Noranda slashes dividend, posts loss

Facing $4.1 billion in net debt, Noranda (NRD-T) is slashing its traditionally juicy divided by 40%.

The surprise move, which drops the quarterly payment to 12 from 20, is part of a larger restructuring plan aimed at taming the company’s debt-laden balance.

Also under the plan, Noranda will issue $500 million worth of new shares (about 40 million of them at the current share price) and take on US$300 million in new term-debt to fund pending debt maturities. Brascan (BNNa-T), which owns a 40% stake in Noranda, has agreed to buy up to $300 million worth of the new shares; the balance will be offered to the public. A portion of the proceeds from the offering will be used to redeem $150 million in preferred shares recently issued to Brascan; the rest will go to reduce debt.

The dividend cut and preferred shares redemption are expected to cut the company’s annual dividend payments by $70 million. In the end, Noranda figures the recapitalization plan will cut its net-debt-to-capitalization ratio to 38% from 51%, and generate about $1 billion in capital.

The dividend news was accompanied by a second-quarter net loss of $15 million (or 11 per share). The results include $12 million in restructuring provisions, which were partially offset by a one-time tax recovery of $7 million. A year earlier, Noranda earned $47 million (18 a share), including a net after-tax gain of $66 million on the sale of 51% of the CEZinc processing facility.

Revenue between the two periods slipped by $90 million to $1.58 billion thanks to a stronger Canadian dollar and lower copper sales a result of strike at the Horne smelter in Rouyn-Noranda, Que. Cash flow (after working capital changes) from operations fell to $156 million from $191 million.

For the first half of the year, Noranda’s loss piled up to $74 million (38 a share) on revenue of $3.16 billion, compared with year-ago net earnings of $55 million (19 a share) on 3.3 billion.

At quarter’s end, Noranda had $554 million in cash (down from $824 million a year earlier) and about 244.4 million shares outstanding.

Noranda will begin reporting in U.S. dollars as of July 1.

Print


 

Republish this article

Be the first to comment on "Noranda slashes dividend, posts loss"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close