Tahoe Resources stock slides 9 percent on lukewarm demand for offer
(Reuters) - Shares in Tahoe Resources Inc (THO.TO: Quote) (TAHO.N: Quote) fell more than 9 percent on Tuesday on tepid investor demand for nearly C$1 billion worth of the gold and silver producer's stock, three industry sources said.
Goldcorp Inc (G.TO: Quote) announced late on Monday that it would sell its 25.6 percent stake in Tahoe Resources for C$998.5 million ($811.00 million) in a so-called bought deal - a transaction where one or more investment banks commit to buying the offering and then typically sells it to other investors.
The industry sources, who asked not to be identified because they were not authorized to comment publicly on the matter, said joint book runners GMP Securities and BMO Capital Markets were having some difficulty placing the stock at the offering price of C$17.20 a share.
The offering price represents a 7 percent discount to Tahoe's closing stock price on Monday.
Neither GMP nor BMO responded immediately to a request for comment.
Tahoe spokesman Ira Gostin said that the miner had heard that the offering was going well but that it could take a few days for the placement to be completed.
"I think that a near $1 billion deal doesn't materialize in a day," he said, adding however that Tahoe's existing shareholders were "very receptive" to the offer.
Tahoe's stock was down C$1.67, or 9 percent, on the Toronto Stock Exchange at C$16.80. In New York, it was down 9 percent at $13.64. Other gold and silver stocks were also lower, hit by a slide in the gold price.
This is not the first large mining industry bought deal to struggle in recent months as the sector remains in the grips of a four-year downturn. In March, investment banks had a tough time finding buyers for an $800 million stock offering by Silver Wheaton Corp SLW.TO.
(Reporting by Nicole Mordant in Vancouver; Editing by Tom Brown)
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