FQ has to fix its problems before sitting down with PTQ:
Andrea Gimenez (andrea.gimenez @ epasa.com) / PANAMA AMERICA
Review Factors
Probability of default rating - Ba3-PD.
First Quantum has a debt of $ 1,500 million 8.75% Notes due 2020 - B1/LGD5.
The company currently has $ 500 million in letters at 7.5% due 2021 - B1/LGD5.
Some 350 million 7.25% Notes due 2019 are part of the company's debt - B2/LGD6 FQM (Akubra) Ltd (formerly Inmet Mining Corporation)
The corporate family rating is - Ba3.
The agency ranking Moody's issued a downward revision of all grades of First Quantum Minerals (FQM), after the company release a press release on November 27, 2013, with respect to a dispute with certain holders of bonds.
According to the credit evaluator, if the dispute remains unresolved for a period of time, this could negatively affect the ability of the company to raise more funds and continue their plan of substantial capital expenditure, particularly with respect to their key projects, as Sentinel and Cobre Panama.
To this is also added the maturity of a loan of $ 2.5 million currently holds FQM Akubra, which is due for completion payment for June next year.
The Akubra FQM FQM is a subsidiary that is merged with Inmet Mining Corporation ("Inmet") earlier this year, following the completion of a tender offer, made by Inmet FQM.
Claim
The owners of these bonds are claiming that the breach of certain terms has occurred under the indentures two bonds FQM (Akubra) Ltd ('FQM Akubra') for a total of nearly two billion dollars.
"The downward revision reflects our concerns regarding the potential negative consequences for FQM a legal dispute involving about 2 million in notes," says Juan Marco Migliavacca, Moody's VP and senior analyst and principal analyst for FQM .
"The conflict creates uncertainty and could end up with an acceleration of the debt, which could have a negative impact on the liquidity of the company, if not addressed by management proactively, but the acceleration is not considered a likely outcome in this stage, "he added.
The press release from Moody's included in their statements that the initiation of the review is conducted by the possibility that any resolution of the legal dispute could adversely affect the FQM.
However, it was stressed that the review focused on the potential risks that the dispute is creating and the extent to which the company is developing any contingency plan to achieve mitigate these risks.
AI
