Compañía Minera Frontera Cobre del Mayo, S.A. de C.V. announces Early Results of Tender Offers and Consent Solicitation

MEXICO CITY, Oct. 16, 2018 /PRNewswire/ -- Compañía Minera Frontera Cobre del Mayo, S.A. de C.V. (the "Offeror") announced the early results of its previously announced tender offers (collectively, the "Offers" and each an "Offer") to purchase for cash any and all of the outstanding notes of the following series, in each case, issued by its affiliate Cobre del Mayo, S.A. de C.V. ("CDM"):   Senior Secured PIK Toggle Notes due 2021 (the "2021 Notes"); 10.75% Senior Notes due 2018 (the "2018 Notes"); and Junior Non-Interest Bearing Notes due 2045 (the "2045 Notes"); each as described further in the table below (collectively, the "Notes"). As previously announced, the Offeror is also soliciting consents ("Consents") from the holders of the 2021 Notes to amend certain provisions of the indenture (the "2021 Notes Indenture") governing the 2021 Notes (the "Consent Solicitation") as described in the Offer to Purchase and Consent Solicitation Statement (as defined below). No consents are being solicited with respect to the 2018 Notes or the 2045 Notes.

The terms and conditions of the Offers and the Consent Solicitation are described in the Offeror's Offer to Purchase and Consent Solicitation Statement, dated September 28, 2018 (the "Offer to Purchase and Consent Solicitation Statement"), and the related Letter of Transmittal and Consent, in each case as amended by the Offeror's press release dated October 5, 2018 (which press release related solely to a reduction in the minimum denominations of 2018 Notes applicable to the Offers). As a result of the current challenges facing CDM, including cash flow difficulties as a result of reduced copper production and increased total production cost, the Offeror is making the Offers in order to purchase outstanding Notes at prices that the Offeror believes represent an attractive premium to recent trading prices and to decrease the aggregate amount of CDM's outstanding debt and related interest expense (excluding debt held by, and interest payable to, the Offeror, which is a guarantor of the 2021 Notes and the 2018 Notes and thus a part of the CDM credit group) and the Offeror is making the Consent Solicitation in order to loosen certain restrictions contained in the 2021 Notes Indenture to provide CDM with additional flexibility. Trading in the Notes has been limited, and the Offers also are intended to provide liquidity for holders to sell their Notes. It is expected that CDM will use borrowings under its credit facility with Banco Azteca, S.A., Institución de Banca Múltiple, to lend cash to the Offeror in an amount sufficient for the Offeror to fund the Offers and to pay the Consent Payment (as defined below).

The following table summarizes the early results of the Offers and the Consent Solicitation, according to the information provided by Ipreo LLC, the Tender Agent and Tabulation Agent for the Offers and the Consent Solicitation, as of the Early Tender Date (as defined below), describing the amount and percentage of Notes validly tendered and not validly withdrawn and the percentage of Consents received and not revoked in the Consent Solicitation:

The Offers and the Consent Solicitation will each expire at 5:00 P.M., Central European Time ("CET"), on October 29, 2018, unless extended (such date and time, as it may be extended, the "Expiration Date") or earlier terminated by the Offeror in accordance with the terms of the Offer to Purchase and Consent Solicitation Statement. No tenders or Consents submitted after the Expiration Date will be valid.

The deadline to validly withdraw tenders of Notes and revoke Consents was 5:00 P.M., CET, on October 15, 2018 (the "Withdrawal Deadline"); therefore Notes that have been tendered and not validly withdrawn, and Notes tendered after the Withdrawal Deadline, but prior to the Expiration Date, may not be withdrawn, and Consents that have been delivered and not validly revoked, and Consents delivered after the Withdrawal Deadline, but prior to the Expiration Date, may not be revoked, in each case unless withdrawal or revocation rights are required to be extended pursuant to applicable law.

Subject to the terms and conditions of the Offers and the Consent Solicitation, holders who validly tendered, and did not validly withdraw, their Notes pursuant to the applicable Offer and, as applicable, validly delivered, and did not validly revoke, their Consents pursuant to the Consent Solicitation, at or prior to 5:00 P.M., CET, on October 15, 2018 (the "Early Tender Date"), and whose Notes are accepted for purchase, and, as applicable, whose Consents are accepted for payment, will receive the applicable Total Consideration of: $440.00 for each $1,000 principal amount of 2021 Notes purchased pursuant to the Offers, $200.00 for each $1,000 principal amount of 2018 Notes purchased pursuant to the Offers and $20.00 for each $1,000 principal amount of 2045 Notes purchased pursuant to the Offers (as applicable, the "Total Consideration"). The Total Consideration includes the early tender premium (the "Early Tender Premium") of $15.00 per $1,000 principal amount of Notes and the consent payment (the "Consent Payment") of $15.00 per $1,000 principal amount of Notes, in the case of the 2021 Notes, and the Early Tender Premium of $50.00 per $1,000 principal amount of Notes, in the case of the 2018 Notes. No consents are being solicited with respect to the 2018 Notes or the 2045 Notes (and no consent payment is payable in connection with the 2018 Notes or the 2045 Notes) and no early tender premium is payable in the case of the 2045 Notes. Holders who validly tendered their 2021 Notes are deemed to have validly delivered their related Consents by such tender. Holders of the 2021 Notes who withdrew their 2021 Notes prior to the Withdrawal Deadline, thereby revoking their Consents, may resubmit their Consents without tendering their 2021 Notes. Holders who validly delivered Consents but did not tender their 2021 Notes at or prior to the Early Tender Date, and did not validly revoke their Consents at or prior to the Early Tender Date, are eligible to receive only the Consent Payment.  Holders who validly deliver Consents (but do not tender their 2021 Notes) after the Early Tender Date and at or prior to the Expiration Date will not be eligible to receive the Consent Payment.

The Offeror announced today that it has received Consents from holders of a majority in aggregate principal amount of the 2021 Notes outstanding (excluding 2021 Notes held by CDM or its affiliates, which are deemed not to be outstanding) allowing CDM to amend certain provisions of the 2021 Notes Indenture (the "2021 Notes Proposed Amendments") described in the Offer to Purchase and Consent Solicitation Statement. The Offeror expects that CDM, the Offeror and the other guarantors party to the 2021 Notes Indenture will promptly execute and deliver to the 2021 Notes Indenture trustee a supplemental indenture in respect of the 2021 Notes to effect the 2021 Notes Proposed Amendments, which supplemental indenture will become effective immediately upon its execution and delivery by the parties thereto, but which will not become operative until the earliest date upon which Consents are accepted by the Offeror in accordance with the terms of the Offers and the Consent Solicitation.

Subject to the terms and conditions of the Offers and the Consent Solicitation, holders who validly tender, and do not validly withdraw, their Notes and, if applicable, validly deliver, and do not validly revoke, their Consents, after the Early Tender Date and at or prior to 5:00 P.M., CET, on the Expiration Date, and whose Notes are accepted for purchase, will receive only the applicable Tender Offer Consideration of: $410.00 for each $1,000 principal amount of 2021 Notes purchased pursuant to the Offers, $150.00 for each $1,000 principal amount of 2018 Notes purchased pursuant to the Offers and $20.00 for each $1,000 principal amount of 2045 Notes purchased pursuant to the Offers and the Consent Solicitation (as applicable, the "Tender Offer Consideration"). The Tender Offer Consideration is equal to the applicable Total Consideration minus the Early Tender Premium (if applicable) and the Consent Payment (if applicable). No additional amounts will be payable in respect of accrued and unpaid interest on the 2021 Notes and 2018 Notes accepted for purchase pursuant to the Offers and the Consent Solicitation. The 2045 Notes are non-interest bearing. Holders who validly deliver Consents (but do not tender their 2021 Notes) after the Early Tender Date and at or prior to the Expiration Date will not be eligible to receive the Consent Payment.

The Offeror expects to accept for purchase any Notes validly tendered and not validly withdrawn, and, if applicable, accept and pay for any Consents validly delivered and not validly revoked, at or prior to the Early Tender Date on the early settlement date (the "Early Settlement Date"). The Early Settlement Date is currently expected to occur on October 18, 2018. On the Early Settlement Date, the Offeror expects to purchase Notes that have been validly tendered and not validly withdrawn and, if applicable, to pay for Consents that have been validly delivered and not validly revoked at or prior to the Early Tender Date, as described in the Offer to Purchase and Consent Solicitation Statement. The Offeror expects to purchase any Notes validly tendered after the Early Tender Date and at or prior to the Expiration Date and that the Offeror accepts for purchase in accordance with the terms and conditions of the Offers, as described in the Offer to Purchase and Consent Solicitation Statement, promptly following the Expiration Date (the "Final Settlement Date"). No payment will be made on account of any Consents delivered after the Early Tender Date. The Final Settlement Date is expected to occur within three business days following the Expiration Date.

The Offers and the Consent Solicitation are subject to the satisfaction or waiver of certain conditions to the Offers and the Consent Solicitation set forth in the Offer to Purchase and Consent Solicitation Statement. The Offers are not conditioned upon a minimum principal amount of Notes being tendered or upon receipt of financing.  

Full details of the terms and conditions of the Offers and the Consent Solicitation are described in the Offer to Purchase and Consent Solicitation Statement and related Letter of Transmittal and Consent, in each case as amended by the Offeror's press release dated October 5, 2018. Holders of the Notes are encouraged to read these documents, as they contain important information regarding the Offers and the Consent Solicitation.

The Offeror has retained BCP Securities, LLC to act as the dealer manager and solicitation agent for the Offers and the Consent Solicitation and Ipreo LLC as the Tender Agent, Tabulation Agent and Information Agent for the Offers and the Consent Solicitation. Questions regarding the Offers and the Consent Solicitation may be directed to BCP Securities, LLC at (203) 629-2186, or Ipreo LLC at (212) 849-3880 (collect), (888) 593-9546 (toll-free) or email [email protected]. Requests for additional copies of the Offer to Purchase and Consent Solicitation Statement or the Letter of Transmittal and Consent should be directed to the Information Agent at the phone numbers above.

None of the Offeror, CDM, their respective directors, employees or affiliates, the dealer manager, the solicitation agent, the tender agent, the tabulation agent and information agent or the trustee with respect to the Notes is making any recommendation as to whether holders should tender any Notes or deliver Consents, in response to the Offers and the Consent Solicitation. Holders must make their own decisions as to whether to participate in the Offers and the Consent Solicitation.

The Offers and the Consent Solicitation are only being made pursuant to the Offer to Purchase and Consent Solicitation Statement and the related Letter of Transmittal and Consent, in each case as amended by the Offeror's press release dated October 5, 2018. This press release is neither an offer to purchase nor a solicitation of an offer to sell any Notes in the Offers and the Consent Solicitation. The Offers and the Consent Solicitation are not being made to, nor will Notes be accepted for purchase from or on behalf of, holders of Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities or other laws of such jurisdiction. In any jurisdiction in which the Offers and the Consent Solicitation are required to be made by a licensed broker or dealer, the Offers and the Consent Solicitation will be deemed to be made on behalf of the Offeror by one or more registered brokers or dealers that are licensed under the laws of such jurisdiction.

Cautionary Note Regarding Forward-Looking Statements

This press release, the Offer to Purchase and Consent Solicitation Statement and the documents incorporated by reference in the Offer to Purchase and Consent Solicitation Statement include forward-looking statements. This forward-looking information includes, among others, statements regarding the terms and timing for completion of the Offers and the Consent Solicitation. In addition, these forward-looking statements include, without limitation, statements regarding CDM's future financial position and results of operations, the expectations of the Offeror and CDM, CDM's strategy, plans, objectives, goals and targets, future developments in the markets in which CDM participates or is seeking to participate or anticipated regulatory changes in the markets in which CDM operates or intends to operate. In some cases, forward-looking statements can be identified by terminology such as "aim," "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "plan," "potential," "predict," "project," "should" or "will" or the negative of such terms or other comparable terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Offeror cautions you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that CDM's actual results of operations, financial condition and liquidity may differ materially from those made in, or suggested by, the forward-looking statements contained in the Offer to Purchase and Consent Solicitation Statement and the documents incorporated by reference. In addition, even if CDM's results of operations, financial condition and liquidity and the development of the industry in which it operates, are consistent with the forward-looking statements contained in the Offer to Purchase and Consent Solicitation Statement and the documents incorporated by reference, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to:

• risks related to CDM's liquidity;
  
• risks related to the price of copper;
  
• risks related to CDM's competitive position;
  
• risks related to CDM's strategy and expectations about growth in demand for copper and business operations, financial condition and results of operations;
  
• risks related to CDM's operations, including the quality of its ore body, its ability to predict the nature, metallurgy, mineralization and alteration of the ore body and the effectiveness of its heap leaching process;
  
• risks relating to the operation by Kupari Metals S.A. of its flotation plant;
  
• risks related to the revocation, expropriation or termination of CDM's mining concessions or its water concessions or of the agreements pursuant to which it explores or exploits mining concessions belonging to third parties;
  
• the inability to be compensated fairly in the event of termination of CDM's mining concessions or its water concessions;
  
• the impact of changes in the prices of raw materials, labor, services, sulfuric acid, components and other inputs;
  
• CDM's relationship with unions and its ability to negotiate collective bargaining agreements;
• the availability of materials and equipment;
  
• CDM's access to funding sources, and the cost of the funding;
  
• changes in regulatory, administrative or economic conditions affecting the mining industry, including government interpretations and policies;
  
• the application and enforcement of environmental laws and regulations;
  
• risks related to Mexico's social, political or economic environment, including in relation to the results of Mexico's recent election;
  
• the impact of changes in the end uses of CDM's products;
• risks related to CDM's agreement with Grupo Rexgo, S.A. de C.V. ("Grupo Rexgo") and Grupo Rexgo's lawsuit related thereto;
  
• fluctuations in the value of the U.S. dollar against the Mexican peso;
  
• risks associated with market demand for and liquidity of the Notes;
  
• risks related to the timing and successful consummation of the Offers and the Consent Solicitation; and
  
• changes in the taxation of CDM's business.

Holders of Notes should read the entire Offer to Purchase and Consent Solicitation Statement, including the information under the headings "Risk factors" and "Cobre del Mayo, S.A. de C.V." and the documents listed under the heading "Incorporation of documents by reference" for a more complete discussion of the factors that could affect the Offers and the Consent Solicitation and CDM's future performance and the markets in which CDM operates. In light of these risks, uncertainties and assumptions, the forward-looking events described in this press release and the Offer to Purchase and Consent Solicitation Statement may not occur. The Offeror undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or developments.

SOURCE Cobre del Mayo SA de CV

Related Links

http://www.cobredelmayo.com