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First Quantum ‘Strongly Disputes’ Default on Inmet Bonds

Nov. 27 (Bloomberg) -- First Quantum Minerals Ltd., a Vancouver-based copper producer, said it “strongly disputed” a claim by noteholders that a default occurred on bonds issued by Inmet Mining Corp., a company it bought this year.

A group of noteholders including CI Investments Inc. and Barometer Capital Management Inc. allege that terms of the bonds were violated in the C$5 billion ($4.7 billion) acquisition of Inmet, First Quantum said in a statement today.

“First Quantum strongly disputes the claims of the noteholder group in relation to the Inmet indentures,” Philip Pascall, First Quantum’s chief executive officer, said in the statement. “These claims are without legal foundation.”

In its takeover of Inmet, First Quantum employed a bridge loan to buy the company, using the target’s assets to support the financing, then paid off the short-term debt with cash, creating a “strong argument” that First Quantum breached the payments provision, according to a report by the researcher Covenant Review published June 27.

First Quantum fell 3.4 percent to C$17.28 at in Toronto. The stock has dropped 21 percent this year.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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