Skeena Resources Limited announced its intention to offer and sell USD 750 million aggregate principal amount of Senior Secured Notes due 2031 (the ?Notes?), subject to market and other conditions (the ?Offering?). All references to dollars ($) in this news release are in United States (?US?) dollars. The Notes will be fully and unconditionally guaranteed by certain of the Company?s subsidiaries relating to its Eskay Creek project and will be secured by a first priority lien on certain of the Company?s and the guarantors?
property, including equity interests, the Segregated Accounts (as defined below) and interests in the Eskay Creek project. Skeena intends to use approximately USD 184 million of the proceeds from the Offering to fund the Stream Buy-Down; an estimated USD 100 million to fund an interest reserve account, which is expected to contain an amount equal to the first three semi-annual interest payments due under the Notes; and the remaining proceeds to fund a disbursement account with funds to be used to advance the Eskay Creek project, to pay certain fees and expenses and to add cash to Skeena?s balance sheet for, among other things, general corporate purposes. Pursuant to an agreement between Skeena and the stream purchasers under the Company?s existing USD 200 million gold stream (the ?Stream Purchasers?), Skeena intends to buy down the Stream Agreement (as defined below) by making a lump-sum payment of approximately USD 184 million to the Stream Purchasers in exchange for a reduction of the stream percentage deliverable from production at the Eskay Creek Project to the Stream Purchasers by 66.67%.
In connection with the Offering and the Stream Buy-Down, the Company has entered into an amended stream agreement (the ?Stream Agreement?) with Orion and certain of its affiliates to facilitate the Offering and related transactions. The amendments include, among other things, the termination of the availability of the stream cost over-run facility and amendments to certain liquidity and reporting covenants. In addition, the Company intends to cancel its existing USD 350 million senior secured term loan (the ?Term Loan?) and cost over-run facility under the Stream Agreement concurrently with the completion of the Offering and the Stream Buy-Down.
The Term Loan and cost over-run facility are currently undrawn, and the Company does not expect to incur any fees in connection with the cancellations. Completion of the Term Loan and cost over-run facility cancellations and Stream Buy-Back are subject to the successful completion of the Offering and each other. The Offering and use of proceeds therefrom for the related refinancing is intended to improve the Company?s future operating margins, increase its exposure to gold prices and future production, and enhance overall project economics for the Eskay Creek project.
The Notes will be offered and sold in the United States only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the ?Securities Act?), and to non-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. The Notes will be offered and sold in Canada on a private placement basis pursuant to applicable Canadian prospectus exemptions. The offer and sale of the Notes have not been and will not be registered under the Securities Act or any state securities laws and the Notes may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall there be any offer or sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful.
