Thompson Creek floats price talk at 9.75-10% for $350M high-yield bond deal
According to LCD (Leveraged Commentary & Data) News, TC is going to set their bonds around the 9.75% to 10.00% mark. This is about what is expected. Anything at 10% or less is going to be decent. I was personally hoping for 9% or less, but TC is asking for so much that they will need to pay a bit more. If they were only asking for $200m, it would probably be a lower rate. Frankly though, I'd rather see them take $350 million at 10% than $200 million at 8%, because this now allows them the ability to hold off on selling moly for $11/lb and wait for higher prices. It gives them some leverage in trading.
And besides, the reality is, each 1% adds an additional $3.5 million per year in debt servicing, so it's pretty much irrelevant in the grand scheme of things. That $3.5 million can be made up by selling Molybdenum at a slightly higher cost. For instance, if they can get even $0.25 more for their 30 million lbs of molybdenum, it will bring in an extra $7.5 million in profit. They recognize this, and it's why they have taken out more cash than they need. What is more critical about the rate is the overall health of TC. The fact TC can raise $350 million in bonds will provide another boost to investor confidence.
And, here is the full quote from LCD news:
Thompson Creek floats price talk at 9.75-10% for $350M high-yield bond deal; pricing tomorrow $TC #highyield