Cambior Signs Restructuring Agreement With Its Financial Creditors.Business Editors MONTREAL--(BUSINESS WIRE)--Dec. 23, 1999 Cambior Inc. (AMEX AMEX See: American Stock Exchange :CBJ CBJ Columbus Blue Jackets (NHL team) CBJ Central Bank of Jordan CBJ Conflict-Directed Backjumping CBJ Circuit Board Jack CBJ Code-Breakers Journal CBJ Class Broker for Java CBJ Color Bubble Jet ) (TSE See Tokyo Stock Exchange. TSE 1. See Tokyo Stock Exchange (TSE). 2. See Toronto Stock Exchange (TSE). :CBJ.) ("Cambior") announces that it has signed a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). agreement, an amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. and restated credit agreement and other related documents (together, the "Agreements") with its lenders and hedge providers (the "Financial Creditors") regarding the restructuring of its obligations to such Financial Creditors. The Agreements provide that Cambior's loan obligations to the Financial Creditors, which currently total approximately $212 million, will extend to and mature on December 31, 2000. All loans will remain denominated in U.S. dollars for the balance of the loan period and no additional borrowings under the Agreements will be permitted. Cambior will continue to pay monthly interest on such loans on a cash basis at LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 75 basis points per annum Per annum Yearly. until June 30, 2000. Additional interest charges equal to 325 basis points per annum also commence to accrue To increase; to augment; to come to by way of increase; to be added as an increase, profit, or damage. Acquired; falling due; made or executed; matured; occurred; received; vested; was created; was incurred. upon signing of the Agreements, but facility restructuring fees equal to 1 % of the loan and hedge exposure amount, will be deferred until June 30, 2000, subject to mandatory prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. if assets sales occur or additional capital is raised sooner. The Agreements also provide an agreed basis for the management of Cambior's hedging portfolio whereby the flexible forward positions, including spot deferred contracts and call options with initial maturities in 1999 and early 2000, have been reduced and restructured into fixed forward positions maturing over the next three years. Cambior's gold hedging program as of December 22, 1999, has been reduced to 1.8 million ounces at an average price of $333 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. (including a deferred gain of $11/oz), and the naked call Naked Call A call option position held by a writer who does not hold a long position in the stock on which the call has been written. Sometimes referred to as an "uncovered call." Notes: Naked options are very risky. position has been reduced to a total of 784,000 ounces at an average price of $349 per ounce. These positions are detailed in Table 1, below. Cambior's loan and hedge obligations to the Financial Creditors will be subject to acceleration if Cambior defaults on its obligations under the Agreements or if satisfactory arrangements to repay or refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. the loan by December 31, 2000, are not in place by September 30, 2000. Cambior has also committed to making an interim payment of $75 million (including deferred fees and deferred interest) to the Financial Creditors by June 30, 2000. Loan amounts under the Agreements that remain outstanding after June 30, 2000 would be subject to additional interest charges which could, after taking into account the payment of $75 million by June 30, 2000, result in additional payments to the Financial Creditors in the order of $2 million if the balance owing remained outstanding until maturity. The Agreements also include, among other things, restrictions on capital expenditures, hedging activities, additional borrowings from third parties and dividend payments, an asset sales approval mechanism and a commitment to use a substantial portion of any proceeds from asset sales or equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. to repay obligations to the Financial Creditors. Cambior has granted to the Financial Creditors a floating charge on Cambior's assets with appropriate exclusions or qualifications for assets that cannot be charged without third party consents. Cambior has agreed, among other things, to create fixed charges on its Mouska, Bouchard-Hebert and Langlois mines in addition to the previous charge created over the Doyon Mine. Other fixed charges may also be created in due course. Cambior, with the assistance of financial advisor Bunting bunting, common name for small, plump birds of the family Fringillidae (finch family). Among the American buntings are the indigo bunting, in which the summer plumage of the male reflects sunlight as a rich, metallic blue; the painted bunting, or nonpareil ( Warburg Dillon Read Investment bank created by the 1997 merger of S.G. Warburg & Co. and Dillon, Read & Co. Subsequently renamed UBS Warburg and now part of UBS AG, where the Warburg name was eventually dropped. Inc., continues to pursue aggressively its previously announced efforts to deleverage Deleverage The reduction of financial instruments or borrowed capital previously used to increase the potential return of an investment. It is the opposite of leverage. Notes: Increasing leverage increases a firm's risk, therefore, deleveraging attempts to lower risk. itself and to maximize shareholder value through substantial asset sales or corporate transactions. Discussions with interested parties are now underway. Cambior is encouraged by initial indications of interest received to date and is firmly committed to carrying out this process with all due despatch. Cambior Inc. is an international diversified diversified (di·verˑ·s gold producer with operations, development projects and exploration activities throughout the Americas. Cambior's shares trade on the Toronto and American (AMEX) stock exchanges under the symbol "CBJ." This press release contains certain "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ," as defined in the 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. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Such risks and uncertainties are disclosed under the heading "Risk Factors" in Cambior's Annual Information Form (AIF AIF Annual Information Form AIF Apoptosis-Inducing Factor AIF Agence Intergouvernementale de la Francophonie (French: Intergovernmental Agency for Francophony) AIF Australian Imperial Force ) filed with the Ontario Securities Commission The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. , the Quebec Securities Commission, the United States Securities and Exchange Commission (Form 40-F) and other regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities .
TABLE 1 GOLD HEDGING PROGRAM
Cambior's gold hedge positions as at December 22, 1999 are as follows:
2000 2001 2002 2003 2004 to 2007 Total
Fixed forward
(000 ounces
of
gold)(1) 370 240 205 -- -- 815
Average price
($/oz) 302 291 291 -- -- 296
Variable
forward
(000 ounces
of
gold)(2) 112 192 102 102 476 984
Average
price
($/oz) 340 340 340 340 349 344
Total
forward position
(000 ounces
of
gold) 482 432 307 102 476 1,799
Average cash
price
($/oz) 311 313 307 340 349 322
Deferred
gain
($/oz)(3) 29 13 -- -- -- 11
Total realizable
price
($/oz) 340 326 307 340 349 333
Call options
sold
(000)(4) 100 382 302 - 784
Average price
($/oz) 340 352 348 - 349
(1) These positions consist of fixed forwards on 247,500 ounces
at $308/oz maturing over the first five months of 2000 and 567,000
ounces at $291/oz maturing over the next three years. These latter
positions are shown on the basis that Hedge Providers have committed
that $8 million of net proceeds from asset sales will be used to
support this average price for the fixed forwards at $291/oz; without
the support of this $8 million, these forward positions would be at
$276/oz.
(2) These positions consist of variable-volume forward contracts
and are presented in the table at the nominal volume of gold delivery
commitments. The variable-volume forwards have been contracted under
two tranches with the following terms. The first tranche provides
forwards on 576,000 ounces in 36 equal monthly deliveries of 16,000
ounces at $340/oz from June 2000 to December 2001, and 16,000 ounces
at $356.60/oz from June 2006 to October 2007. The quantities of gold
to be delivered will be set on each test date at the end of the months
of June 2000 to December 2001, for the deliveries of June 2000 to
December 2001, as well as for those of June 2006 to October 2007. The
nominal quantities have been set based on a gold price of $300/oz at
the test date. Actual quantities to be delivered will vary from 80 %
of nominal quantity (if the spot price of gold on the relevant test
date is $270/oz or less), to 200 % of nominal quantity (if the spot
price of gold on the relevant test date is $450/oz or higher). The
second tranche consists of a very similar arrangement with a nominal
quantity of 408,000 ounces committed in 48 equal monthly deliveries of
8,500 ounces at $340/oz from January 2002 to December 2005. The test
dates for this tranche correspond to the delivery dates, and the
actual quantities deliverable under this tranche will vary from 80 %
of nominal quantity (if the spot price of gold on the relevant test
date is $243/oz or less) to 200 % of nominal quantity (if the spot
price of gold on the relevant test date is $405/oz or higher). This
latter forward structure also includes a gold lease rate swap based on
a lease rate of 1.50 % per annum. Payments resulting from differences
between the swap lease rate and actual lease rates will be settled in
gold equivalent using the same payment schedule as the delivery
schedule of the forward structure.
(3) Deferred gains were realized by the conversion of gold loans
into U.S dollar loans during 1997 and 1998. An amount of $4.4 million
has been recorded in earnings for the third quarter of 1999 and the
balance of $24.2 million will be included in earnings as follows: $4.4
million for the fourth quarter of 1999, $14.1 million in 2000 and $5.7
million in 2001.
(4) The call position for 2000 consists of one contract expiring
in December at $340$/oz. The position for 2001 includes a number of
positions throughout the year at prices between $340/oz and $400/oz
for an average price of $352/oz. The 2002 positions consist of a
number of contracts for the second half of 2002 at strike prices
varying between $340/oz and $354/oz for an average of $348/oz. These
also have a fix-to-floating gold lease rate swap on 648,000 ounces at
rates of 1.50 % and 1.75 % per annum. Historically, these call
positions, when exercised, have been converted into spot deferred
positions.
The estimated mark to market of the above hedging position as of
December 22, 1999, represents the following:
$M
Deferred hedging gain 20.1
Hedging positions (48.5)
Total hedge position (28.4)
The mark to market estimates are derived from estimates received
from hedging counterparties and are based on a gold spot price of
$285.75/oz and the market conditions prevailing as at December 22,
1999. The number of ounces committed (Delta) by counterparties in this
hedge position is equivalent to 2.3 million ounces.
Note: All Amounts in U.S. dollars.
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