UBS is leading a $475 million credit backing Blue Pearl Mining's $575 million acquisition of Thompson Creek Metals. The facility is split into a $350 million senior secured first lien, consisting of a $25 million revolver and a $325 million term loan, and a $125 million second lien. Pricing on the facility could not be determined.
Along with the purchase price of $575 million, Blue Pearl may have contingent payments of up to $125 million depending on the future price of molybdenum, the primary product mined for by Thompson Creek. Molybdenum is an element known for its corrosion-resistant properties and is most frequently used as an alloy to strengthen iron and steel. Toronto, Canada-based Blue Pearl intends to pay the balance of the acquisition through an equity issuance, announced Sept. 12.
Standard & Poor's assigned a B with a 1 recovery rating to the first lien and a CCC+ with a 3 recovery rating to the second lien. S&P expects there to be a decline in molybdenum prices and thus expects the company's cash flow to decline, especially since two-thirds of molybdenum is produced as a by-product of other mining, primarily copper. Moody's Investors Service rated the credit's first lien B2 and the second Caa2. Moody's also gave the credit a B3 rating for probability of default, and a loss given default of 3 and 5 for the first and second liens, respectively.
Thompson Creek Metals mines and processes molybdenum and is based in Englewood, Colo. A spokesman for Blue Pearl declined comment. A representative from Thompson Creek could not be reached.