Mineral Resources Completes Offering Of US$700 Million Senior Secured Notes

Mineral Resources Limited (ASX: MIN), a Perth-based mining infrastructure service provider in Australia, announced on 24th April 2019 that the company has completed its offering of US$700 million Senior Secured Notes due 2027, which the company announced previously.

Mineral Resourcess initially intended to offer up to an aggregate principal amount of US$750 million Senior Unsecured Notes to the qualified institutional buyers. The intention to select the qualified buyers was in accordance with the Rule 144A under the United States Securities Act of 1933.

The initial decided coupon rate on the notes was 8.125% per annum paid semi-annually on 1st May and 1st November of every year, and the first coupon payment was intended by the company to release on 1st November 2019. Mineral Resources recently completed the pricing of the notes.

Mineral Resources provided a seniority ranking in the notes and classified it as Senior Secured Notes, and apart from qualified institutional buyers, the company placed the Notes to certain persons outside the United States, which in turn, marked offshore transactions following Regulation S under the United States Securities Act of 1933.

Mineral Resources mentioned in the update that the company intends to use the portion of the capital raised by the secured notes to refinance certain of its existing credit facilities, and any remaining amount on general corporate purposes, which includes capital expenditure.

Upon repayment of its existing credit facilities, Mineral Resources intends to enter a new Syndicated Revolving Credit Facility with consideration of A$250 million. The company mentioned that it does not plan to enter the Syndicate Revolving Credit Facility at closing.

Few wholly-owned subsidiaries of the company will act as a separate entity to guarantee the proposed transaction after the issue of the Notes.

The seniority ranking in the proposed transaction will provide the investors with an upper class and will make them eligible for the first repayment, which includes both the interest payment and the principal repayment. However, the terms of the Senior Secured Notes are not provided by the company, and indenture of the transaction is not made public by the company.

As per the Managing Director of the company, Chris Ellison, the company’s business has grown over a long tenure, and the company established operations across various mines with an estimated life of 10-years to 30-years.

Mr Ellison emphasized on the importance of the proposed transaction in his comments and mentioned that notes offering provides the company with ready access to an additional capital source, which could further support the growth opportunities, once they emerge.

Mr Ellison also mentioned that the capital raising through the secured notes marks a milestone for the company as it aligns the funding needs of its long-term operations, which includes the development of the Wodgina and Mt Marion hard-rock lithium project.

The development of these operations along with the refinancing of its existing credit facilities could provide the company with a boost to develop lithium projects, which in turn, could allow the company to take advantage and realize high commodity prices in the market, amid rapid electrification in the Automobile industry.

The share of the company was trading at A$16.290 (as on 24th April 2019, 02:28 PM), down by 1.033% as compared to its previous close.

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