Boliden Limited Reports Second Quarter 2001 Results and Recent Corporate Developments.Business Editors TORONTO--(BUSINESS WIRE)--July 26, 2001 Boliden Limited: Overview -- Improved year over year operating results -- Prospectus filed for $243 million fully secured equity offerings -- Definitive loan documentation signed to refinance existing debt and losses incurred on the closing out of existing foreign currency hedge contracts -- Norzink and Chilean Assets sold -- New credit lines to carry out foreign currency hedging at current exchange rates -- New President and Chief Executive Officer appointed -- New board of directors to be appointed and Swedish redomiciliation process to commence after completion of equity offerings. Boliden Limited today reported its operating results for the second quarter and the first half of 2001. The Company reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $11.0 million for the quarter and $19.9 million for the half, compared with an operating loss of $34.7 million for the second quarter and $41.1 million for the first half of 2000. The principal reasons for the change are higher mining and smelting smelting, in metallurgy, any process of melting or fusion, especially to extract a metal from its ore. Smelting processes vary in detail depending on the nature of the ore and the metal involved, but they are typified in the use of the blast furnace. production offset by lower metal and sulphuric acid sulphuric acid: see sulfuric acid. prices and lower treatment and refining charges (TC/RCs). The operating loss for the quarter compares with an operating loss of $8.9 million for the first quarter of 2001. The Company's foreign currency hedge Currency hedge Applies mainly to international equities. Hedging technique to guard against foreign exchange fluctuations (i.e., short Euro l00 mm when holding a long position of Euro l00 mm in stocks). contracts negatively affected the Company's operating results by $22.4 million for the quarter and $40.4 million for the half, $15.8 million for the second quarter and $26.0 million for the first half of 2000 and $18.0 million for the first quarter of 2001. After accounting for interest expense and income taxes and the gain realized by the Company on the sale of its 50% interest in Norzink ($34.4 million), the Company reported net income of $8.6 million or $0.03 per common share for the quarter and a net loss of $12.9 million or $0.07 per common share for the half, compared with a net loss of $34.4 million or $0.17 per common share for the second quarter and $52.7 million or $0.34 per common share for the first half of 2000. Cash provided by operations before non-cash working capital changes was $2.9 million or $0.01 per common share for the quarter and cash used in operations was $2.7 million or $0.01 per common share for the half, compared with cash used in operations of $15.6 million or $0.07 per common share for the second quarter and $4.5 million or $0.03 per common share for the first half of 2000. The cash provided by operations before non-cash working capital changes for the quarter compares with cash used in operations of $5.6 million or $0.03 per common share for the first quarter of 2001. CORPORATE DEVELOPMENTS Equity Offerings On June 29, 2001, the Company filed a short form prospectus in respect of its previously announced equity offerings consisting of a $105 million common share rights offering to the Company's existing shareholders fully secured by subscription and standby commitments Standby commitment An agreement between a corporation and investment firm that the firm will purchase whatever part of a stock issue that is offered in a rights offering that is not subscribed to in the two- to four- week standby period. and a $138 million common share offering directed to existing shareholders, certain Swedish investors and the Company's lenders fully secured by purchase commitments. The proceeds of the rights offering will be used to pay accrued and unpaid interest on the Company's debt ($24.0 million as at June 30, 2001) and for general corporate purposes, including the payment of the costs of the equity offerings and the establishment of the reserve accounts described below under New Credit Facility. The proceeds of the directed offering will be used to reduce the Company's debt. The equity offerings are being completed concurrently and are being carried out in conjunction with the refinancing Refinancing An extension and/or increase in amount of existing debt. of the Company's debt and the restructuring of the Company's foreign currency hedge contracts. The terms of the equity offerings are described in the Company's short form prospectus which was mailed to shareholders of record on July 12, 2001. A copy of the short form prospectus is available at the SEDAR SEDAR System for Electronic Document Analysis and Retrieval SEDAR Southeast Data, Assessment, and Review website maintained by CDS Inc. at www.sedar.com. The equity offerings will be completed during August 2001. New Credit Facility On June 21, 2001, the Company settled a term sheet with the lenders (Lenders) under its $300 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility, $230 million term loan facility, $109.4 million bridge facility and SEK SEK In currencies, this is the abbreviation for the Swedish Krona. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 90 ($8.4) million operating facility (Credit Facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities ) and the counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. (Hedge Counterparties) under those external foreign currency hedge contracts that were outstanding on March 31, 2001 (Hedge Contracts) outlining the material business terms of the refinancing of the principal amount of the debt outstanding under the Credit Facilities and the losses incurred on the maturity or closing out of the Hedge Contracts. On July 25, 2001, the Lenders and the Hedge Counterparties as lenders, the Company's wholly-owned subsidiary, Boliden Mineral AB (Mineral), as borrower and the Company and Boliden Treasury AB (Treasury) as guarantors entered into definitive loan documentation with respect to a new credit facility (New Credit Facility) to be used by Mineral to carry out the refinancing. The New Credit Facility will be effective upon the completion of the equity offerings. Tranches Tranches A piece, portion or slice of a deal or structured financing. This portion is one of several related securities that are offered at the same time but have different risks, rewards and/or maturities. "Tranche" is the French word for "slice". Under the New Credit Facility, Mineral will be entitled to borrow up to the principal amount outstanding under the Credit Facilities and the losses incurred on the maturity or closing out of the Hedge Contracts in four tranches: -- (a) a $380 million term tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. (Tranche A) repayable on June 30, 2006; -- (b) a $150 million revolving tranche (Tranche B), including up to $20 million by way of letters of credit, repayable on June 30, 2006; -- (c) a $117.8 million term tranche (Tranche C), repayable on June 30, 2003; and -- (d) a term tranche (Tranche D) equal to the losses incurred on the maturity or closing out of the Hedge Contracts repayable as to 50% on June 30, 2003 and as to the balance in six semi-annual instalments commencing on December 31, 2003. Tranches A and B are equal to the principal amounts outstanding under the $300 million revolving credit facility and the $230 million term loan facility. Tranche C is equal to the principal amounts outstanding under the $109.4 million bridge facility and SEK 90 ($8.4) million operating facility. Tranche D will be equal to the losses incurred on the maturity or closing out of the Hedge Contracts. The losses incurred under the Hedge Contracts that matured after March 31, 2001 was $27.8 million and the mark-to-market position under the Hedge Contracts that were outstanding on June 30, 2001 was a loss of $114.3 million. The actual losses incurred on the closing out of the Hedge Contracts that were outstanding on June 30, 2001 will depend on the exchange rates of the Swedish krona Noun 1. Swedish krona - the basic unit of money in Sweden krona Swedish monetary unit - monetary unit in Sweden ore - a monetary subunit in Denmark and Norway and Sweden; 100 ore equal 1 krona , Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents , Norwegian kroner and Spanish peseta relative to the U.S. dollar on the date that those Hedge Contracts are closed out. The losses incurred on the closing out of the Hedge Contracts that were outstanding on June 30, 2001 will be amortized over the periods that those Hedge Contracts were intended to hedge as a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. . Use of Borrowings Mineral is required to use the amounts borrowed by it under the New Credit Facility to repay the principal amounts outstanding under the Credit Facilities and the losses incurred on the maturity or closing out of the Hedge Contracts. Debt Reduction The proceeds of the directed offering will be used to reduce the debt outstanding under the New Credit Facility. The $85 million net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of sale of the Company's interest in Norzink and $23.4 million of the net proceeds of sale of the Chilean Assets will be used to repay the balance of Tranche C in full. Commencing June 30, 2002, Mineral is required to complete a semi-annual calculation of cash flow available for debt reduction and to use such cash flow for debt reduction. Mineral may reborrow any amounts repaid under Tranche B up to the amount remaining outstanding after application of the proceeds of the directed offering (approximately $135 million). Mineral may not reborrow any amounts repaid under Tranches A, C and D. Interest Rate The rate of interest payable by Mineral on amounts outstanding under the New Credit Facility will be LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus a margin of 100 basis points per annum Per annum Yearly. . SEK250 Million Medium Term Notes Treasury's outstanding SEK250 million medium term notes (MTNs) which mature after the New Credit Facility will remain outstanding and will be assumed by Mineral. Part of the proceeds of the directed offering will be used to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. principal outstanding under the MTNs.The MTNs will be secured pari passu [Latin, By an equal progress; equably; ratably; without preference.] Used especially to describe creditors who, in marshalling assets, are entitled to receive out of the same fund without any precedence over each other. PARI PASSU. By the same gradation. with the debt outstanding under the New Credit Facility by the security provided under the New Credit Facility. New Hedging Lines of Credit The Company has commitments from certain of its lenders to provide additional lines of credit to permit the Company to implement a foreign currency hedging program covering up to 60% of three years of Swedish krona denominated exposure (approximately $600 million) at current rates. The new hedging lines of credit will be secured in priority to the MTNs and the debt outstanding under the New Credit Facility by the security provided under the New Credit Facility. Sale of Norzink On April 17, 2001, the Company's subsidiary, Boliden Mineral AB, and Rio Tinto Rio Tinto may refer to:
Sale of Chilean Assets On June 8, 2001, the Company executed and delivered the definitive agreement relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the sale of its interests in Compania Minera Lomas Bayas and Compania Boliden Westmin Chile Limitada, the owners of the Lomas Bayas copper project and the adjacent Fortuna de Cobre deposit (Chilean Assets), to certain subsidiaries of Falconbridge Limited. The transaction closed in escrow escrow Instrument, such as a deed, money, or property, that constitutes evidence of obligations between two or more parties and is held by a third party. It is delivered by the third party only upon fulfillment of some condition. on July 20, 2001 and is scheduled to be completed on July 26, 2001. The Company will realize net proceeds of $62.3 million on the sale. $25 million of the net proceeds will be used to repay Tranche C and other debt under the New Credit Facility and the balance will be used for general corporate purposes, including establishing the Reserve Accounts required to be established and maintained by Mineral under the New Credit Facility. Resignation and Appointment of President On June 11, 2001, the Company's President and Chief Executive Officer, Thomas Cederborg, announced his decision to resign as an officer and director of the Company following completion of the equity offerings. On June 27, 2001, the Company announced that Jan Johansson has been appointed President and Chief Executive Officer of the Company effective August 1, 2001. Mr. Johansson, a native of Sweden, has many years experience in the Swedish and international business communities, most recently as Senior Vice-President, Telia AB (the Swedish telecommunications company See telecom company. ) and Senior Executive Vice-President of Vattenfall AB (a major Scandinavia power company). All dollar amounts are in United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. dollars This information is brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/07/26/20010726BIT00180/bit0001.doc http://www.waymaker.net/bitonline/2001/07/26/20010726BIT00180/bit0001.pdf |
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