First Quantum may have breached covenants in US$4.85bn Inmet takeover - press

Canada's First Quantum Minerals (TSX: FM, LSE: FQM) may have breached the covenants of US$2bn bonds in its Cdn$5.1bn (US$4.85bn) acquisitionof compatriot Inmet Mining, Bloomberg reports. The Inmet bonds carried restricted-payments covenants, limiting the amount of cash an issuer may use for distribution to shareholders, the report said. First Quantum used a bridge loan in the acquisition of Inmet, using Inmet's assets to back up the financing, and then paid off the short-term debt with cash, it added. This creates a "strong argument" that First Quantum breached the payments provision, according to a report by US-based researcher Covenant Review cited by Bloomberg. "It appears that the money that went to Inmet shareholders was indirectly funded by Inmet assets," a situation the provisions were designed to protect against, Anthony P. Canale, head of high-yield research at Covenant Review, was reported as saying. No one from First Quantum was immediately available to comment. The company has pledged to develop Inmet's principal asset, the Cobre Panamá copper-gold project in Panama, faster and at a lower cost than the US$6.2bn previously forecast by Inmet. First Quantum has already cut the number of managersat the project, resulting in improved productivity, president Clive Newall said in a conference call following the company's Q1 financial results. First Quantum also owns copper, gold and nickel mines in Africa and Australia and the Haquira copper deposit in Peru.