Article/Intelligence
LMEs Arrive in Canada, as Majority Noteholders of Coal Producer Uptier Holdings Into Priming Bonds
Conuma Resources executed a non-pro-rata notes uptiering that boosted the coal producer’s liquidity while giving some bondholders a superior claim on the company’s collateral compared with that of their peers, according to sources.
Conuma’s liability management exercise represents potentially the first non-pro-rata LME for a Canada-based company, though it has dollar-denominated debt. The LME also harks back to the LME 1.0 version where minority lenders’ existing holdings are completely subordinated instead of being offered to participate on less attractive terms. However, Conuma’s deal allows for every noteholder to participate in the new money, in addition to other lender-friendly terms, the sources said.
Conuma Resources, advised by Moelis as financial advisor, transacted with holders of a majority of the $215 million 13.125% secured notes due 2028 for $190 million of new priming 13.125% secured notes due 2028, the sources said. The majority bondholders got to swap $140 million of their holdings for the new bonds, and Conuma secured $50 million of new money through the issuance of the remainder of the notes, the sources said. The new-money opportunity was offered to all noteholders, they added.
Even though minority noteholders are essentially subordinated, the company’s owners wrote a $25 million preferred equity check and committed to fund an additional $25 million if liquidity falls below 40 million Canadian dollars, according to an S&P Global Ratings note. The existing and new notes’ collateral will also be enhanced by the addition of a subsidiary guarantee from Peach River Coal Inc., a coal mine operation in British Columbia acquired by Conuma in February, the credit ratings agency said.
The transaction provides Conuma with liquidity to manage its short-term working capital needs, but it is not transformational for the capital structure and it does not address the high leverage of the company, Moody’s Investors Service said in a note on April 16. The company depends on sustainably stronger metallurgical coal prices and the successful ramp up of production at its Quintette mine to meet its financial obligations, S&P said.
Conuma Resources did not respond to a request for comment. Moelis declined to comment.
This publication has been prepared by Octus, Inc. or one of its affiliates (collectively, "Octus") and is being provided to the recipient in connection with a subscription to one or more Octus products. Recipient’s use of the Octus platform is subject to Octus Terms of Use or the user agreement pursuant to which the recipient has access to the platform (the “Applicable Terms”). The recipient of this publication may not redistribute or republish any portion of the information contained herein other than with Octus express written consent or in accordance with the Applicable Terms. The information in this publication is for general informational purposes only and should not be construed as legal, investment, accounting or other professional advice on any subject matter or as a substitute for such advice. The recipient of this publication must comply with all applicable laws, including laws regarding the purchase and sale of securities. Octus obtains information from a wide variety of sources, which it believes to be reliable, but Octus does not make any representation, warranty, or certification as to the materiality or public availability of the information in this publication or that such information is accurate, complete, comprehensive or fit for a particular purpose. Recipients must make their own decisions about investment strategies or securities mentioned in this publication. Octus and its officers, directors, partners and employees expressly disclaim all liability relating to or arising from actions taken or not taken based on any or all of the information contained in this publication. © 2025 Octus. All rights reserved. Octus(TM) and the Octus logo are trademarks of Octus Intelligence, Inc.