Agnico-Eagle Mines Limited handed the sole lead of a $125 million refinancing toScotia Bank after the bank came in with a term sheet and wanted to go it alone, without co-leads Deutsche Bank and Barclays Capital. The company secured an additional $25 million while obtaining more flexible covenants, said David Garofalo, v.p. finance and cfo. "Scotia was more confident to underwrite the entire deal," Garofalo said. "Scotia Capital came in with a term sheet and said they'd like to refinance the existing facility. We said we'd consider it under certain terms and they met them."
Deutsche Bank and Barclays preferred to have an underwriting capacity and opted not to join the bank group on the new deal, Garofalo said, and two other banks also left the group. Ted Meyer, spokesman for Deutsche Bank, did not return calls for comment. A spokeswoman at Barclays also did not return calls.
The new credit offers the company flexibility to make acquisitions. Pricing remains the same at LIBOR plus 2 1/4 %. Garofalo believes that the company's improving profitability and successful execution of its business plan were the reason for the better terms and increased financing. Barclays Capital and Deutsche Bank never attempted to negotiate terms on the new deal or outbid Scotia, said Garofalo.
"Two years ago we were in the middle of a construction program, which is now completed," he said. "The banks have more confidence with that and more comfort on our cash flows." The company recently closed a $76.5 million equity offering, The company's EBITDA is $20 million, as compared to flat last year. Garafalo predicts profitability will multiply annually and be at $100 million in two years.