Thompson Creek Metals Co. Inc. (NYSE: TC) has priced an offering of 8.8 million of its 6.5% tangible equity units ("tMEDS", a service mark of J.P. Morgan Securities), each with a stated amount of $25 (Form 424B2 on 5/8/2012, SEC file no. 333-170232). Each tMEDS is a unit composed of a prepaid stock purchase contract and a senior amortizing note due May 15, 2015. Of the $220 million aggregate stated amount of tMEDS, approximately $177.5 million will be accounted for as equity and $35.9 million will be accounted for as debt.
Each purchase contract will automatically settle on May 15, 2015 for between 4.5855 and 5.3879 common shares of Thompson Creek, subject to adjustment. A unitholder may elect to settle a purchase contract early prior to the third scheduled trading day immediately preceding the mandatory settlement date and receive a number of common shares per contract equal to: (i) 95% of the minimum settlement rate for settlement prior to November 10, 2012, and (ii) the minimum settlement rate for settlement commencing on November 11, 2012.
The amortizing notes will pay equal quarterly installments of $0.406250 per amortizing note, which will constitute a payment of interest and a partial repayment of principal, and which in the aggregate will be equivalent to a 6.5% cash payment per year with respect to each $25 stated amount of tMEDS. The amortizing notes will be senior unsecured obligations of the issuer. Each tMEDS may be separated into its constituent purchase contract and amortizing note after the initial issuance date of the tMEDS, and the separate components may be combined to recreate a tMEDS.
Thompson intends to use the net proceeds from the tMEDS offering, together with cash and the net proceeds from a concurrent senior notes offering, to complete construction of its Mt. Milligan copper-gold mine. The validity of the tMEDS was passed upon for the company by Gibson, Dunn & Crutcher and for the underwriters by Simpson Thacher & Bartlett.
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