Oil-sands mogul Murray Edwards is backing a C$100 million ($92 million) bond sale by Imperial Metals Corp. that will help fund the cleanup of a mine-waste spill, the worst accident of its kind in Canada in 20 years.
Edwards, Imperial’s largest shareholder, agreed to buy C$40 million of the 6 percent, six-year senior unsecured convertible debentures via Edco Capital Corp., a company he controls.
The Fairholme Partnership LP will buy another C$40 million. If the issuance fails to raise the full amount sought, Edco will buy non-convertible notes bearing interest at 12 percent to make up the shortfall, Imperial said yesterday in a statement.
Murray, 54, who holds a 36 percent stake in Imperial, has business interests that span energy, engineering and a stake in a National Hockey League team. Buying the bonds isn’t the first time that he’s helped fund development of the Mount Polley copper and gold mine, the scene of last week’s accident, said David Davidson, an analyst at Paradigm Capital Inc.
“Once he invests in something, he supports it through thick and thin,” Davidson, who’s based in Toronto and whose rating on Imperial is under review following the spill, said today in an interview. “Not only is he committed to Mount Polley, but he’s committed at a really tough time.”
Imperial said funds from the sale and Imperial’s operations, and insurance proceeds, will be enough to cover costs at Mount Polley as well as the completion of its Red Chris project, which like Mount Polley is in British Columbia.
In 2003, Edwards bought stock sold by Imperial to fund exploration at the Mount Polley site. Two years later, a company he controlled provided Imperial with a credit facility to help restart the mine. No one at Imperial was immediately available to comment on Edwards’ support of the mine.
“While the precise costs of remediation and repair are presently unknown, the company believes that the costs can be managed over time,” Imperial said in the statement.
Imperial shares rose 16 percent to C$10.11 at the close in Toronto. The stock has plunged 40 percent since the Aug. 4 accident, erasing about C$500 million of market value.
The failure of a waste-pond dam at the copper and gold mine, 400 kilometers (250 miles) northeast of Vancouver, unleashed a torrent of waste that left local residents unable to bathe in or drink the water from their taps. The ban on using water has now been lifted for most of the area near the spill.
The accident, which is still being investigated by the British Columbia government, has fueled debate in Canada about safety and environmental rules governing resource projects. The province’s Minister of Energy and Mines Bill Bennett said last week that events at Mount Polley will spur a nationwide reassessment of mining regulation.
In a related development, Imperial agreed to refrain from starting up the Red Chris mine until after the Tahltan First Nation community has conducted an independent technical review of the project, David Haslam, a spokesman for B.C.’s energy and mines ministry, said today in an e-mailed statement.
Imperial planned to start the C$631 million Red Chris mine in September, Steve Robertson, the company’s vice president of corporate affairs, said in an Aug. 9 interview at Mt. Polley.
Edwards is one of Canada’s best-known natural-resources developers. A pioneer of the oil sands industry in Alberta and chairman of Canadian Natural Resources Ltd., he’s also the largest shareholder in oil-field services company Ensign Energy Services Inc. and Magellan Aerospace Corp., a maker of aircraft parts, according to data compiled by Bloomberg.
The combined value of those equity holdings is about C$2 billion, the data show. Edwards is also a co-owner of the Calgary Flames NHL team.
The son of a Regina, Saskatchewan, school-teacher mother and an accountant father, Edwards was a lawyer in Calgary before starting an investment bank focused on energy companies.
He has advised Prime Minister Stephen Harper on foreign investment, the National Post reported last year. In June, Edwards was appointed to Canada’s Economic Advisory Council, which advises to the minister of finance.
Edwards’ companies have supported the ruling British Columbia Liberal Party. Canadian Natural has donated C$153,480 to the party since 2006, according to the Elections B.C. website, which tracks political contributions. A unit of Imperial and a subsidiary of Ensign have also made donations, the data show
Edwards helped organize a fundraiser for British Columbia Premier Christy Clark in Calgary in October 2012, news website The Tyee reported in 2012.
“A significant part of our progress in British Columbia comes from people like Murray Edwards,” Clark said in a speech to the School of Public Policy at the University of Calgary in October 2012.
(Imperial scheduled a conference call for Aug. 18 at 1 p.m. New York time to discuss earnings reported yesterday.)