Funds drawn from the facility will bear interest at the London Interbank Offer Rate (currently 1.7%) plus 2.25% per year, increasing over the term of the loan to 4.5% annually. Any amount drawn must be refinanced or repaid by February 2006. Security will extend to the acquired assets and guarantees by the Wheaton subsidiary acquiring the assets.
Proceeds from any debt refinancing or equity issue (not completed as part of an acquisition), as well as proceeds from significant asset sales, will be applied to repay amounts outstanding under the facility.
The US$300-million facility, combined with a present cash balance of more than US$100 million, will allow Wheaton to acquire precious metal assets “and continue its growth path,” says CEO Ian Telfer.
Telfer says the company will use its cash reserves to pursue acquisitions rather than pay out a dividend.
Wheaton’s plans for its proposed silver spinoff, Silver Wheaton, include expanding via acquisitions. Wheaton River will sell all the silver produced from its Luismin operations in Mexico to
Chap recently raised $70 million via the private placement of 175 million subscription receipts; the proceeds, less $1 million, will be applied to the Luismin acquisition. In the end, Wheaton River will hold about 75% of Silver Wheaton’s 724 million outstanding shares.
Telfer says the scheme gives Wheaton shareholders the valuation of 20 years of cash flow up front in cash and shares.
Sept. 9 is the deadline for the creation of Silver Wheaton.
A renewed takeover bid by
Wheaton’s special committee of directors has yet to offer its opinion on the bid, and the company has told its shareholders not to tender any shares to Coeur until a board decision is made.
Says Telfer: “While the special committee of Wheaton’s board of directors will carefully consider the Coeur offer and make recommendations to the full board, based upon the fact that fewer than one per cent of Wheaton’s shares were deposited to Coeur’s U.S. tender offer, it appears there is no interest in this transaction.”
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