GMP Says Barrick Share Sale Doesn’t Put Firm at Risk

The chief executive officer of GMP Capital Inc. said Canada’s second-largest non-bank brokerage isn’t taking an undue risk or betting the firm by partly underwriting Barrick Gold Corp.’s $3 billion share sale.

Royal Bank of Canada, Barclays Plc and Toronto-based GMP are leading the sale, which is set to close Nov. 14. The underwriters acquired all the 163.5 million shares in a so-called bought deal and are trying to sell them for $18.35 each.

Barrick rose 0.2 percent to $18.22 at the close in New York. The Globe and Mail reported Nov. 6 the new shares are proving to be a hard sell to wary investors.

“We take a sophisticated approach to risk,” Harris Fricker said today in a conference call to discuss GMP’s third-quarter results. “This is a business we’ve been in for almost 20 years and as guys who own 23 percent of the firm we’re not in the habit of ever risking our franchise.”

The underwriters have the option to buy more shares, which would lift proceeds from the sale to as much as to $3.45 billion, Toronto-based Barrick said in an Oct. 31 statement. Barrick plans to use $2.6 billion from the sale to buy back bonds.

“There’s been more speculation over this than Area 51,” Fricker said, comparing the stock sale with the U.S. military installation in the Nevada desert that’s been the subject of decades of speculation and conspiracy theories. “The actual results will demonstrate the prudence of taking on the transaction.”

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