Cambior granted extension

Key lenders to Cambior (CBJ-T) have granted the company a 2-week extension for the completion of its financial restructuring plan, giving the company more time to arrange and consolidate its debt.

Cambior will use the time to complete legal documentation for the simultaneous closure of a US$65-million credit facility and a prepaid US$55-million agreement on the forward sale of gold. The company recently completed the conversion of Jipangu’s US$10-million loan into equity, which was also part of the new restructuring plan.

Cambior says the closing of the credit facility and gold forward-sale agreement was delayed by “the complexity of the transactions involving multiple parties and jurisdictions and disruption caused by the holiday season.” The two deals were initially scheduled to close in late December 2000 but have now been extended to mid-January 2001.

In early December, a group of banks, led by the Chase Manhattan Bank of Canada and the Bank of Nova Scotia, committed to a US$65-million financing comprising a US$55-million term loan and a $10-million revolving credit facility amortized over five years. The loan deal includes minimum annual payments.

Under the deal, Cambior agreed to a mandatory hedging program that ensures that its deliverables amount to no more than 90% of its proven and probable recoverable reserves at any time. It also requires the company to have hedged a minimum of 70% of its forecast production over the life of the loan at an average gold price of at least US$295 per oz. The hedging facility will not be subject to margin calls.

Cambior also agreed to issue to the banking syndicate (subject to regulatory approval) 1.3 million purchase warrants exercisable at 56 per share. The warrants will be exercisable at any time on or before Dec. 31, 2005.

Under a separate deal with Credit Suisse First Boston (another of the company’s current lenders), Cambior arranged for a US$55-million prepaid forward sale of 233,685 oz. gold for the next five years. Delivery is due on the last business day of each month, from July 2001 to December 2005. The establishment fee is 2% of the principal amount.

As a result of repaying and refinancing US$225 million in financial obligations over 14 months, Cambior has reduced its debt to about US$164 million. Upon completion of the sale of its La Granja copper project to Billiton, which is expected shortly, the company’s debt will be about US$129 million.