Barrick Gold Launches $3 Bln Stock Offering To Reduce Debt

(RTTNews) - Canadian gold producer Barrick Gold Corp. (ABX, ABX.TO) said Thursday that it has launched a $3 billion public equity offering and plans to use $2.6 billion of the the net proceeds from the offering to reduce its debt, even as it grapples with falling gold prices. The company expects the offering to close on or about November 14, 2013.

Barrick said it has agreed to sell 163.5 million of its common shares at a price of $18.35 per share in a bought-deal public offering that will be underwritten by a group of underwriters, led by RBC Capital Markets, Barclays and GMP Securities L.P. The company expects gross proceeds from the offering to be about $3 billion.

In addition, Barrick has granted the underwriters an over-allotment option to purchase up to an additional 24.5 million common shares at the offering price exercisable for a period of 30 days after closing.

Barrick expects its common shares outstanding to increase to about 1.6 billion from about 1 billion shares. If the over-allotment option is exercised in full, Barrick expects its common shares outstanding to increase to 1.19 billion shares.

The company expects gross proceeds from the offering to be about $3.45 billion if the over-allotment option is exercised in full. The net proceeds from the offering will be about $2.9 billion after deducting the underwriters' commission. In the event that the over-allotment option is exercised in full, the net proceeds to be received by Barrick will be about $3.3 billion.

The company intends to strengthen its balance sheet and improve its long-term liquidity position by using about $2.6 billion of the net proceeds to redeem or repurchase outstanding debt. As at the end of the recent third quarter, Barrick had long-term debt of $14.57 billion, up from $12.10 billion at the end of the year-ago period.

Specifically, Barrick intends to use about $1.1 billion of the net proceeds to redeem $700 million of 1.75 percent notes due 2014 and issued by Barrick, together with $350 million of 4.875 percent notes also due in 2014 and issued by Barrick Gold Finance Corp.

Subsequent to the commencement of the offering, Barrick intends to commence a tender offer for its various outstanding debt securities. The company plans to use about $1.5 billion of the net proceeds of the offering to purchase ten series of outstanding notes due between 2015 and 2023.

Barrick will use the balance of the net proceeds, including from the over-allotment option if it is exercised, to further strengthen its balance sheet, including further debt reductions and for general corporate purposes. The general corporate purposes include ongoing operating and capital expenditures relating to Barrick's existing portfolio of mines.

In a separate statement, Barrick said it has commenced a cash tender offer for its ten specified series of outstanding notes. Barrick, Barrick (HMC) Mining Company, Barrick North America Finance LLC, and Barrick (PD) Australia Finance Pty Ltd. have offered to purchase the series of notes for up to $1.50 billion in cash. The tender offer will expire on December 2, 2013.

Earlier on Thursday, Barrick, the world's largest gold producer, reported a 73 percent decline in profit for the third quarter as revenues were affected by lower gold bullion sales.

The company now expects its full-year gold production at the low end of the original guidance. Further, Barrick said it will suspend construction activities at the Pascua-Lama project, reducing its 2014 capital costs by up to $1 billion.

Barrick's third-quarter net income attributable to equity holders declined to $172 million or $0.17 per share from $649 million or $0.65 per share in the same period last year, reflecting the impact of lower realized gold and copper prices, higher interest expense and higher income tax expense, partially offset by higher copper sales. Revenues for the quarter declined to $2.98 billion from $3.40 billion in the prior-year quarter.

ABX closed Thursday's regular trading session at $19.39, down $1.11 or 5.41 percent on a volume of 24.63 million shares. In after-hours, the stock further declined $1.05 or 5.42 percent to $18.34.