Q: Hello Peter,
Would you pick some after the bought deal? The deal is above the current price and being used to retire debt.
Would appreciate your assessment.
Regards
Rajiv
Would you pick some after the bought deal? The deal is above the current price and being used to retire debt.
Would appreciate your assessment.
Regards
Rajiv
5i Research Answer:
With the stock (still) up 58% this year, management likely was tempted to issue shares while things were good. Debt is $950M, with net debt closer to $600M, about 3X cash flow. Still on the high side, so from a fundamental perspective the company likely wanted to improve its financial flexibility. It is also buying back 9.7% of the Cote Gold Mine, which will raise its interest to 70%. But investors do not like dilution. The deal has still been completed despite the price drop. A decline is highly typical in a deal. It is not our favourite in the sector, but for those interested in the stock the drop does create a buying opportunity, in our view.