Cobre del Mayo, S.A. de C.V. Announces Exchange Offer and Consent Solicitation

MEXICO CITY, April 12, 2021 /PRNewswire/ -- Cobre del Mayo, S.A. de C.V. ("CDM") announced today that it has commenced an offer (the "Exchange Offer") to Eligible Holders described below to exchange any and all of its outstanding $125,228,986 aggregate principal amount of Senior Secured PIK Toggle Notes due 2021 (ISIN: XS1354863612 and XS1354862564; Common Codes: 135486361 and 135486256) (the "Existing Notes") for, at the election of such Eligible Holders, a combination of Senior Secured Notes due 2026 (the "2026 Secured Notes") and Senior Secured PIK Toggle Notes due 2030 (the "2030 Secured Notes" and, together with the 2026 Secured Notes, the "New Notes").  In conjunction with the Exchange Offer, CDM is soliciting consents (the "Consent Solicitation") to amend the indenture governing the Existing Notes to eliminate most of the restrictive covenants set forth in such indenture (the "Proposed Amendments").  Eligible Holders must consent to the Proposed Amendments in order to participate in the Exchange Offer, and must participate in the Exchange Offer in order to participate in the Consent Solicitation.  Eligible Holders of Existing Notes who validly tender their Existing Notes will be deemed to have delivered their consent to the Proposed Amendments.

While the recent increase in copper prices and CDM's recent decision to restart mining operations gives CDM confidence that it will be able to service its debt after the Exchange Offer, given that mining operations were suspended until January 2021, CDM does not envision having sufficient liquidity to service its Existing Notes, which mature on November 15, 2021.  The purpose of the Exchange Offer is to better align CDM's debt service requirements with its anticipated cash generation capabilities.  Going forward, CDM intends to use its cash flow to service senior debt, optimize its operations, resolve contingent risks and increase levels of working capital.  In this context, CDM does not expect to be in a position to make any payments in respect of the Existing Notes outstanding after the Exchange Offer.

Eligible Holders of Existing Notes that validly tender and do not validly withdraw their Existing Notes in the Exchange Offer on or prior to 5:00 p.m., New York City time, on April 23, 2021, unless extended or earlier terminated by CDM at its sole discretion (such time and date, as the same may be extended, the "Early Tender Date"), and which Existing Notes are accepted by CDM, will be eligible to receive $1,043.75 in principal amount of New Notes per $1,000 principal amount of Existing Notes tendered (the "Early Tender Consideration").  Eligible Holders of Existing Notes that validly tender and do not validly withdraw their Existing Notes in the Exchange Offer after the Early Tender Date, but on or prior to 11:59 p.m., New York City time, on May 7, 2021, unless extended or earlier terminated by CDM at its sole discretion (such time and date, as the same may be extended, the "Expiration Date"), will be eligible to receive $980.00 in principal amount of New Notes per $1,000 principal amount of Existing Notes tendered (the "Late Tender Consideration" and, together with the Early Tender Consideration, the "Exchange Consideration").  Existing Notes validly tendered and consents to the Proposed Amendments (described below) validly delivered may be validly withdrawn or revoked, as applicable, at any time prior to 11:59 p.m., New York City time, on May 7, 2021, unless extended or earlier terminated by CDM at its sole discretion (such time and date, as the same may be extended, the "Withdrawal Deadline"), but not thereafter.  Eligible Holders may elect to receive Series A Secured Notes, Series B Secured Notes, or a combination thereof as the applicable Exchange Consideration.

The New Notes will be fully, unconditionally and irrevocably guaranteed by certain direct and indirect wholly owned subsidiaries of our parent company, Frontera Copper Corporation, S.A.P.I. de C.V. ("Frontera"), but will not be guaranteed by Frontera.

BCP Securities, LLC is acting as Dealer Manager and Solicitation Agent for the Exchange Offer and the Consent Solicitation.  Ipreo LLC is acting as Exchange Agent and Information Agent for the Exchange Offer and the Consent Solicitation.

Available Documents and Other Details

Documents relating to the Exchange Offer and the Consent Solicitation will only be made available to holders ("Eligible Holders") who confirm and agree that they are a holder of Existing Notes (A) that would be acquiring the New Notes outside the United States or otherwise pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act") or (B) that is an institutional "accredited investor" (as that term is defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act), which is a "qualified institutional buyer" (as that term is defined in Rule 144A under the Securities Act) (collectively, the "Eligible Holders").

Eligible Holders who wish to review the Confidential Exchange Offer Memorandum and Consent Solicitation Statement, dated April 12, 2021 (the "Statement"), should contact Ipreo LLC, the Exchange Agent and the Information Agent for the Exchange Offer and the Consent Solicitation, at 450 West 33rd Street, 5th Floor, New York, New York 10001, Attention: Aaron Dougherty, e-mail: [email protected], banks and brokers call at +1 (212) 849-3880, toll-free at +1 (888) 593-9546, or by facsimile (for Eligible Institutions only) at: +1 (888) 254-6152, with confirmation at +1 (212) 849-3880.  Eligible Holders may also contact James Harper of BCP Securities, LLC at +1 (203) 629-2186 or at [email protected].

The New Notes have not been and will not be registered under the Securities Act or any state securities laws.  Accordingly, the Exchange Offer is only being made to registered holders of Existing Notes (i) outside of the United States pursuant to Regulation S under the Securities Act or otherwise to, or for the account or benefit of, non-U.S. persons (as defined in Regulation S) in accordance with Regulation S, or (ii) that are institutional "accredited investors," within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act, which are "qualified institutional buyers," as that term is defined in Rule 144A under the Securities Act (together, the "Eligible Holders").

CDM has not and will not register the New Notes with the National Securities Registry (Registro Nacional de Valores) maintained by the National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores or "CNBV"), and, therefore, the New Notes may not be offered or sold publicly in Mexico, except that the New Notes may be sold to Mexican institutional and qualified investors pursuant to the private placement exemption set forth in Article 8 of the Mexican Securities Market Law, as amended (Ley del Mercado de Valores, or "LMV").  As required by the LMV, CDM will notify the CNBV of the issuance of the New Notes, including the principal characteristics of the New Notes and of the offering of the New Notes outside of Mexico.  Such notice will be submitted to the CNBV to comply with the LMV and for information purposes only, and the delivery to, and the receipt by, the CNBV of such notice does not constitute or imply any certification as to the investment quality of the New Notes, CDM's solvency, liquidity or credit quality or the accuracy or completeness of the information provided in the Statement.  The information contained in the Statement is exclusively CDM's responsibility and has not been reviewed or authorized by the CNBV.  In making an investment decision, all investors, including any Mexican investors who may acquire New Notes from time to time, must rely on their own review and examination of CDM, the guarantors and the terms of the New Notes.

The complete terms and conditions of the Exchange Offer and the Consent Solicitation are set forth in the informational documents relating to the Exchange Offer and the Consent Solicitation.  This press release is for informational purposes only and is not an offer of securities for sale in the United States or elsewhere.  The New Notes may not be offered or sold in the United States absent registration or an exemption from registration.  The Exchange Offer is only being made pursuant to the Statement.  The Exchange Offer is not being made to any holder of Existing Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

Cautionary Note Regarding Forward-Looking Statements

This press release and the Statement include forward-looking statements.  This forward-looking information includes, among others, statements regarding the terms and timing for completion of the Exchange Offer and the Consent Solicitation.  In addition, these forward-looking statements include, without limitation, statements regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we participate or are seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate.  In some cases, forward-looking statements can be identified by terminology such as "aim," "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "guidance," "intend," "may," "plan," "potential," "predict," "project," "should," or "will" or the negative of such terms or other comparable terminology.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  We caution potential investors that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, financial condition and liquidity may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this press release or the Statement.  In addition, even if our results of operations, financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this press release and the Statement, those results or developments may not be indicative of results or developments in subsequent periods.  Holders of Existing Notes should read the entire Statement, including the sections "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Our Business," for a discussion of some of the risk factors that could affect our future performance and the markets in which we operate. In light of these risks, uncertainties and assumptions, the forward-looking events described in this press release and the Statement may not occur. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information or future events or developments.