The 2020 Notes will accrue interest at a rate of 7.5% per annum and will mature on November 1, 2020. The 2022 Notes will accrue interest at a rate of 7.875% per annum, and will mature on November 1, 2022. The offering of the Notes is expected to close on or about October 27, 2014, subject to the satisfaction of customary closing conditions.
The net proceeds from the offering of the Notes, together with proceeds from the previously announced subscription receipt financing and streaming purchase agreement, will be used to fund Lundin Mining’s pending acquisition (the "Acquisition") of Freeport-McMoRan Inc.’s 80% ownership stake in the Candelaria/Ojos del Salado copper mining operations and supporting infrastructure ("Candelaria"), to repay in full all amounts outstanding under the Company’s existing term loan, to pay related fees and expenses and for general corporate purposes.
The Notes will be guaranteed on a senior secured basis by certain of the Company’s subsidiaries that are guarantors under its existing credit facility and certain of the Company’s subsidiaries that become guarantors under the streaming purchase agreement ("Streaming Subsidiaries"). The Notes and the guarantees will be secured on a first priority basis by a pledge of the shares of certain Streaming Subsidiaries and on a second priority basis by a pledge of the shares of certain of the Company’s subsidiaries that are also pledged to secure the Company’s existing credit facility.
The Company will deposit the gross proceeds of US$1.0 billion from the sale of the Notes into a segregated escrow account until the satisfaction or waiver of certain conditions, including the consummation of the Acquisition (the "Escrow Conditions"). If the Escrow Conditions are not satisfied or waived on or prior to December 26, 2014, or such earlier date as Lundin Mining determines in its sole discretion that the Escrow Conditions cannot be satisfied, Lundin Mining will be required to redeem the Notes at a price equal to 100% of the gross proceeds of the Notes plus accrued interest from the issue date of the notes to, but not including, the redemption date. Escrowed funds would be released and applied to pay for any such redemption.
This press release is not an offer of securities for sale in the United States or in any other jurisdiction. The Notes have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. The Notes have not been and will not be qualified for distribution or distribution to the public under applicable Canadian securities laws.
