Golden Star Resources restructured and upsized its senior secured credit facility with Macquarie Bank.
Transaction Highlights
- The credit facility, an amortizing term loan, was restructured into a three-year revolving credit facility.
- The capacity of the facility was extended to $90 million, representing a $20 million increase.
- With $60 million of the facility currently drawn, Golden Star has $30 million of available liquidity from the upsized facility.
- The change in the structure of the facility removes the near-term capital repayment amortization profile, providing up to $50 million of additional liquidity in 2021 and 2022.
- The facility has an interest charge of LIBOR plus 4% to 5.25%. Golden Star to remain in the lower end of this range based on forecasted net debt:EBITDA ratios. The revised pricing is therefore expected to result in a 0.25% to 0.5% saving relative to the current pricing of 4.5% plus LIBOR.
- As part of the restructuring of the facility, Golden Star entered into zero cost collar hedges for 84,375 ounces with a floor price of $1,600 per ounce and a ceiling price of $2,115, which amortize on a quarterly basis over a three-year period.
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“Restructuring the credit facility to an RCF and increasing the capacity reflect the progress made over the last year in improving the financial position of the business. The RCF structure removes the capital repayment amortization profile of the credit facility and better aligns the facility with the investment in the growth of the Wassa gold mine outlined in the recent updated technical report,” Andrew Wray, president and CEO of Golden Star, said. “Following the repayment of the higher cost convertible debentures in August 2021, overall indebtedness is expected to be at a conservative level and forecast net debt:EBITDA ratios should see us achieve the lower end of the interest cost range. We expect to achieve an improvement in our cost of capital, equating to an annual saving of up to $2.7 million.
“The extension of the gold price protection program into 2024 secures an attractive floor and ceiling price for the period, further de-risking the company’s ability to deliver on its financial obligations while also investing in the growth of Wassa.”
In order to draw down the incremental debt capacity, Golden Star must meet a $35 million forecast minimum cash covenant at the time of draw down, net of an assumed repayment of the 7% convertible debentures maturing in August 2021, before reducing to $25 million for the remaining life of the facility.
The restructuring also removes the $5 million quarterly capital repayment amortization profile which was due to come into effect in Q3/21 if the facility was fully drawn or Q1/22 if the current $60 million drawn amount was sustained. Therefore, this releases a further $10 million of liquidity in 2021 and $20 million in 2022.
The capacity of the restructured facility remains at $90 million to June 30, 2023, when it steps down to $50 million until maturity on June 30, 2024. The term of the revolving credit facility and the step down in the capacity will be reviewed annually and could be further extended, subject to the successful conversion of mineral resources to mineral reserves through the planned infill drilling program.
