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Thompson Creek offering $350M in notes

Keywords: Tags  Thompson Creek, molybdenum, revolving credit facility, Mount Milligan, copper gold, Thorsten Schier


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 2018—a move the miner said is intended to increase its financial flexibility.

"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 healthier."

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.


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