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5/11/17

Yamana's (AUY) (YRI.to) desperation to get out of BRIO: The fun never stops

It was hardly the first time, for those of you who remember the Titanic-meets-iceberg attempt a couple of years ago, but all we need to remember is back in November and December of 2016 when Yamana (AUY) told us it was selling Brio Gold (BRIO.to) in a secondary? These were the terms in November...

The final prospectus qualifies the distribution of an aggregate of up to 59,225,957 Brio Shares at a price of C$3.25 per Brio Share (the "Exercise Price") upon the exercise of up to an aggregate of 59,225,957 Purchase Rights, for aggregate gross proceeds to Yamana of up to C$192,484,360....

...Brio Gold will become a standalone public company effective as of the closing date of the Offering, with Yamana holding 46.3% (on a non-diluted basis) of the issued and outstanding shares of Brio Gold. The closing date of the Offering is expected to occur on or about December 23, 2016. 
But when the dust had settled, this is what they managed to achieve:
"A total of 17,324,507 Brio Shares owned by Yamana were transferred pursuant to the transactions ...Yamana continues to be a significant shareholder of Brio Gold, holding approximately 85% of the issued and outstanding Brio Shares."

So, 17.325m shares of BRIO at C$3.25. Then in March, Marrone managed to hoodwink some fund manager into buying a 6m block at C$3.35.

And now? This:
YAMANA GOLD INC. (TSX:YRI) (NYSE:AUY) ("Yamana" or the "Company") is pleased to announce that it has, along with Brio Gold Inc. ("Brio Gold"), entered into an agreement with a syndicate of underwriters (the "Underwriters") co-led by Canaccord Genuity Corp., CIBC Capital Markets and National Bank Financial Ltd. pursuant to which the Underwriters have agreed to purchase 26,667,000 common shares of Brio Gold currently held by Yamana on a bought deal basis at an offering price of C$3.00 per Brio Gold common share ("the Offering").

On the back of the BRIO 1q17 financials that came in better than expected, AUY goes back to the well once again but this time they've handed over the execution risk in exchange for a haircut. The new C$3 number still makes BRIO crazily expensive, but those sell side desks will now pump it for all they're worth in exchange for the commish. You'll also notice that they still can't get rid of the full amount planned back in November, it's going to be 53% AUY after the dust has settled so you can bet your sweet bippy there's more fun to come later on.

To all this, IKN has simple questions: Do these people think we haven't noticed? Does Marrone believe that his obvious and absolute desperation to dump the doggist end of his asset book hasn't been clocked and registered by the market? Do the brokerages on the other end of this bought deal think there are enough idiots and suckers to soak up these shares?

Of course, the answer to that last one is a resounding YES. Retail, the crop that never fails.