December 14, 2018 / 2:50 PM / a month ago

Canada's Imperial Metals hires BMO to speed up restructuring: sources

LONDON (Reuters) - Canadian copper producer Imperial Metals (III.TO) has hired Bank of Montreal (BMO) to speed up a restructuring process that could include the sale of the company for up to $1 billion, two sources familiar with the matter said.

The logo of the Bank of Montreal (BMO) is seen on their flagship location on Bay Street in Toronto, Ontario, Canada March 16, 2017. Picture taken March 16, 2017. REUTERS/Chris Helgren

Imperial Metals, backed by Canadian billionaire Murray Edwards, earlier this year set up a special committee to identify strategic alternatives including joint ventures and a total or partial sale of the business.

It has now mandated the Canadian investment bank to start a formal process, the sources said.

Imperial Metals did not respond to a request for comment and BMO declined to comment.

The company produces copper and gold at its Red Chris, Mount Polley and Huckleberry mines and lead and zinc at half-owned Ruddock Creek mine, all in British Columbia.

With a market capitalization of C$152 million ($114 million) and a debt of C$852.4 million in 2017, the company was guaranteed an extension of its C$200 million credit facility by a company controlled by main shareholder Edwards earlier this year.

Prior to starting its review in September, the company said it had been in talks with another party for a joint venture agreement at its Red Chris mine.

Copper is highly sought after by mining companies because it’s viewed as having one of the brightest outlooks, with existing reserves dwindling and strong demand for use in electric cars expected.

But deals in the sector have not been abundant, partly due to a lack of high-quality assets and funding complications for potential buyers.

The world’s largest listed miner BHP (BHP.AX) BLT.L this week called off the $320 million sale of Chile’s Cerro Colorado mine to private equity fund EMR Capital, due to problems with financing the deal.

Canada’s Teck Resources Ltd (TECKb.TO), (TECK.N) agreed to sell a 30 percent stake in its Quebrada Blanca copper mine expansion in northern Chile to Japan’s Sumitomo for $1.2 billion, while Mitsubishi agreed to raise its stake in the Quellaveco copper project in Peru it shares with Anglo American Plc (AAL.L).

Imperial’s shares have fallen for five consecutive years and are down 63 percent this year, compared to a 15 percent fall in the price of copper CMCU3 in the same period.

($1 = 1.3387 Canadian dollars)

Reporting by Clara Denina; Additional reporting by Susan Taylor in Toronto; Editing by Susan Fenton

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