RE:PricingEvent Hudbay announces pricing on $600 million notes offering.
Impact: SLIGHTLY POSITIVE Hudbay announced that it has priced an offering of $600 million aggregate principal amount of 4.50% senior notes due 2026. The notes will be issued at 100% of their principal amount, providing the company with gross proceeds of $600 million. The offering is expected to close on March 8, 2021, subject to customary closing conditions.
Hudbay is planning to use the net proceeds from the offering to fund the redemption of all of its outstanding $600 million 7.625% senior notes due 2025. The lower coupon rate on the new notes should result in annual interest savings of ~$19 million ($0.03/share).
We understand that management was not looking to extend its maturities materially and nor was there any need to add additional liquidity to the balance sheet. The new notes were issued to take advantage of lower interest rates. Based on our base-case $3.50/lb 2021 copper price, we anticipate that Hudbay will generate ~$150 million in FCF this year. At a $4.00 average copper price, we estimate FCF at ~$250 million