Metals Acquisition details financing for Cobar purchase

By Mary-Katherine Stinson

Lexington, Ky., March 2 –Metals Acquisition Corp.’s wholly owned subsidiaries Metals Acquisition Corp. (Australia) Pty Ltd. and Metals Acquisition Ltd. entered a syndicated facility agreement on Feb. 28 in connection with the acquisition of Cobar Management Pty. Ltd., according to an 8-K filing with the Securities and Exchange Commission.

The agreement provides for three senior credit facilities made up of the following:

• A $205 million acquisition term loan that can be used to fund the business combination consideration;

• A $25 million revolving credit facility that can be used only for general corporate purposes post-closing of the business combination; and

• An A$40 million letter-of-credit facility that is for performance guarantees in favor of the government of New South Wales in relation to the environmental rehabilitation obligations of the Cornish, Scottish and Australian mine.

Details

The term loan requires quarterly repayments as necessary to meet a debt service cover ratio minimum of 1.5x but can be mandatorily repaid by way of a cashflow sweep available to Metals Acquisition Australia and each of its subsidiaries on the last day of each quarter. The company must apply 30% of all excess cash in repayment of the term loan in inverse order of maturity. The loan is fully amortized over a notational five-year loan life.

The revolver must be repaid before or as of three years after the financial close of the facility agreement.

The term loan and revolver are fully committed. The third facility has not received full commitments but is structured on the basis that a further lender can accede to the syndicated facility in order to fund it.

The rate of interest on the term loan and revolver is SOFR plus 300 basis points, with a 0% floor for SOFR.

The issuance fee for the letter-of-credit facility in lieu of interest is 2% annually on the amount of each outstanding performance guarantee, or 3% on the amount of each outstanding financial guarantee.

Citibank, NA, Sydney Branch and Bank of Montreal are mandated lead arrangers and joint bookrunners with Harris Bank NA, Bank of Nova Scotia, Australian Branch and National Bank of Canada also comprising the group of senior lenders for the syndicated facility agreement. Citisecurities Ltd. is the agent for the senior lenders.

Metals Acquisition Australia will acquire Cobar and its interest in the Cornish, Scottish and Australian mine for total consideration up to $1.1 billion. Cobar is being acquired from Glencore Operations Australia Pty Ltd.

The upfront cash consideration of $775 million that is part of the total consideration may be scaled up or down based on the results of an equity raise.

There is also a $75 million deferred cash consideration, also tied to a future equity raise.

Fort Worth, Tex.-based Metals Acquisition is a blank check company focused on green-economy metals and mining businesses in high quality, stable jurisdictions.

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