(All Amounts in U.S. dollars unless stated otherwise)
April 14, 2014
(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
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?
partnership will be obligated to make principal payments of
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.