Home Health Exercise Eldorado Gold: Major Refinancing Exercise
Exercise - May 15, 2019

Eldorado Gold: Major Refinancing Exercise

Eldorado Gold pronounces a $450 million credit facility.

The agency also launches a $300 million notes providing.

This is advantageous information: Eldorado Gold had a plan on the way to cope with 2020 debt.

The market could have been busy with other things on the day of the statement. I’d watch the stock for a short-term upside play.

While most marketplace members have been centered on a massive down day for equities resulting from a brand new spherical of the U.S. – China alternate warfare, Eldorado Gold (EGO) shared very crucial news on refinancing. The latest quarterly report changed into not true even as the conference name changed into a pure catastrophe, so real refinancing steps with a concrete plan to remove 2020 adulthood are virtually welcome information. Here’s how Eldorado Gold decided to clear up its debt hassle:

Eldorado Gold gets a $450 million senior secured credit facility. It includes a $two hundred million time period mortgage and a $250 million revolving credit score facility. The term loan will be used (collectively with different assets) to redeem 2020 notes. The revolving credit score facility is for fashionable functions. Note that Eldorado Gold has $71 million in letters of credit score that are deemed to be splendid beneath the new facility.
Eldorado Gold launches a $300 million senior secured second lien notes presenting. The notes will mature in 2024. At this point, the hobby fee is unknown.
Eldorado Gold will use the proceeds from the $2 hundred million time period loan, $300 million notes supplying and coins accessible to redeem $six hundred million 6.One hundred twenty-five % notes due December 2020, the overall quantity of its debt.

At the cease of the primary sector, Eldorado Gold had $221 million of coins. While the dimensions of the cash role have been materially reduced in contrast with the cease of 2018, future cash flow coming from Kisladag and Lamaque need to stabilize and then grow to be had coins at the balance sheet. In this mild, the enterprise’s decision to contribute $a hundred million of cash to the redemption of 2020 notes is a flow that makes the best feel.

Eldorado Gold has been long silent approximately any details on its plans to deal with the 2020 adulthood, so the assertion is a first-rate superb component for Eldorado Gold. Bankruptcy fears had been basically erased when the organization announced that it’ll now not continue with the Kisladag mill and that they’ll be completely off the table when the agency finishes refinancing. It can be interesting to peer what hobby rate might be received for second lien notes – without a doubt, Eldorado’s interest payments will boom in comparison to the present day scenario, however, the size of such an increase stays uncertain. Anyway, I do now not expect any crushing effect at the corporation’s price range because the time period mortgage received a decent charge for a company in Eldorado’s state of affairs (LIBOR +2.25-3.25%).

I trust that most market individuals have been busy with different stocks on the day when Eldorado Gold announced its refinancing, so the stock moved generally in step with gold equities because of superb gold rate overall performance which benefited from every other spherical of the U.S. – China trade struggle. Thus, the effect of the news (a technique to the debt problem) won’t be absolutely priced in, beginning an opportunity for a brief-time period upside play. Longer-time period share charge performance will rely on gold charges and the enterprise’s capacity to repair investors’ self-belief.

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Disclosure: I/we have no positions in any stocks cited, but may additionally provoke a protracted function in EGO over the following 72 hours. I wrote this article myself, and it expresses my personal opinions. I am not receiving compensation for it (other than from Seeking Alpha). I haven’t any enterprise relationship with any employer whose stock is stated in this article.