Blue Pearl to prepay second-lien credit facility
2007-03-12 09:50 ET - News Release
Mr. Ian McDonald reports
BLUE PEARL TO PREPAY SECOND LIEN CREDIT FACILITY
Blue Pearl Mining Ltd. will prepay the $62-million (U.S.) second-lien credit facility it entered into last October as part of the debt financing to purchase Thompson Creek Metals Co. (TCMC). At the request of Blue Pearl, first-lien credit facility lenders have allowed the prepayment by waiving their right to be paid prior to the second-lien lenders.
"We're delighted that the lenders involved in the first-lien credit facility have given their approval for Blue Pearl to pay off the second lien," said Ian McDonald, executive chairman.
"The second lien was necessary to complete the acquisition but it had an especially high interest rate of LIBOR (London interbank offered rate) plus 10 percentage points, costing Blue Pearl about $9-million (U.S.) per year in interest charges.
"The molybdenum price has remained strong and our company has accumulated significant cash balances that allowed for this prepayment."
The remaining $340-million (U.S.) first-lien credit facility has an interest rate of LIBOR plus 4.75 percentage points. Principal payments of $18.75-million (U.S.) per quarter are required on the first lien in 2007.
"Paying down debt is among the priorities we have announced for Blue Pearl," Mr. McDonald stated. "At the end of March, following just over five months of operations since the TCMC acquisition and after we have made our first regular quarterly payment on the first lien, Blue Pearl's bank debt will be less than $320-million, a considerable reduction from the total bank debt of $402-million incurred for the acquisition.
"As we announced in our Jan. 16, 2007, news release on our outlook and initiatives, another priority is the development of new mine plans at our Thompson Creek and Endako mines, based on a re-evaluation of the mineral reserves and mineral resources assuming a long-term molybdenum price of $10 (U.S.) per pound. Previous mine plans had assumed a long-term price of $5 (U.S.) per pound at Thompson Creek and $3.50 per (U.S.) pound at Endako. (See Stockwatch news dated Jan. 16, 2007.)
"We are also focused on bringing our high-grade Davidson deposit into production. A feasibility study for this is currently being conducted.
"Revised mineral resources and reserves for all three operations are expected in the near future."
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