Mexico’s Cobre del Mayo extends exchange offer for 10¾% notes

By Angela McDaniels

Tacoma, Wash., Jan. 21 – Cobre del Mayo, SA de CV extended the exchange offer for its $217.2 million of outstanding 10¾% senior notes due 2018 to 11 a.m. ET on Jan. 28 from 11 a.m. ET on Jan. 20, according to a company news release.

As of 11 a.m. ET on Jan. 20, holders had tendered $196.5 million principal amount, or 90.5%, of the notes.

As previously reported, in exchange for the 10¾% notes, the company is offering about $119.5 million principal amount of senior secured pay-in-kind toggle notes due 2021 and about $97.8 million principal amount of junior non-interest bearing 2045 notes.

For each $1,000 principal amount of notes exchanged, holders will receive $550 principal amount of secured notes and $450 principal amount of junior notes.

In addition, holders will receive secured notes in an amount equal to accrued interest up to but excluding the settlement date, which is expected to be Feb. 2.

Under the exchange offer, holders may choose to sell the junior notes that they receive to an affiliate of the company for cash payment of $20 per $1,000 principal amount of junior notes.

Based on elections made by noteholders who have tendered so far, the company affiliate is expected to purchase 88.8% of the principal amount of the junior notes to be issued in the exchange offer.

The terms of the secured notes provide for the payment of additional annual cash interest payments to the extent that settlement prices for LME grade A copper cathode exceed threshold prices.

The secured notes will be guaranteed by direct and indirect wholly owned subsidiaries of the parent company, Frontera Copper Corp., SAPI de CV, as well as Kupari Holdings SA, of which the company owns 40% of the outstanding equity interests, and its subsidiaries. The secured notes will not be guaranteed by Frontera.

The company said that Frontera had agreed to lend the company the funds for interest due Nov. 15. The entire $13 million principal amount of the loan will be exchanged for an equal principal amount of secured notes upon completion of the exchange offer.

Consents sought

Along with the exchange offer, the company is soliciting consents to amend the notes indenture to eliminate most of the restrictive covenants. Holders who give their consents will receive a consent payment of $1 per $1,000 principal amount for which consents are provided.

Holders may participate in the consent solicitation without tendering their notes in the exchange offer, but they may not participate in the exchange offer without consenting to the proposed amendments.

The exchange offer is only being made to holders who would be acquiring the new notes outside the United States or otherwise under Regulation S or those who are institutional accredited investors under Rule 144A.

The exchange and solicitation agents are Jefferies LLC (212 708-2733) and BCP Securities, LLC (203 629-2181). The information agent is D.F. King Ltd. (44 20 7920 9700, 212 269-5550, 852 3953 7230, cobredelmayo@dfkingltd.com or http://sites.dfkingltd.com/cobredelmayo).

The issuer is a mining company based in Hermosillo, Mexico.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.