This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Goldcorp Inc. - Unanswered Questions On Osisko/Yamana Proposal

(All Amounts in U.S. dollars unless stated otherwise)

VANCOUVER, April 14, 2014 /PRNewswire/ - GOLDCORP INC. (TSX: G, NYSE: GG) today announced that it has reviewed the recently-filed agreements and documentation relating to the proposed alternative transaction that were publicly-disclosed for the first time on Friday April 11, 2014 by Osisko Mining Corporation ("Osisko") and Yamana Gold Inc. ("Yamana").  Based on numerous questions received from Osisko shareholders trying to compare the alternative transaction to the Goldcorp offer, the review has identified a number of important aspects of this highly-complex transaction that were not previously publicly disclosed by Osisko or Yamana in the press release of April 2, 2014 announcing the transaction.

As Osisko shareholders evaluate the Osisko/Yamana proposal, a number of important questions remain that should be clarified by Osisko and Yamana in order to allow shareholders to properly determine their financial impact:

Is the gold streaming aspect of the transaction more extensive than first disclosed?  Included in the agreement is an option for the Canada Pension Plan Investment Board ("CPPIB") to convert up to $275 million of its $425 million debt facility into a gold stream on the same terms as the arrangement with La Caisse de dépôt et placement du Québec ("CDP"). As a result, the total gold stream can be increased to 50,000 ounces per annum from the previously-disclosed 37,500 ounces per annum.

Could such an expansion of the gold stream lead to additional debt placed on the partnership? If CPPIB elects to convert a portion of its loan into a gold stream, CDP has the right to lend the partnership an amount equal to the amount converted on the same terms as the CPPIB loan.  In addition, there may be other debt repayment triggers in the agreement with the potential to place further debt pressure on the partnership.

Is total consideration provided to CPPIB and CDP related to the gold stream and loan agreements larger than previously disclosed?  The documentation provides that the proposed Osisko "Stubco" would issue previously undisclosed warrants to CDP and CPPIB equal to 1.84% and 2.85%, respectively, of its pro forma shares.

What is the full impact of loan repayments on Malartic's cash flow and dividends? The Malartic partnership will be obligated to make principal payments of $51 million per year commencing in September of this year, thereby significantly reducing the cash flow to Osisko Stubco.

Why are the current executives of Osisko receiving an undisclosed amount of retention payments for continuing with Osisko Stubco?  Neither the identities of the beneficiaries of these arrangements nor the total amount of these retention payments (which would be an obligation of Osisko Stubco) have been disclosed.

What are the full tax consequences of the proposed transaction? An asset sale would normally trigger significant tax obligations that would reduce the net value of the joint venture transaction. These tax impacts have not been disclosed by Osisko and Yamana.

The proposed Osisko/Yamana transaction is extremely complex.  A significant portion of the value that is being offered to Osisko shareholders is in the form of the shares of Osisko "Stubco". Valuing those shares, in light of the overall complexity of the relationship between Osisko Stubco, CDP, CPPIB and Yamana is extremely difficult, and is made more so by the existence of these important unanswered questions. In contrast, the value of the Goldcorp offer is easily determined and considerably more certain.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs