NEXA RESOURCES ANNOUNCES EARLY TENDER EXPIRATION AND RESULTS OF ITS OFFER TO PURCHASE A PORTION OF ITS NOTES DUE IN 2028
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Insights
The managed reduction of Nexa Resources' outstanding notes due in 2028 has the potential to positively influence the company's debt profile. By repurchasing a significant portion of these notes using cash, Nexa could potentially achieve a lower long-term interest expense. Given the tender offer included a premium over the par value, it is plausible to assume a proactive approach to debt management. This may enhance investor confidence in the firm's financial strategies and possibly affect its credit ratings positively.
Analyzing the offer's acceptance level, which reached over 50%, indicates robust interest from note holders, reflecting the attractiveness of the offer or a possible inclination of note holders to liquidate their positions in the current economic environment. This high participation rate could also suggest market anticipation of interest rate fluctuations or assessments of the company's future cash flows.
Despite the apparent merits, the transaction might also suggest that Nexa Resources is harboring surplus cash reserves or a preference for equity over debt in its capital structure. This could signal underlying strategic shifts in the company's operations or investment activities that stakeholders should monitor closely.
The prorated acceptance of the tendered 2028 Notes indicates a disciplined financial strategy, as it allows Nexa Resources to avoid exceeding its Maximum Payment Amount threshold. Such fiscal restraint is reassuring to investors concerned about the risk of over-leveraging. The success of the tender offer before its expiration date could suggest that the market views the company's securities favorably, which may diminish liquidity risk for these notes.
It is important to note, however, that the reduction in outstanding debt through a tender offer could also denote an attempt to manipulate the company's leverage ratios prior to future financing activities or in anticipation of changing market conditions. A critical assessment of the company's balance sheet post-transaction may reveal whether such strategic debt repurchase was necessary for maintaining its debt covenant compliance or was a purely opportunistic financial maneuver.
Engaging renowned Dealer Managers for the tender offer suggests a strategic move by Nexa Resources to ensure the offer's success and reflects positively on the company's governance practices. It may also be a play to consolidate future dealings and negotiations with these financial institutions.
From an investment strategy perspective, the timing of this transaction and the decision to use cash reserves for debt repurchase rather than for other investments or shareholder returns warrant attention. Shareholders should evaluate the opportunity cost of this tender offer, considering alternative investments the company could have pursued with the deployed capital. The acceptance of the tender offer could also impact the supply-demand dynamics of the remaining notes, potentially influencing their market valuation and yield spread.
Lastly, stakeholders should consider the broader industry and economic context within which this offer has been made, as the metals and mining sector to which Nexa belongs may be experiencing shifts in commodity prices, regulatory changes, or other macroeconomic factors that can impact corporate financing strategies and investor decisions.
As of 5:00pm (
Because the aggregate purchase price of the 2028 Notes validly tendered and not validly withdrawn on or prior to the 2028 Early Tender Date (including Accrued Interest, as defined below) is expected to exceed the Maximum Payment Amount, Nexa Resources expects to accept the validly tendered 2028 Notes on a prorated basis according to the principal amount of such 2028 Notes, such that Nexa Resources spends no more than the Maximum Payment Amount (including Accrued Interest). The principal amount of 2028 Notes tendered by a holder of 2028 Notes will be multiplied by the proration rate indicated below and then rounded down to the nearest
The following table sets forth certain information relating to the 2028 Tender Offer, including the principal amount of 2028 Notes validly tendered and not validly withdrawn and accepted for purchase in the 2028 Tender Offer.
Title of | CUSIP | ISIN | Principal | Principal Amount | Principal | Proration | 2028 Total |
| 65290D | US65290DAA19/ | 32.3 % |
(1) | The amount to be paid for each | |||||
Holders of 2028 Notes accepted for purchase in the 2028 Tender Offer will be eligible to receive the total consideration of
Although the 2028 Tender Offer is scheduled to expire at 5:00pm (
The settlement date of the 2028 Tender Offer will occur within one business day following the 2028 Early Expiration Date, on April 15, 2024, or as promptly as practicable thereafter (the "2028 Early Settlement Date").
The 2028 Total Consideration will be paid together with accrued and unpaid interest on the 2028 Notes from the last interest payment date preceding the applicable 2028 Early Settlement Date to, but not including such 2028 Early Settlement Date ("Accrued Interest"). All 2028 Notes accepted for purchase in the 2028 Tender Offer will cease to accrue interest on the applicable 2028 Early Settlement Date, unless Nexa Resources defaults in the payment of amounts payable pursuant to the 2028 Tender Offer. All 2028 Notes not tendered or accepted for purchase shall continue to accrue interest.
Nexa Resources has engaged BBVA Securities Inc., Citigroup Global Markets Inc., HSBC Securities (
This press release is for informational purposes only and does not constitute an offer to purchase or the solicitation of acceptance of the Offer to Purchase. Neither the
About Nexa
Nexa is a large-scale, low-cost integrated zinc producer with over 65 years of experience developing and operating mining and smelting assets in
Nexa was among the top five producers of mined zinc globally in 2023 and one of the top five metallic zinc producers worldwide in 2023, according to Wood Mackenzie.
Cautionary Statement on Forward-Looking Statements
This news release contains certain forward-looking information and forward-looking statements as defined in applicable securities laws (collectively referred to in this news release as "forward-looking statements"). Forward-looking statements contained in this news release may include, but are not limited to, zinc and other metal prices and exchange rate assumptions, projected operating and capital costs, metal or mineral recoveries, head grades, mine life, production rates, and returns; the Company's potential plans; the estimation of the tonnage, grade and content of deposits and the extent of mineral resource and mineral reserve estimates; timing of commencement of production; exploration potential and results; and the timing and receipt of necessary permits for future operations.
These statements are based on information currently available to the Company and the Company provides no assurance that actual results and future performance and achievements will meet or not differ from the expectations of management or qualified persons. All statements other than statements of historical fact are forward-looking statements. The words "believe," "will," "may," "may have," "would," "estimate," "continues," "anticipates," "intends," "plans," "expects," "budget," "scheduled," "forecasts" and similar words are intended to identify estimates and forward-looking statements. Forward-looking statements are not guarantees and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Actual results and developments may be substantially different from the expectations described in the forward-looking statements for a number of reasons, many of which are not under our control, among them, the activities of our competition, the future global economic situation, weather conditions, market prices and conditions, exchange rates, and operational and financial risks. The unexpected occurrence of one or more of the abovementioned events may significantly change the results of our operations on which we have based our estimates and forward-looking statements. Our estimates and forward-looking statements may also be influenced by, among others, legal, political, environmental, or other risks that could materially affect the potential development of the Project, including risks related to outbreaks of contagious diseases or health crises impacting overall economic activity regionally or globally, as well as risks relating to ongoing or future investigations by local authorities with respect to our business and operations and the conduct of our customers, including the impact to our financial statements regarding the resolution of any such matters.
These forward-looking statements related to future events or future performance and include current estimates, predictions, forecasts, beliefs and statements as to management's expectations with respect to, but not limited to, the business and operations of the Company and mining production, our growth strategy, the impact of applicable laws and regulations, future zinc and other metal prices, smelting sales, capex, expenses related to exploration and project evaluation, estimation of Mineral Reserves and/or Mineral Resources, mine life and our financial liquidity.
Forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable and appropriate by management and qualified persons considering their experience are inherently subject to significant uncertainties and contingencies and may prove to be incorrect. Statements concerning future production costs or volumes are based on numerous assumptions of management regarding operating matters and on assumptions that demand for products develops as anticipated, that customers and other counterparties perform their contractual obligations, full integration of mining and smelting operations, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labor disturbances, interruption in transportation or utilities, adverse weather conditions, and that there are no material unanticipated variations in metal prices, exchange rates, or the cost of energy, supplies or transportation, among other assumptions.
Estimates and forward-looking statements refer only to the date when they were made, and we do not undertake any obligation to update or revise any estimate or forward-looking statement due to new information, future events or otherwise, except as required by law. Estimates and forward-looking statements involve risks and uncertainties and do not guarantee future performance, as actual results or developments may be substantially different from the expectations described in the forward-looking statements. Further information concerning risks and uncertainties associated with these forward-looking statements and our business can be found in our public disclosures filed under our profile on SEDAR (www.sedarplus.ca) and on EDGAR (www.sec.gov).
For further information, please contact:
Investor Relations Team
ir@nexaresouces.com
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SOURCE Nexa Resources S.A.
FAQ
What is the purpose of Nexa Resources' announcement regarding the early tender expiration and results of its offer?
What are the details of the offer to purchase made by Nexa Resources?
What percentage of the outstanding principal amount of the 2027 Notes did Nexa purchase?
What is the Maximum Payment Amount for the purchase of the 2028 Notes by Nexa Resources?
What is the total consideration per $1,000 principal amount of the 2028 Notes tendered and accepted for purchase?
