HudBay Minerals nixes $400 million offering of eight-year notes

By Angela McDaniels

Tacoma, Wash., May 18 - HudBay Minerals Inc. said late Friday that it discontinued its planned offering of $400 million senior notes due 2020 due to market conditions.

"Although the funding we were seeking was available to us, poor overall market conditions caused the proposed interest rate to exceed our cost of capital criteria," president and chief executive officer David Garofalo said in a company news release.

"We currently have a large cash balance with no debt, strong cash flow and available credit to help fund our development projects. The offering was one of a number of debt-financing alternatives we have been considering, including off-take linked project financing, and we will remain disciplined as we pursue these opportunities."

The company talked the offering with a yield in the 9¾% area on Thursday, according to a syndicate source. The deal was expected to price Friday.

Bank of America Merrill Lynch was the bookrunner. CIBC World Markets, Scotia Capital, TD Securities, Credit Suisse Securities (USA) LLC, RBC Capital Markets Corp., NBCF, SG CIB, Cormark, GMP, Macquarie and Stifel, Nicholas & Co. Inc. were the co-managers.

The Rule 144A and Regulation S for life notes were expected to have four years of call protection and a 101% poison put.

The company planned to use the proceeds for general corporate purposes, for development projects in Manitoba and, if approved, for the development of its Constancia project.

HudBay Minerals is an integrated mining company based in Toronto.

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