VANCOUVER, British Columbia - Fortuna Silver Mines (NYSE:FSM) Inc. (TSX: FVI) (NYSE: FSM), a Canadian precious metals mining company, announced plans to offer convertible senior notes due in 2029 in an aggregate principal amount of $150 million. The offering may expand by an additional $22.5 million if the initial purchasers exercise their option within 15 days.
The proceeds from the offering are earmarked for the repayment of existing bank indebtedness, fulfilling working capital requirements, and general corporate purposes. Additionally, the funds will be used to repay the company's existing 4.65% senior subordinated unsecured convertible debentures, should they not be converted into shares before the redemption date.
Fortuna intends to issue a notice of redemption for the existing debentures before the offering closes. Debenture holders will have the choice to convert their holdings into shares or receive a cash payment. The interest rate and initial conversion rate for the new notes will be set based on market conditions at the time of the offering's pricing. The notes will accrize interest semi-annually at a fixed rate and will be convertible into shares of Fortuna.
The company reserves the right to redeem the notes under certain conditions, and note holders will have the right to require Fortuna to repurchase their notes upon the occurrence of specific events.
The offering is exclusive to qualified institutional buyers in the United States and to non-U.S. persons outside the United States in compliance with the U.S. Securities Act of 1933, as amended, and Regulation S.
The notes and shares resulting from conversion will not be registered under the Securities Act and may not be offered or sold in the U.S. without registration or an applicable exemption. Sales in Canada will occur only through exemptions from prospectus requirements of Canadian provincial securities laws.
Fortuna Silver (TSX:FVI) Mines operates five mines across Argentina, Burkina Faso, Côte d'Ivoire, Mexico, and Peru, with a commitment to efficient production, environmental protection, and social responsibility.
This news article is based on a press release statement and contains forward-looking statements. These statements are subject to various risks and uncertainties, and actual results could differ materially from those projected. Investors should not place undue reliance on forward-looking statements.
InvestingPro Insights
As Fortuna Silver Mines Inc . embarks on a strategic move to offer convertible senior notes, investors are closely monitoring the company's financial health and potential for growth.
According to InvestingPro data, Fortuna Silver Mines currently holds a market capitalization of $59.23 million, with a notable P/E ratio (adjusted for the last twelve months as of Q4 2023) at 7.52, suggesting a reasonable valuation relative to earnings. The company's revenue for the same period stood at $26.74 million, with a gross profit margin impressively at 65.97%, indicating strong profitability in its operations.
One InvestingPro Tip highlights the company's PEG ratio at 0.43, which could signal that the stock is potentially undervalued considering its earnings growth prospects. This is particularly relevant for investors assessing the potential return on the new convertible notes offering. Moreover, with a dividend yield as of mid-May 2023 at 6.44%, the company demonstrates a commitment to returning value to shareholders, despite a decrease in dividend growth over the last twelve months.
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