Normandy's $200m Bonus
The Age
Friday December 12, 1997
Normandy Mining shook off some of the gloom in the gold sector yesterday with its announcement that there had been heavy oversubscriptions from a dozen banks to its $500 million loan refinancing.
The company, Australia's biggest gold producer, has opted to take $200 million in oversubscriptions, increasing its firepower at a time when gold assets are trading at distressed prices.
But the group's corporate executive general manager, Mr Colin Jackson, said it would be wrong to assume that the $200 million, effectively a standby facility, was taken up for any particular purpose.
"We have no immediate use for that $200 million. We don't have an unspoken agenda," he said.
Mr Jackson said the reason for taking up the oversubscription boiled down to the attractive margins and standby fees negotiated by the group. "We believe they can't go any lower," he said.
He said another factor in its acceptance was that as the whole process was time-consuming, it was sensible business practice to take up the extra $200 million.
Mr Jackson said a feature of the total $700 million loan syndication was that there were no additional covenants or restrictions on the company.
The keenness of the banks to lend to the company reflects the group's strong cash flow and a hedge book that guarantees that cash flow for years to come.
Normandy has 5.7 million ounces of gold hedged at an average of $711 an ounce, well up on the distressed spot market price of $430 an ounce.
© 1997 The Age
Share This