Filed Pursuant to Rule 424(b)(3)
File No. 333-52285
SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 13, 1998)
The Doe Run Resources Corporation
Offer to Exchange its 11 1/4% Senior Notes due 2005, Series B and Floating
Interest Rate Senior Notes due 2003, Series B, which have been registered
under the Securities Act of 1933, as amended, for any all of its
outstanding 11 1/4% Senior Notes due 2005, Series A and Floating
Interest Rate Senior Notes due 2003, Series A, respectively
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The Exchange Offer will expire at 5:00 p.m., New York City time, on September
10, 1998, unless extended.
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Capitalized terms used herein and not otherwise defined have the meanings
ascribed to them in the Prospectus dated August 13, 1998.
Prospective investors should be aware of the following recent developments:
ACQUISITION OF THE ASARCO MLD
On September 1, 1998 (the "New Notes Issue Date"), Doe Run consummated the
Potential ASARCO MLD Acquisition and acquired certain assets relating to the
ASARCO MLD, including a smelter and refinery and two mines. The purchase price
for the assets was approximately $55.8 million at closing, plus contingent
deferred payments, if any. See "Business--Potential Acquisition of ASARCO's
Missouri Lead Division."
Doe Run financed the purchase price of the ASARCO MLD Assets (as defined)
primarily through an offering of $50.0 million aggregate principal amount of 11
1/4% Senior Secured Notes due 2005 (the "New Notes"). The indenture, dated as of
September 1, 1998 (the "New Indenture"), by and among Doe Run, the Guarantors,
Doe Run Air S.A.C., a Peruvian corporation ("Doe Run Air"), and Doe Run
Development S.A.C., a Peruvian corporation ("Doe Run Development" and together
with the Guarantors and Doe Run Air, the "New Guarantors"), governing the New
Notes provides for substantially the same payment terms, maturity date, optional
redemption provisions, change of control provisions and covenants as the Fixed
Rate Notes issued under the Indenture described in the Prospectus. The New Notes
are fully and unconditionally guaranteed (the "New Guarantees") by the New
Guarantors.
Within 90 days of the New Notes Issue Date, the New Notes are expected to
be secured by a first priority lien on substantially all of the property, plant
and equipment of the ASARCO MLD (other than inventory, accounts receivable or
other current assets and intangibles of the ASARCO MLD) (the "ASARCO MLD
Assets"). If for any reason the New Notes are not secured by a first priority
lien on the ASARCO MLD Assets within 90 days after the New Notes Issue Date,
then commencing on the 91st day after the New Notes Issue Date, the interest
rate on the aggregate principal amount of the New Notes shall increase by 1.0%
per annum for each 90-day period that the New Notes are not so secured;
provided, that the interest rate on the New Notes shall in no event exceed 18
1/4% per annum and upon the date that the New Notes are secured by a first
priority lien on the ASARCO MLD Assets, such additional interest shall cease to
accrue. The New Notes are expected to be senior secured obligations of Doe Run
and will effectively rank senior in right of payment to all existing and future
senior unsecured indebtedness of Doe Run to the extent of the ASARCO MLD Assets,
and will rank senior in right of payment to all existing and future senior
subordinated and subordinated indebtedness of the Company. The New Guarantees
are general senior obligations of the Guarantors and will rank equally in right
of payment to all existing and future senior unsecured indebtedness of the
Guarantors, including the Guarantees of the Notes, and senior in right of
payment to all existing and future subordinated indebtedness of the Guarantors,
subject, in the case of the
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The date of this Supplement is September 3, 1998.
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New Guarantees of Doe Run Mining, Doe Run Peru, Doe Run Air and Doe Run
Development, to statutorily preferred exceptions and statutorily mandated
priorities based on the date of issuance with respect to payment of obligations
under applicable Peruvian law. Holders of the secured indebtedness under the
Revolving Credit Facilities, and any other secured indebtedness of Doe Run and
the New Guarantors, will have claims that effectively rank prior to those of the
holders of New Notes with respect to the assets securing such indebtedness. In
addition, the New Guarantee of Doe Run Peru is contractually subordinated to the
indebtedness of Doe Run Peru under the New Doe Run Peru Revolving Credit
Facility.
The New Notes were issued with original issue discount of approximately
$5.3 million for Federal income tax purposes. The Unaudited Pro Forma
Consolidated Balance Sheet as of April 30, 1998 and Unaudited Pro Forma
Consolidated Statements of Operations for the six months ended April 30, 1998
and the year ended October 31, 1997, were based on available information and
certain assumptions that Doe Run believed were reasonable under the
circumstances. The actual effect of the Potential ASARCO MLD Acquisition differs
from those assumptions and estimates.
The Unaudited Pro Forma Consolidated Balance Sheet as of April 30, 1998
reflected additional borrowing of $60.0 million, with an interest rate of
11.25%, to finance the estimated purchase price of $54.5 million, pay financing
fees of $2.5 million and have excess cash of $3.0 million. Doe Run actually sold
$50.0 million of the New Notes and received cash of $44.7 million, net of
original issue discount. Doe Run also borrowed approximately $12.5 million under
the New Doe Run Revolving Credit Facility to finance the balance of the purchase
price of the ASARCO MLD Assets. The total proceeds of $57.2 million were used to
finance the actual purchase price of $55.9 million and pay financing fees of
$1.3 million. The difference between the purchase price assumed in the Unaudited
Pro Forma Consolidated Balance Sheet and the purchase price paid at closing
resulted from higher inventory quantities than were previously estimated. The
purchase price was based on a pre-closing inventory valuation and is subject to
adjustment once the valuations are finalized. Estimated additional financing
costs of approximately $.4 million are yet to be paid.
The resulting pro forma interest expense of $26.7 million and $53.5 million
for the six months ended April 30, 1998 and the year ended October 31, 1997,
respectively, is $.4 million and $.6 million higher, respectively, than
previously set forth in the Unaudited Pro Forma Consolidated Statements of
Operations.
In addition, the New Doe Run Revolving Credit Facility was amended to,
among other things, permit the issuance of the New Notes and the liens on the
ASARCO MLD Assets securing the New Notes.
ACQUISITION OF COBRIZA
On August 31, 1998, Doe Run Peru completed the acquisition of the capital
stock of Empresa Minera Cobriza S.A., a Peruvian corporation, which owned a mine
and related assets. The purchase price of these assets was $7.5 million, $3.0
million of which was paid at closing and the balance of which is payable in
equal annual installments over three years. See "Prospectus Summary--Recent
Transactions and Events--Potential Acquisitions."
ADDITIONAL GUARANTORS
Pursuant to a First Supplemental Indenture, dated as of September 1, 1998,
among Doe Run, the New Guarantors and the Trustee, Doe Run Air and Doe Run
Development were added as Guarantors of the Notes. See "Description of the
Notes--Certain Covenants--Future Guarantees."
