NEW YORK Thompson Creek
Metals Co. Inc. will terminate its existing $300-million
revolving credit facility when it closes its offering of $350
million in senior secured first-priority notes due 2018a
move the miner said is intended to increase its financial
"Kevin (Loughrey, chairman and
chief executive officer) has stated on several occasions,
including the last conference call, that we would continue to
look at financing options that would provide greater
flexibility than the revolver," a spokeswoman told AMM
in an e-mail Tuesday.
The company had $176 million
available under the revolving credit facility, with $24 million
in letters of credit and a $100-million liquidity requirement
making up the rest, according to the spokeswoman.
One analyst welcomed the move.
"Replacing this (revolving credit) facility with long-term debt
gives them the breathing room they need. This is a prudent step
and they probably should have tried to get something like this
in place earlier," he said.
Analyst John Tumazos of Holmdel,
N.J.-based Very Independent Research LLC agreed that revolving
credit facilities were more constraining, involving "strict
covenants, regular oversight and ongoing input as (to) how to
run the business," and the replacement of the revolving
facility would be a positive development for the company.
"Management chooses a higher
interest rate cost and higher underwriting fee schedule from a
junk bond in place of bank debt to keep management
jobs," Tumazos told AMM in an e-mail. "More debt and
higher financing costs will not make the company
The Denver-based company will
use the proceeds of the offering to finance the development of
its Mount Milligan copper-gold project in British Columbia, as
well as for general corporate purposes.
Thompson Creek reported weak
third-quarter financial results on the back of lower molybdenum
sales and prices; in addition, it has been struggling with cost
overruns at the Mount Milligan Mine and operational challenges
at its molybdenum mines (
amm.com, Nov. 9).
The notes are not convertible
into Thompson Creek stock, the company said.