Sirius Minerals talks $400 million 5% eight-year convertible bonds to yield 10%, up 20%-25%

By Abigail W. Adams

Portland, Me., April 30 – Sirius Minerals plc plans to price $400 million of eight-year guaranteed convertible bonds on Wednesday with price talk for a coupon of 5%, a yield to maturity of 10% and an initial conversion premium of 20% to 25%, according to a company news release.

The company also intends to issue an additional $244.2 million in guaranteed convertible bonds due 2027 to holders of the outstanding $244.2 million of the guaranteed convertible bonds due 2023 that tender their bonds as part of the repurchase offer.

J.P. Morgan Cazenove is bookrunner for the offering, which is being marketed to qualified institutional buyers in the European Economic Area.

The conversion price for the bonds will be adjusted on May 25, 2020 in accordance with a pre-determined formula.

If the conversion price is less than the reference share price, it will be reset to be equal to the reference share price.

Holders will receive a make-whole payment in addition to ordinary shares upon conversion.

The bonds will be redeemed at their maturity at 160.19% of their principal amount.

The bonds will be callable in whole but not in part from June 13, 2021 to June 13, 2023 at 150% of the accreted principal amount and after June 13, 2023 at 130% of the accreted amount.

Concurrently with the convertible bond offering, the company is offering to repurchase the outstanding $244.2 million of its guaranteed convertible bonds due 2023 to holders that agree to apply the cash amount to the purchase of new guaranteed convertible bonds due 2027.

In addition, the company will make an interest payment of $3,967 per $200,000 of the principal amount repurchased.

Proceeds from the new convertible bonds offering will be placed in escrow and will be released to the issuer upon the earlier of Jan. 23, 2020 or the completion of an issuance of senior secured guaranteed bonds or other financing of at least $500 million or the entry into a revolving credit facility with a committed amount of $2.5 billion.

Following the release of the funds from escrow, proceeds will fund the development of the North Yorkshire mine in the United Kingdom.

Sirius Minerals is a U.K.-based fertilizer development company.

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