement)
If the
filing Persons has previously filed a statement on Schedule 13G to report the
acquisition that is the subject of this Schedule 13D, and is filing this
statement because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note:
Schedules filed in paper format shall include a signed original and five copies
of the schedule, including all exhibits. See §240.13d-7 for other
parties to whom copies are to be sent.
* The
remainder of this cover page shall be filled out for a reporting person’s
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The
information required in the remainder of this cover page shall not be deemed to
be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934
(“Act”) or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE
13D
Page 2 of 10 Pages
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1.
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Names
of Reporting Persons.
I.R.S.
Identification Nos. of above persons (entities only).
WEST
FACE CAPITAL INC.
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2.
|
Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
[ ]
(b)
[ ]
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3.
|
SEC
Use Only
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4.
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Source
of Funds (See Instructions)
WC
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5.
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Check
if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or
2(e)
[ ]
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6.
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Citizenship
or Place of Organization
Canada
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Number
of
Shares
Beneficially
Owned
by Each Reporting
Persons
With
|
7.
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Sole
Voting
Power None
|
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8.
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Shared
Voting
Power 7,876,922
(1)
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9.
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Sole
Dispositive
Power None
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10.
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Shared
Dispositive
Power 7,876,922
(1)
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11.
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Aggregate
Amount Beneficially Owned by Each Reporting Person
7,876,922
(1)
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12.
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Check
if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[ ]
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13.
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Percent
of Class Represented by Amount in Row (11)
13.3%
based on 59,047,477 shares outstanding as of August 12, 2009.
(1)
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14.
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Type
of Reporting Person:
CO,
IA
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(1) This amount includes an amount of Shares that the Reporting
Person may be entitled to obtain upon the conversion of convertible bonds.
SCHEDULE
13D
Page 3 of 10 Pages
|
1.
|
Names
of Reporting Persons.
I.R.S.
Identification Nos. of above persons (entities only).
GREGORY
A. BOLAND
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2.
|
Check
the Appropriate Box if a Member of a Group (See Instructions)
(a)
[ ]
(b)
[ ]
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3.
|
SEC
Use Only
|
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4.
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Source
of Funds (See Instructions)
WC
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5.
|
Check
if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or
2(e)
[ ]
|
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6.
|
Citizenship
or Place of Organization
Canada
|
||
|
Number
of
Shares
Beneficially
Owned
by Each Reporting
Persons
With
|
7.
|
Sole
Voting
Power None
|
|
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8.
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Shared
Voting
Power 7,876,922
(1)
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9.
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Sole
Dispositive
Power None
|
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10.
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Shared
Dispositive
Power 7,876,922
(1)
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||
|
11.
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Aggregate
Amount Beneficially Owned by Each Reporting Person
7,876,922
(1)
|
||
|
12.
|
Check
if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[ ]
|
||
|
13.
|
Percent
of Class Represented by Amount in Row (11)
13.3%
based on 59,047,477 shares outstanding as of August 12, 2009.
(1)
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14.
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Type
of Reporting Person:
IN,
HC
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(1) This amount includes an amount of Shares that the Reporting
Person may be entitled to obtain upon the conversion of convertible
bonds.
Page 4 of 10 Pages
This
Amendment No. 2 relates to the Statement of Beneficial Ownership on Schedule 13D
filed by West Face Capital Inc. (“West Face”) and Gregory A. Boland (“Mr.
Boland”) (collectively, the “Reporting Persons”) with the Securities and
Exchange Commission (the “Commission”) on September 25, 2009 (the “Initial
Schedule 13D”) and Amendment No. 1 to the Schedule 13D filed on October 20, 2009
(“Amendment No. 1 to the Schedule 13D”). Except as set forth below,
all Items of the Initial Schedule 13D and Amendment No. 1 to the Schedule 13D
remain unchanged. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Initial Schedule
13D.
Item
3. Source
and Amount of Funds or Other Consideration
Item
3 of the Statement is hereby amended to reflect the following information for
updating as of November 3, 2009.
Since the filing of Amendment No. 1 to
the Schedule 13D, all Shares acquired by the Reporting Persons were acquired for
the account of WFMF, WFLP and WFCLP, except as previously disclosed in the
Initial Schedule 13D and Amendment No. 1 to the Schedule 13D. The
aggregate purchase price paid by the Reporting Persons for such Shares was
approximately $765,958.
Item
4. Purpose
of Transaction
Item
4 of the Statement is hereby amended to reflect the following information for
updating as of November 3, 2009.
The
Reporting Persons acquired the Shares for investment purposes, and such
purchases have been made in the Reporting Persons’ ordinary course of business.
The Reporting Persons expect to review from time to time their investment in the
Company and may, depending on the market and other conditions: (i) purchase
additional Shares, options or related derivatives in the open market, in
privately negotiated transactions or otherwise and (ii) sell all or a portion of
the Shares, options or related derivatives now beneficially owned or hereafter
acquired by them.
Also,
consistent with their investment intent, the Reporting Persons may engage in
communications with, without limitation, one or more shareholders of the
Company, one or more officers of the Company and/or one or more members of the
board of directors of the Company regarding the Company, including but not
limited to its operations and capital structure. Although the acquisition of the
Shares is for investment purposes, the Reporting Persons may have engaged in,
and may continue to pursue, either alone or with others, discussions with
management or directors of the issuer regarding alternatives to protect, grow
and ultimately realize long-term value for shareholders. In this
regard, the Reporting Persons recently sent a letter to the Company recommending
certain actions, which is attached hereto as Exhibit
B. Furthermore, consistent with its investment research methods and
evaluation criteria, the Reporting Persons may discuss such other alternatives
as the Reporting Persons deem appropriate with other shareholders, industry
analysts, investment and financing professionals or any other third
parties.
Except as
set forth above, none of the Reporting Persons has any plans or proposals which
relate to, or could result in, any of the matters referred to in paragraphs (a)
through (d), and (f) through (j), inclusive, of the instructions to Item 4 of
Schedule 13D. The Reporting Persons may, at any time and from time to
time, review or reconsider their position and/or change their purpose and/or
formulate plans or proposals with respect thereto.
Page 5 of 10 Pages
Item
5. Interest
in Securities of the Issuer
Item
5 of the Statement is hereby amended to reflect the following information for
updating as of November 3, 2009.
According to information filed by the
Company with the Commission, as of August 12, 2009 the number of Shares
outstanding was 57,670,555 based on the Company’s Report on Form 6-K, filed on August 12,
2009. Pursuant to Rule 13d-3(d)(1)(i)(D), in calculating the
percentages of beneficial ownership Reporting Persons have added 1,376,922
Shares to the number of Shares outstanding based upon an amount of Shares that
the Reporting Persons may be entitled to obtain upon the conversion of
convertible bonds.
(a) Each
of West Face and Mr. Boland may be deemed to be the beneficial owner of
7,876,922 Shares (approximately 13.3% of the total
number of Shares outstanding). This amount consists of: (A) 4,226,788
Shares held for the account of WFMF; (B) 2,613,110 Shares held for the account
of WFLP; and (C) 1,037,024 Shares held for the account of WFCLP.
(b) Each
of West Face and Mr. Boland may be deemed to have shared power to direct the
voting and disposition of the 7,876,922 Shares that they may be deemed to
beneficially own as set forth above.
(c)
Except for the transactions listed on Annex A hereto, all of which were
effected through routine brokerage transactions, there have been no
transactions with respect to the Shares other than those transactions reflected
on the Initial Schedule 13D and Amendment No. 1 to the Schedule
13D.
In
accordance with Rule
13d-4 under the Exchange Act, the
Initial Schedule 13D, Amendment No. 1 to the Schedule 13D, this Schedule 13D,
and any amendments thereto, shall not be construed as an admission that the
Reporting Persons are beneficial owners of any securities reflected on the
Initial Schedule 13D, Amendment No. 1 to the Schedule 13D, this Schedule 13D,
and any amendments thereto. The Reporting Persons note that, upon
conversion of the convertible notes held, the Issuer will have the option to
deliver common shares, cash, or a combination of cash and common shares for the
notes surrendered, and the Issuer will provide notice of its election to deliver
part or all of the conversion consideration in cash within two business days of
receipt of the notice of conversion. In this regard, the Reporting
Persons believe, pursuant to Rule 13d-3(d)(1), that they should not
be deemed to be a beneficial owner of the underlying equity securities when
satisfaction of conditions to an investor's right to acquire the securities,
such as is the situation here with respect to the convertible notes,
remains outside the Reporting Person's control.
Item
7. Materials
to be filed as Exhibits
Item
7 of the Statement is hereby amended to reflect the following information for
updating as of November 3, 2009.
Page 6 of 10 Pages
EXHIBIT
INDEX
|
Ex.
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Page
No.
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B
|
West
Face Capital Inc. Letter, dated November 3, 2009, to the Board of
Directors of Gold Reserve Inc.
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9
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SCHEDULE
13D
Page 7 of 10 Pages
SIGNATURE
After
reasonable inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and
correct.
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Date:
November 4, 2009
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WEST
FACE CAPITAL INC.
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By: __/s/
John Maynard________
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Name: John
Maynard
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Title: Chief
Financial Officer
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Date:
November 4, 2009
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GREGORY
A. BOLAND
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By: ___/s/ Gregory A.
Boland___
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Page 8 of 10 Pages
ANNEX
A
RECENT
TRANSACTIONS IN THE SECURITIES OF
GOLD
RESERVE INC.
A. Transactions
for the account of West Face Long Term Opportunities Master Fund
L.P.:
|
Date
of Transaction
|
Nature
of Transaction
|
Number
of Shares
|
Approximate
Price per
Share
|
|
11/2/2009
|
PURCHASE
|
111,800
|
$1.11
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11/2/2009
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PURCHASE
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72,130
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$1.15
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11/3/2009
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PURCHASE
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55,000
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$1.37
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11/3/2009
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PURCHASE
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102,838
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$1.35
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B. Transactions
for the account of West Face Long Term Opportunities (USA) Limited
Partnership:
|
Date
of Transaction
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Nature
of Transaction
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Number
of Shares
|
Approximate
Price per Share
|
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11/2/2009
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PURCHASE
|
63,900
|
$1.11
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11/2/2009
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PURCHASE
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41,300
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$1.15
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11/3/2009
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PURCHASE
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31,500
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$1.37
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11/3/2009
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PURCHASE
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58,800
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$1.35
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C. Transactions
for the account of West Face Long Term Opportunities Limited
Partnership:
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Date
of Transaction
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Nature
of Transaction
|
Number
of Shares
|
Approximate
Price per Share
|
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11/2/2009
|
PURCHASE
|
27,400
|
$1.11
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11/2/2009
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PURCHASE
|
17,700
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$1.15
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11/3/2009
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PURCHASE
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13,500
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$1.37
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11/3/2009
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PURCHASE
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25,200
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$1.35
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Page 9 of 10 Pages
EXHIBIT B
WEST FACE CAPITAL
West Face
Capital
Letter to
the Board of Directors of Gold Reserve Inc.
November
3rd, 2009
Gold
Reserve Inc.
926 West
Sprague Avenue
Suite
200
Spokane,
Washington, USA
99201
To the Board of Directos of
Gold Reserve Inc.
West Face
Capital Inc. is the beneficial owner of 6.5 million shares and $10.220 million
face value of convertible debentures of Gold Reserve (“GRZ”). As a significant
holder of GRZ securities, West Face Capital would like to express its views
concerning the manner in which the directors of Gold Reserve fulfill their
duties to the company and its security holders in the circumstances facing GRZ
today. As described below, in circumstances where GRZ has one key asset, being a
litigation claim against Government of Venezuela, West Face Capital believes
that it is incumbent upon the directors of GRZ to take the necessary and
appropriate actions to increase shareholder and other stakeholder value by,
among other things: (a) preserving its cash and avoiding transactions that may
dilute shareholder value; (b) creating a more optimal capital structure through
debt repurchases; and (c) carrying out an auction process open to all bidders
aimed at maximizing value.
Preserve
Cash/Equipment/Avoid Dilution
In order
to avoid diluting GRZ shareholder value, West Face Capital believes that GRZ
should immediately cease any negotiations to use its cash and equipment to buy a
new development project or merge with a company that has the same effect. These
kinds of potentially dilutive transactions should be avoided, at least until
such time as a formal auction and sale process has concluded. West Face Capital
believes that any new development project could lead to increased financial risk
or further shareholder dilution as the upcoming June 2012 convertible debenture
refinancing could be put into question.
Page 10 of 10 Pages
Debt
Repurchase
Currently,
GRZ has a capital structure that is not optimal with cash earning almost zero
interest while the debt is being paid 5½%.
Given that the debentures are trading at a discount to par value, GRZ also has
the ability to reduce debt at an effective yield in excess of 15% (to the 2012
put date). Any such purchases below par value will be incremental to the net
asset value of GRZ common shares. West Face urges the company to be more
proactive and aggressive in creating a more optimal, cost effective capital
structure. This can be done by GRZ repurchasing convertible debentures in
tranches, and should be started immediately, before and/or during an auction
sale process.
Auction Sale
Process
In the
circumstances facing GRZ, West Face Capital believes that GRZ should allow its
shareholders to decide the future course of the company by conducting a formal
auction and sale process and allowing its shareholders to accept or reject the
proposal made by the highest bidder.
West Face
Capital believes GRZ’s core assets of equipment, drilling and engineering data,
as well as the Las Brisas arbitration litigation claim, have significant value
and that a third party may be willing to pay a substantial premium to current
market value for these assets, preferably with cash or highly liquid equity. It
is West Face Capital’s view that the implied value the market is attaching to
this litigation asset is de
minimis.
In order
to maximize value for GRZ and its security holders, West Face Capital believes
that the auction and sale process should be open to all participants that are
willing to table a formal bid. Among other things, this process should also
provide the Government of Venezuela with the opportunity to settle their legal
obligations to GRZ by making a cash offer to the company. West Face Capital
believes shareholders should be given the opportunity to vote on any proposals
that may emerge. If no settlement or takeover offer emerges that is acceptable
to shareholders, then GRZ should be fully able to proceed with its current
arbitration litigation plan.
West Face
Capital is grateful for the opportunity to express its views as a significant
security holder of GRZ. It is motivated only by a desire to maximize the value
of its investment in GRZ. It looks forward to working with the board of
directors of GRZ to achieve that result.
West Face
Capital
2 Bloor
Street East, Suite 810, Box #85, Toronto, Ontario M4W IA8
Tel:
647.724.8900 Fax: 647.724.8910
info@westfacecapita1.com