Global diversified miner Glencore has placed a tap issue of nondilutive zero-coupon cash settled guaranteed convertible bonds for $125-million to be consolidated with its $500-million nondilutive bonds due 2025.
The new bonds are to be issued on the same terms as the original bonds and, as of the date falling 41 days after the issue date, which is expected to be September 26, the new bonds will be fully fungible and consolidated with the original bonds.
Concurrently with the placing of the new bonds, the issuer has bought from one or more hedge counterparties cash-settled call options on shares of Glencore to hedge the increase in its economic exposure to a potential exercise of the conversion rights embedded in the bonds.
As conversion rights in respect of the bonds will be cash-settled only, the issue and conversion of the bonds will not result in the issuance of any new shares, or the delivery of existing shares, of Glencore or any other group company.
The net proceeds of the offering of the new bonds will be used for general corporate purposes and for the purchase of the call options.
The initial issue price of the new bonds will be 89% of their nominal value. The final issue price of the new bonds will be announced on September 21.
OTHER LOGISTICS
The new bonds have been offered through an accelerated book building process through a private placement to institutional investors only, outside the US, Australia, Canada, Japan, Jersey, South Africa or any other jurisdiction in which offers or sales of the new bonds would be prohibited by applicable law.
It is anticipated that the hedge counterparties to the call options, which may include the joint book runners, will enter into transactions to hedge their respective positions under the call options through the purchase or sale of shares or any other transactions, on the market and off-market, at any time, and in particular during the reference period and at the conversion or redemption of the bonds.
An additional application will be made for the new bonds to be admitted to trading on the Open Market segment of the Frankfurt Stock Exchange and such admission to trading is expected no later than 41 days after the issue date of the new bonds.
In the context of the offering, Glencore and the issuer have agreed to a lock-up undertaking in relation to its shares and equity-linked securities for a period ending 90 calendar days after the date hereof, subject to certain exceptions and waiver by the Sole Global Coordinator.