Magma buys back outstanding warrants

In an effort to prevent stock dilution, Magma Copper (NYSE) is offering to buy back its outstanding warrants.

The company will pay US$8.25 for each of the 4.1 million publicly traded warrants, which had a closing price on May 12 of US$7. Each warrant entitles the holder to buy one share of common stock for US$8.50 on or before the expiry date of Nov. 30.

Unless it is extended, the buyback offer will expire on June 14.

The total dollar value of the warrants under the deal is US$33.5 million.

Magma has 46 million common shares outstanding. The 4.1 million warrants, if converted into common stock, would represent about a 10% interest in the company.

Magma is also offering US$200 million in senior subordinated notes, due May 15, 2005, with no call provision. The notes will be offered by Goldman Sachs and Merrill Lynch.

Proceeds from the sale of the notes will be used to repay short-term debt and repurchase the warrants.