By Nicole Mordant
Canadian mining company Centerra Gold agreed on Tuesday to buy U.S. –based miner Thompson Creek Metals for around $1.1 billion in shares and cash, including paying off nearly $900 million of debt, to expand its operations in North America.
Centerra, whose main asset is the Kumtor gold mine in Kyrgyzstan, has wanted to reduce its exposure to the impoverished Asian nation, which has in recent months escalated its rhetoric against the miner as it guns for a bigger slice of its profits.
Denver, Colorado-based Thompson Creek's main asset is the Mount Milligan copper and gold mine in British Columbia.
"Half of the value of all our assets will now be domiciled in Canada. I really think we have absolutely transformed the company in a very favorable way," Centerra Chief Executive Scott Perry said in an interview.
Thompson Creek last November hired Moelis & Co and BMO Capital Markets to look at alternatives, including debt refinancing and restructuring and asset sales, after the company's debt ballooned following the 2010 purchase of Mount Milligan and the cost of developing it into a mine.
In December, Deutsche Bank analyst Jorge Beristain described Thompson Creek's debt as "unsustainable" in a note to clients and said the company was "quickly approaching an end-game". The company was also hit by weaker gold and copper prices.
REPAY ALL NOTEHOLDERS
In terms of the deal, Centerra will redeem all of Thompson Creek's secured and unsecured notes at their call price plus accrued and unpaid interest for $889 million.
Perry said Centerra opted to pay off all the noteholders to ensure "deal certainty".