NEWS
Precious Metals  

Newmont bondholder revolt may put Barrick on hook for debt

Barrick Gold Corp. could find itself partially liable for $600 million in additional debt, if some Newmont Mining Corp. bondholders have their way.

The creditors are trying to block an amendment Newmont is seeking for a large tranche of notes associated with its operations in Nevada, according to people with knowledge of the matter. The change would prevent liability for those bonds from shifting to Barrick after the companies’ recently announced joint venture in the state is completed.

A majority of holders of Newmont’s $600 million of bonds due 2035 have organized and submitted their rejection to the proposed change, the people said, asking not to be identified as the discussions are private. The JV with Barrick is not contingent upon Newmont bondholders agreeing to the amendment, Newmont said in a statement last week. But if bondholders succeed, the JV would likely be the new guarantor of the securities, according to CreditSights analysts, putting Barrick on the hook to assume some of the liability.

The 2035 bonds are guaranteed by Newmont USA Ltd., which includes the three Nevada gold mines set to become part of the JV with Barrick

The 2035 bonds are guaranteed by Newmont USA Ltd., which includes the three Nevada gold mines set to become part of the JV with Barrick. Those assets accounted for about 88 percent of the guarantor’s proven and probable reserves within North America at the end of last year, and the proposed JV would constitute a sale of “all or substantially all” of the guarantor’s assets in Nevada, per the bond prospectus.

That would make the JV liable for the 2035 notes, which isn’t necessarily what Barrick signed up for when announcing the deal last month. It’s not clear whether Barrick asked for the changes.

The relationship between Newmont and Barrick, the world’s two largest gold miners, has been fraught for years. Merger talks between the two companies have failed in the past, as have attempts to increase cooperation in Nevada. The joint venture agreement was only reached after Barrick launched, and agreed to withdraw, a hostile bid for Newmont.

Consent fee

Newmont is required to bring its assets into the joint venture free and clear of any third party debt, and Barrick is not planning to guarantee any Newmont obligations, nor is the joint venture, a spokeswoman for Barrick said. “Barrick expects that Newmont will address any joint venture related issues that it may have with its creditors in a manner that would accommodate the completion of the joint venture arrangements within the time frame contemplated by the parties.”

Newmont couldn’t immediately be reached for comment.

Newmont has offered holders $1 per every $1,000 to accept the changes, and consents are due by 5 p.m. New York time Wednesday. The company informed holders of the offer through a statement issued on April 4 at 4:05 p.m., giving them less than a week to respond.

“The guarantor language in the merger covenant is worth more than 10 basis points in our view and we believe bondholders should push for a higher consent fee,” CreditSights analysts Wen Li and Will Benedict said in an April 7 report.

“Bottom line — this consent was launched in a way that obscured the potential impact to certain bondholders”

The expiration date comes on the same day that Credit Roundtable, a bondholder industry advocacy group, gathers for its semiannual meeting in Washington. The meeting started at 8:30 a.m. and Newmont had come up in conversation within minutes, according to David Knutson, co-leader of the group.

“Bottom line — this consent was launched in a way that obscured the potential impact to certain bondholders,” Knutson said.

Last month Newmont was forced to promise shareholders the largest dividend in 32 years to woo support for its $10 billion merger with Goldcorp Inc.

Major equity investors, including Paulson & Co. and VanEck, had argued that the price tag did not reflect the value of Newmont’s joint venture with Barrick, which was negotiated after the Goldcorp deal was struck. The dividend could induce Newmont shareholders to vote for the Goldcorp deal on April 11 by rewarding them in advance for $4.7 billion in synergies that Barrick expects the JV will create.

News No: 4322
Date: 2019/04/11 - 16:56
News Source: MINING.COM

Newmont  Barrick Gold  USA  VanEck  debt 

Comments:

Leave a Comment:

   
   
   
 

Newmont shareholders overwhelmingly approve $10B Goldcorp takeover, creating world’s top gold miner

Shareholders in US gold giant Newmont Mining (NYSE:NEM) have almost unanimously approved the miner’s proposed $10B takeover of Canada’s Goldcorp (TSX:G) (NYSE:GG), a deal that creates the world’s largest gold producer by market value, output and reserves, robbing Barrick of its recently cemented supremacy.
 

US farmer debt soars as crop output climbs further

Farm debt is surging in the US as several years of depressed grain prices have squeezed grower wallets, a trend that could reshape fertilizer buying and application habits.
 

Barrick’s deal-making chairman awarded $12.9m in 2018

Barrick Gold Corp. boosted Executive Chairman John Thornton’s total compensation last year 67 percent to $12.9 million, rewarding the former investment banker for the company’s performance and his role in the merger with Randgold Resources Ltd.
 

28,260 MT Bulk Ferrous Scrap Import Vessel to Arrive at Indian Port

After a gap of almost 2-months, a bulk scrap import vessel is expected to arrive at an Indian port. As per vessel line up data maintained with SteelMint, a bulk scrap import vessel named 'Orhan' is expected to arrive from the USA at Kandla port on 01st Apr'19
 

VanEck shares Paulson's concerns on Newmont-Goldcorp merger

Paulson & Co. isn’t the only Newmont Mining Corp. shareholder that’s expressing concerns over the terms of the gold miner’s $10 billion purchase of Goldcorp Inc.
 

Paulson opposes Newmont-Goldcorp merger

Paulson & Co., which holds 14.2 million shares of Newmont Mining (NYSE: NEM), said on Thursday that it does not support Newmont's proposed acquisition of Goldcorp (NYSE: GG, TSX: G) as it is structured.
Upcoming Events
Publications
 Mines & Metals

Mine & Business Today

 Scrap & Recycling

Ahangan

Our partners