Yamana Gold Inc. (USA) (NYSE:AUY) has announced that it would be spinning off its subsidiary Brio Gold, by offering its shareholders the purchase rights of Brio’s common shares. The offer is being made to the shareholders, as a dividend in kind, from the company. The rights would entitle the shareholders of Yamana Gold to purchase a portion of its stake in Brio. However, the exercise price of the rights is yet to be determined and the two companies are waiting for file a final prospectus, before announcing the pricing.
Brio has already filed a preliminary prospectus with the securities regulatory authority, in Canada, so as to qualify for a secondary offering of its common shares, held by Yamana. The company noted that the spin off was in accordance with its plan to surface value from non-core properties, announced in 2014. It should be noted here that AUY has been trying to sell Brio’s assets, for the last 2-years, but has so far been unsuccessful.
The management has stated that Brio was one of the most undervalued assets of the company and given the market conditions and operational improvements at the subsidiary, it made sense to go for a spin off. The move would also allow the company to focus on its assets in top mining jurisdictions and organic growth of its pipeline. Following the completion of the spin off, Yamana would still hold an equity interest in the new company. AUY shareholders would be awarded a fraction of the purchase right, for each share of common stock held.
In addition to this, the company is also on-track to reduce its debt by $300 million, through 2017, as announced in February 2016. Yamana recently raised approximately $156 million in cash, through the sale of its Mercedes mine, as well as the sale of its securities purchase warrants. It intends to use this cash to reduce its debt, under the debt reduction plan.
Yamana Gold Inc. (USA) (NYSE:AUY) improved its share value by 0.52%, on a trade volume of 16.98 million, to close at $3.89 per share, at the end of October 20 trading session.