Eldorado Gold: Major Refinancing Exercise

Eldorado Gold has a $450 million credit facility.

The agency also launched a $300 million notes providing.

This is valuable information: Eldorado Gold had a plan to cope with the 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.

Eldorado Gold: Major Refinancing Exercise 1

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 important news on refinancing. The latest quarterly report changed into not true even as the conference name changed into a pure catastrophe, so actual 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. Eldorado Gold has $71 million in letters of credit score deemed splendid beneath the new facility.

Eldorado Gold launches a $300 million senior secured second-lien notes presentation. 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 supply, and coins accessible to redeem $six hundred million 6. One hundred twenty-five % notes due December 2020, the overall quantity of its debt.

Eldorado Gold had $221 million of coins at the cease of the primary sector. While the dimensions of the cash role have been materially reduced in contrast with the end of 2018, future cash flow from Kisladag and Lamaque needs to stabilize and grow to have coins on the balance sheet. In this mild, the enterprise’s decision to contribute $ 100 million of cash to the redemption of 2020 notes is a flow that makes the best feel.

Eldorado Gold has long debated its plans to deal with the 2020 adulthood, so the assertion is a first-superb first-rate. Bankruptcy fears were when the organization announced that it would continue with the Kisladag mill and that they’ll ultimately be at 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 compared to the present-day scenario. However, the size of such an increase stays uncertain. Anyway, I do not expect any crushing effect on the corporation’s price range because the 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 when Eldorado Gold announced its refinancing. Hence, the store 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 priced in, beginning an opportunity for a brief-time period of upside play. Longer-time 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 stocks cited but may provoke a protracted EGO function 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.

Duane Simpson

Internet fan. Zombie aficionado. Infuriatingly humble problem solver. Alcohol enthusiast. Spent several months exporting UFOs in Jacksonville, FL. A real dynamo when it comes to exporting gravy in Tampa, FL. Spent 2001-2004 implementing saliva in Edison, NJ. Had moderate success getting my feet wet with junk food on Wall Street. Practiced in the art of building Virgin Mary figurines in Tampa, FL. Practiced in the art of marketing Roombas in Phoenix, AZ.

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