Hudbay refi saves on annual expense, but cash, equivalents fall in Q1

By Devika Patel

Knoxville, Tenn., May 11 – Hudbay Minerals Inc. had less cash on its balance sheet at the end of the last quarter than it did at the beginning, despite a $600 million sale of 4½% five-year senior notes in the quarter, the proceeds of which were used to refinance the company’s senior notes due 2025.

The deal will result in reduced cash interest payments of almost $19 million annually.

“We exited the quarter with $311 million in cash and equivalents, lower than end of last year mainly as a result of capital investments as we complete our growth initiatives in Peru and Manitoba, along with interest payments and bond refinancing fees during the quarter,” president and chief executive officer Peter Kukielski said on the company’s first quarter ended March 31 earnings conference call on Tuesday.

On Feb. 22, Hudbay priced a $600 million issue of five-year senior notes (B3/B/B+) at par to yield 4½% in a drive-by.

The yield printed at the tight end of the 4½% to 4¾% yield talk. Initial guidance was in the high 4% area to 5%.

Barclays was the lead bookrunner. Joint bookrunners were JPMorgan, CIBC, ING, Scotia, BMO, NBC, RBC and TD.

Proceeds were earmarked to redeem the Toronto-based metals mining company’s senior notes due 2025.

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