Imperial Metals Corp. Downgraded To 'SD' From 'CCC-' On Bond Maturity Extension; Unsecured Debt Rating Cut To 'D'

  • Vancouver-based Imperial Metals Corp. announced that it has extended the maturity of its US$325 million senior unsecured notes due today, to Sept. 15, 2019.
  • We believe the notes maturity extension was necessary to avoid a legal default, and the affected investors will receive less value than originally promised as per S&P Global Ratings criteria.
  • As a result, S&P Global Ratings viewed this transaction as tantamount to a selective default, and on March 15, 2019, lowered its issuer credit rating on the company to 'SD' (selective default) from 'CCC-'.
  • At the same time, we lowered our issue-level rating on the company's senior unsecured notes to 'D' (default) from 'CC'.
TORONTO (S&P Global Ratings) March 15, 2019--S&P Global Ratings today took the 
rating actions listed above. The downgrade follows Imperial Metals Corp.'s 
announcement that the company has extended the maturity of its US$325 million 
senior unsecured notes due today, to Sept. 15, 2019. As per S&P Global Ratings 
criteria, the extension of the maturity on the notes (the US$226.5 million 
portion of the notes) constitutes investors receiving less value than 
originally promised. In addition, the extension, in our view, was necessary to 
avoid a legal default on the notes today, rather than purely for opportunistic 
reasons. In our view, the maturity extension is tantamount to a selective 
default, resulting in the 'SD' issuer credit rating on Imperial Metals, and 
'D' issue-level rating on the unsecured notes. 

As part of today's announcement, Imperial Metals also extended the maturities 
of all of its credit facilities, which were also due today, and refinanced the 
US$98.5 million (subscribed by Edco Capital Corp.) of notes held by 
non-affiliates of the company on terms consistent with those on the remaining 
notes outstanding. We believe the maturity extension was necessary to 
facilitate the full repayment of Imperial Metals' debt. We believe that the 
company's recently announced sale of a 70% interest in the Red Chris mine for 
US$807 million (expected to close in third-quarter 2019) would allow Imperial 
Metals to repay all of its extended/refinanced debt in full when it comes due 
in September 2019.

We expect to reassess our ratings on the company with more information 
regarding the pending closing of its transaction with Newcrest Mining Ltd. and 
related debt repayment.