Nexa Resources Prices Offering of US$600 Million 6.750% Senior Unsecured Notes Due 2034
Nexa Resources S.A. announces the pricing of US$600 million 6.750% senior unsecured notes due 2034 to fund a cash tender offer for existing notes due 2027 and 2028. The offering is aimed at qualified institutional buyers and non-U.S. persons, closing on April 9, 2024.
The announcement by Nexa Resources of a $600 million senior unsecured notes offering with a 6.750% interest rate, maturing in 2034, is a strategic financial move with implications for the company's capital structure and debt management. The utilization of proceeds to fund a cash tender offer for existing notes due in 2027 and 2028 indicates an active approach to liability management. By refinancing older debt with higher interest rates or nearing maturity, Nexa Resources could potentially reduce interest expenses and extend its debt maturity profile, which can be favorable for its credit standing.
However, the interest rate of 6.750% should be compared to the current market rates for similar debt instruments. If the rate is significantly higher, it may reflect a risk premium associated with Nexa's creditworthiness. Investors should assess the company's leverage ratios and interest coverage metrics post-issuance to understand the impact on financial health. Additionally, the 'senior unsecured' nature of the notes suggests they rank above other unsecured debt in case of liquidation, but without collateral backing, which could influence the recovery rate for investors in default scenarios.
The offer's structure, limited to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S, highlights compliance with the U.S. Securities Act of 1933. This targeted approach allows Nexa Resources to bypass the more extensive registration requirements and reach a specific investor base more quickly. However, the limited pool of investors may affect the liquidity of the notes in the secondary market. Moreover, the lack of registration with the SEC means less public disclosure, which could impact the level of information available to investors for making informed decisions.
It is also important for investors to understand that the notes, being senior and unsecured, carry certain risks. In the event of a default, while they have priority over other unsecured debt, there is no collateral to cushion the blow. This press release also serves as a legal disclaimer, making it clear that the securities cannot be sold in jurisdictions where they are not registered unless exemptions apply, which is a standard practice to avoid legal complications with securities laws.
From a market perspective, the demand for high-yield corporate bonds, such as the ones issued by Nexa Resources, is influenced by the overall economic climate and investor risk appetite. The offering's timing and the interest rate offered can be indicative of market conditions. For instance, in a low-interest-rate environment, a 6.750% yield might attract investors seeking better returns than what is available from government or investment-grade corporate bonds.
The guarantee by Nexa Resources' subsidiaries adds a layer of assurance, potentially making the notes more attractive to investors who are familiar with the company's operations and financials. However, the broader market sentiment towards the mining sector, influenced by commodity prices, regulatory changes and economic cycles, will also play a critical role in the offering's success and the subsequent performance of the notes in the secondary market.
04/03/2024 - 06:30 PM
LUXEMBOURG / ACCESSWIRE / April 3, 2024 / Nexa Resources S.A. ("Nexa Resources", "Nexa" or the "Company") (NYSE Symbol:NEXA) announced that it has priced today an offering of US$600 million 6.750% senior unsecured notes due 2034 (the "Notes"). Closing is expected to occur on April 9, 2024.
The Notes are guaranteed by Nexa Resources Cajamarquilla S.A. and Nexa Recursos Minerais S.A.
Nexa expects to use the proceeds of this offering primarily to fund a cash tender offer for its existing notes due 2027 and notes due 2028 that are validly tendered and accepted for purchase pursuant to the tender offers announced on April 1, 2024, and the remainder, if any, for general corporate purposes, including liability management transactions.
The Notes were offered and will be sold only to qualified institutional buyers in accordance with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in accordance with Regulation S under the Securities Act. When issued, the Notes will not have been registered under the Securities Act or 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 securities laws.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Any offers of the Notes will be made only by means of a private offering memorandum.
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 Latin America. Nexa currently owns and operates five long-life mines, three of which are located in the central Andes region of Peru, and two of which are located in the state of Minas Gerais in Brazil. Nexa is ramping up Aripuanã, its sixth mine, in the state of Mato Grosso in Brazil. Nexa also currently owns and operates three smelters, two of which are located in the state of Minas Gerais in Brazil, and one of which is located in Cajamarquilla, Peru, which is the largest smelter in the Americas.
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.c a) and on EDGAR (www.sec.gov ).
For further information, please contact:ir@nexaresouces.com
SOURCE: Nexa Resources S.A.
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What is the purpose of Nexa Resources' offering of US$600 million 6.750% senior unsecured notes due 2034?
Nexa Resources plans to use the proceeds primarily to fund a cash tender offer for its existing notes due 2027 and notes due 2028, with the remainder allocated for general corporate purposes.
When is the closing date for the offering of the senior unsecured notes?
The closing date for the offering of the senior unsecured notes is expected to occur on April 9, 2024.
Who are the guarantors of the Notes offered by Nexa Resources?
The Notes are guaranteed by Nexa Resources Cajamarquilla S.A. and Nexa Recursos Minerais S.A.
In what manner will the Notes be offered and sold?
The Notes will be offered and sold only to qualified institutional buyers under Rule 144A of the U.S. Securities Act of 1933 and to non-U.S. persons under Regulation S of the Securities Act.
