Allied Nevada Gold trims revolving credit facility, amends covenants

By Marisa Wong

Madison, Wis., Dec. 30 - Allied Nevada Gold Corp. said it entered into a second amended and restated credit agreement on Dec. 27 with Bank of Nova Scotia as administrative agent and lender to amend its revolving credit facility dated Oct. 31, 2012.

The amendment reduces the size of the revolver to $40 million from $120 million, according to a press release and an 8-K filing with the Securities and Exchange Commission.

The restated credit agreement includes an accordion feature allowing the facility to be increased to $75 million.

Borrowings bear interest at Libor plus 450 basis points. Financial letters of credit and non-financial letters of credit bear interest at 450 bps and 250 bps, respectively.

The facility now matures on April 30, 2016.

The company also eliminated cash flow related covenants, specifically the leverage ratio and interest coverage ratio, included in the prior agreement. The credit agreement now includes covenants to maintain a post-maturity reserve tail of 600,000 recoverable gold equivalent ounces and a current ratio of not less than 1.25 to 1.

The amount available will be determined by a borrowing base, which is primarily the value of inventory on the company's leach pads.

In connection with entering into the amended credit agreement, the company also entered into an amendment to its ISDA Master Agreement with lender Societe Generale and will enter into one with lender National Bank Canada, according to the release.

Under these amendments, the company will be required beginning no later than Jan. 10 to either cash collateralize or post a letter of credit for any amount due to the lenders for the fair market value of the then current settlement cost of C$90 million of the cross currency swap entered into in connection with the issuance of the company's C$400 million 8¾% senior notes. Had the company been required to either cash collateralize or post a letter of credit with the lenders as of Dec. 27, the amount tendered would have been about $8.2 million.

The company said it intends to use the amended credit agreement to post letters of credit with the two lenders.

"We are pleased to have completed the revisions to the credit facility which will provide us with greater liquidity going forward by removing certain covenants that had become obstacles with the declining price of gold," Steve Jones, executive vice president and chief financial officer, commented in the release.

"We will look to grow the credit agreement as provided by the accordion feature in 2014. We appreciate the support of the Bank of Nova Scotia and we look forward to 2014 as we focus on updating the pre-feasibility and feasibility studies for the Hycroft mill expansion."

Commonwealth Bank of Australia, National Bank of Canada and Societe Generale, who were lenders under the prior credit agreement, are not lenders under the restated credit agreement, the filing noted.

The gold exploration company is based in Reno, Nev.

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