Goldcorp Announces $750 Million Offering of Convertible Senior Notes

Today GG annouced $750 in convertible bonds. I was surprised at this announcement as I thought GG's strategy was to be delevered for the duration of this slowdown. I have not read as to specifics where GG wants to use the money but I am assuming that they are facing some budget overruns in Eleonore and Cerro Blanco. Regardless, GG continues to be the less delevered senior gold company at 4.6%. The market did not like this move as GG's price retracted 7.10%.

What I would like to find out is where the money is going to be invested. The interest on the bonds is only 2% which is very low. I cannot see any projects that would have a return on equity (ROE) less than 2%; making this move most likely a value adding proposition.

As soon as I get more details about this issue, I will post it on here.

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Iyad Atuan

valuations.webs.com