Hecla Mining plans $500 million debt for Aurizon acquisition

By Sara Rosenberg

New York, March 4 - Hecla Mining Co. received a commitment for a $400 million three-year credit facility and a $100 million 30-day bridge loan to help fund its acquisition of Aurizon Mines Ltd., according to an 8-K filed with the Securities and Exchange Commission on Monday.

The Bank of Nova Scotia is leading the debt financing.

The credit facility includes a $200 million term loan and a $200 million revolver, with pricing ranging from Libor plus 300 basis points to 450 bps based on leverage, the filing said.

Financial covenants include secured leverage, total leverage and interest coverage ratios.

Amortization on the term loan is 20% in year one, 10% each six months thereafter and 50% at closing.

Under the agreement, Hecla is buying Aurizon for C$4.75 per share. Each holder of Aurizon common shares may elect to receive either C$4.75 in cash or 0.9953 of a Hecla share, subject in each case to pro-ration.

The transaction is valued at about C$796 million.

The acquisition will be implemented by way of a court-approved plan of arrangement under the Business Corporations Act (British Columbia) and will require the approval of 66 2/3% of the votes cast by the affected security holders of Aurizon at a special meeting that is expected to take place in May.

Closing is expected in the second quarter, subject to shareholder, court and regulatory approvals.

Hecla is a Coeur d'Alene, Idaho-based silver producer. Aurizon is a Vancouver, B.C.-based gold producer.

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