First Majestic refinances with new US$300m CB
First Majestic Silver raised US$300m on Wednesday from the sale of a convertible bond issue it used to take out CBs that mature in early 2027.
The Canadian silver miner’s NYSE-listed shares fell just 1.4% to US$15.69 while the two-legged negotiations were taking place.
BMO Capital Markets and TD Securities were joint bookrunners on the 5.1-year CB issue priced at a 0.125% coupon and 42.5% conversion premium, toward the aggressive ends of 0%–0.25% and 37.5%–42.5% terms publicly marketed for one day.
In addition to selling the new CB, the banks negotiated the repurchase of a portion of First Majestic’s US$230m principal 0.375% CB issue that is convertible at US$16.39 and matures in January 2027.
“This is a liability management exercise,” said one banker. “The company is refinancing its existing convert with a lower-cost security that has a higher conversion price.”
The new CBs will be convertible at US$22.36.
In the third quarter, First Majestic churned out US$128.6m of adjusted Ebitda on revenues of US$285.1m, nearly doubling on the top-line over year-ago period as production surged to a record 7.7m silver ounces equivalent. Those results included the benefit of a 70% interest in the Los Gatos mine in Mexico.
First Majestic is spending to grow production at its flagship San Dimas mine and extend the life of the Santa Elena mine.
The miner finished the third quarter with US$435.4m of unrestricted funds and has been buying stock. The CB refinancing is a fine-tuning of the capital structure.