As filed with the Securities and Exchange Commission on March 29, 1994
Registration No. ________
============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
______________
MAGMA COPPER COMPANY
(Exact name of registrant as specified in its charter)
Delaware 86-0219794
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) I.D. number)
7400 North Oracle Road
Suite 200
Tucson, Arizona 85704
(602) 575-5600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Douglas J. Purdom
Chief Financial Officer
Magma Copper Company
7400 North Oracle Road
Suite 200
Tucson, Arizona 85704
(602) 575-5600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________________
The Commission is requested to send copies of all communications to:
Steven D. Pidgeon
Streich Lang, P.A.
100 West Washington Street, Suite 2100
Phoenix, Arizona 85003-1897
(602) 229-5502
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement.
______________________
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
_____________________
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, please check the following
box. [X]
_____________________
CALCULATION OF REGISTRATION FEE
============================================================================
| | Proposed | |
| | Maximum | |
| | Offering | Proposed |
Title of | | Price Per | Maximum | Amount of
Class of Securities | Amount to | Share (2) | Aggregate | Registration
to be Registered | be | | Offering Price | Fee
(1) | Registered| | |
- ----------------------------------------------------------------------------
Common Stock, $0.01 | 3,320,600 | $16.071 | $53,365,362.60 | $18,401.82
par value | Shares | | |
============================================================================
(1) This registration statement covers (i) the issuance by the Registrant
of 1,000,000 shares of Common Stock (which may be subject to adjustment in
certain events) upon exercise of an equal number of Common Stock Purchase
Warrants (the "Class B Warrants"), (ii) the resale by the current holders
(the "Selling Securityholders") of shares of Common Stock acquired by the
Selling Securityholders upon exercise of the Class B Warrants, and (iii) the
resale by one of the Selling Securityholders of 2,320,600 shares of Common
Stock previously acquired by such Selling Securityholder.
(2) Estimated solely for purposes of calculating the registration fee.
___________________________
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 29, 1994
PROSPECTUS
Common Stock
MAGMA COPPER COMPANY
This Prospectus relates to the issuance by Magma Copper Company
("Magma" or the "Company") of 1,000,000 shares of Common Stock, $0.01 par
value per share (the "Common Stock"), upon the exercise of 1,000,000 Common
Stock Purchase Warrants of the Company (the "Class B Warrants") that are
currently outstanding. Each Class B Warrant is exercisable at any time
prior to November 30, 1995 to purchase one share of Common Stock for $8.50
per share, subject to adjustment in certain events. As of the date hereof,
the Class B Warrants are held of record by three securityholders (the
"Selling Securityholders"). This Prospectus also relates to the resale by
the Selling Securityholders of any shares of Common Stock they may acquire
upon exercise of the Class B Warrants and to the resale by one of the
Selling Securityholders of 2,320,600 additional shares of Common Stock
previously acquired by such Selling Securityholder.
The Company's Common Stock is listed on the New York Stock Exchange
("NYSE") (Symbol: "MCU"). On March 25, 1994, the closing price of the
Common Stock, as reported on the NYSE, was $15-7/8 per share. Any Common
Stock offered will be listed, subject to notice of issuance, on such
exchange.
The Selling Securityholders may sell the Common Stock from time to time
in underwritten public offerings, in transactions pursuant to Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), in privately
negotiated transactions, through the facilities of the NYSE, or otherwise,
at market prices prevailing at the time of sale, at prices relating to such
prevailing market prices, or at negotiated prices. The Company will not
receive any of the proceeds from the sale of Common Stock by the Selling
Securityholders. All expenses in connection with the registration of the
securities, other than any underwriting or brokerage discounts, commissions
and selling expenses with respect to Common Stock being sold by the Selling
Securityholders, will be borne by the Company. See "Plan of Distribution"
and "Selling Securityholders."
For a discussion of certain factors that should be
considered by prospective investors, see "Investment
Considerations."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1994
AVAILABLE INFORMATION
Magma is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by Magma with the Commission can be
inspected and copied at the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following regional offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10007 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such information can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock is listed on the New York
Stock Exchange and similar information can be inspected and copied at the
NYSE, 20 Broad Street, 17th Floor, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). As
permitted by the rules and regulations of the Commission, this Prospectus
omits certain of the information contained in the Registration Statement and
reference is hereby made to the Registration Statement and related exhibits
for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of
any documents filed as an exhibit to the Registration Statement or otherwise
filed with the Commission are not necessarily complete, and in each instance
reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by Magma with the Commission
and are hereby incorporated by reference into this Prospectus: (i) Annual
Report on Form 10-K for the fiscal year ended December 31, 1993, as well
as those portions of the Proxy Statement for 1993 Annual Meeting of
Stockholders that are expressly incorporated by reference therein, and (ii)
the description of the Common Stock contained in the Company's Form 8-A
filed on October 22, 1992. All other documents and reports filed pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of this
Prospectus and prior to the termination of the offering of the securities
shall be deemed to be incorporated by reference herein and shall be deemed
to be a part hereof from the date of the filing of such reports and
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, on written or oral request of such person,
a copy of any or all documents which are incorporated herein by reference
(not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in the document which this Prospectus
incorporates). Requests should be directed to Mr. Richard Johnson,
Assistant Treasurer, at the Company's principal executive offices located at
7400 North Oracle Road, Suite 200, Tucson, Arizona 85704, telephone number
(602) 575-5600.
THE COMPANY
Magma is a fully integrated producer of electrolytic copper and ranks
among the largest U.S. copper producers. Magma's principal products are
high quality copper cathode and high quality copper rod, the latter of which
is the basic feedstock of the copper wire and cable industry.
The Company owns and operates underground copper mines at its San
Manuel and Superior Mining Divisions, open-pit copper mines at its San
Manuel and Pinto Valley Mining Divisions, and in situ leaching operations at
its San Manuel and Pinto Valley Mining Divisions, all in southeastern
Arizona.
Magma operates the largest and most modern copper smelting and refining
complex in the United States through its wholly owned subsidiary, Magma
Metals Company. The smelter has a rated production capacity of 1.25 million
tons of copper concentrate per year, which represents up to 25% of U.S.
smelting and refining capacity. In addition to smelting and refining its
own copper concentrate production, the Company smelts and refines a
substantial amount of copper concentrates on a custom basis for, or
purchased from, third parties, the profits from which reduce the Company's
overall break-even cost of producing copper.
Magma was a wholly owned subsidiary of Newmont Mining Corporation
("Newmont") from 1969 until March 1987, and remained under its influence
until November 1988, when Magma undertook a recapitalization (the
"Recapitalization") in which it purchased all of the remaining equity
interests held by Newmont.
Recent Operating Performance
Since the Recapitalization, the Company has substantially improved its
operating performance. The Company has increased copper production from its
own sources by approximately 40% from 402 million pounds in 1988 to 563
million pounds in 1993. Production from the leaching, solvent extraction
and electrowinning ("SX-EW") operations increased by 87% from 86 million
pounds in 1988 to 161 million pounds in 1993. The Company's total smelting
and refining production has increased by approximately 48% from 414 million
pounds of copper in 1988 to 615 million pounds in 1993. Net cash operating
costs of copper sold have decreased from $.78 per pound ($.93 adjusted for
inflation) in 1988 to $.66 per pound in 1992. In 1993, despite the effects
of extraordinary rains and flooding early in the year, the Company was able
to maintain the $.66 per pound cost level that had been achieved in 1992.
Further, as a result of intensified cost reduction efforts, cash operating
costs decreased to $.63 per pound in the third quarter and $.61 per pound in
the fourth quarter of 1993. Net cash operating costs per pound represent
(a) operating costs of Magma source copper sold (excluding depreciation,
depletion and amortization) reduced by credits for by-products and profits
from custom processing divided by (b) total pounds sold from Magma sources.
The Company attributes its increased production and productivity and
reduction in operating costs primarily to improved labor relations, which
culminated in the execution in 1991 of a 15-year collective bargaining
agreement, as well as the use of innovative operating technology, including
an increase in production from lower cost SX-EW technology.
During 1993, the Company's operations were adversely affected by
extraordinary rainfall conditions, lower copper prices (which were partially
offset by hedging activities) and other factors. As a result, total sales
and net income were $792.4 million and $21.9 million, respectively, for the
year ended December 31, 1993, compared to $819.5 million and $55.3 million,
respectively, for the year ended December 31, 1992. The Company estimates
that the extraordinary rainfalls reduced net income by approximately $15.5
million during the first six months of 1993. Although the Company is still
in the process of repairing, upgrading and expanding certain of its
facilities that were damaged by the rainfalls, operations that were affected
by the rainfalls returned to normal in the second half of 1993.
The Company's operations are highly dependent on copper prices. As a
hedge against lower copper prices, the Company purchased put options on the
London Metal Exchange ("LME") covering 511.5 million pounds of 1993
production at an exercise price of $.95 per pound. During the second, third
and fourth quarters of 1993, the Company exercised option contracts
totalling 384 million pounds. Largely as a result of these options, Magma
was able to achieve an average realized price per pound of $.94 in 1993, as
compared to an average LME price of $.87 per pound. For the first and
second quarters of 1994, the Company has purchased put option contracts
covering 287 million pounds of production, providing a minimum realized
price of $.72 per pound on a LME basis. For the third and fourth quarters of
1994, the Company has entered into LME futures contracts covering 121
million pounds of production at an average price of $.82 per pound and
purchased put option contracts covering 176 million pounds of production
that provide a minimum realized price of $.74 per pound on a LME basis. The
Company has also purchased put option contracts covering 374 million
pounds of its production during the first three quarters of 1995 providing
a minimum realized price of $.74 per pound on a LME basis. Coupled with
expected reductions in cash operating costs, the Company believes that the
protection afforded by the options should result in positive cash flow from
operations during 1994. In addition to its hedging program, the Company
has accelerated measures designed to reduce its cash operating costs, with a
view to maintaining sufficient cash balances, cash flow and borrowing
capacity necessary to fund selected development projects.
Development Opportunities
The Company is currently pursuing or evaluating several major mine
development opportunities, as well as an expansion and upgrade to its
smelting and refining complex.
Robinson Mining District. In 1991, the Company completed a series of
transactions in which it acquired the Robinson Mining District ("Robinson")
near Ely, Nevada, for an aggregate cost of approximately $58 million. Based
upon drill and assay results, the Company believes that Robinson has 252
million tons of proven/probable sulfide ore reserves with an average grade
of .553% copper and .0102 ounces of gold per ton, and 57 million tons of
gold oxide ore reserves with an average grade of .0086 ounces of gold per
ton. The Company estimates that Robinson could produce approximately 135
million pounds of copper annually for 16 years through traditional methods.
In addition, these studies estimate that Robinson could produce an average
of 97,300 ounces of gold and 390,000 ounces of silver annually from sulfide
copper ore and 17,500 ounces of gold per year from leaching operations
during this time period. The Company is conducting a further study of this
property to determine the opportunity to increase production and lower
costs, which may require greater capital investment. Development of
Robinson requires, among other factors, appropriate environmental and
operating permits. In early 1993, the Bureau of Land Management determined
that an Environmental Impact Statement ("EIS") must be prepared to analyze
the Company's proposed re-development of the property. The Company believes
the EIS process will be completed during 1994 and production will begin in
the first quarter of 1996, although there can be no assurance in this
regard.
Kalamazoo. The Company's Kalamazoo orebody, which is near its San
Manual underground mine, is comprised of two levels, an upper level which
consists of approximately 33 million tons of proven/probable ore reserves
and a lower level which contains approximately 186 million tons of
proven/probable ore reserves. In March 1993, the Company's Board of
Directors approved funding for the development of the lower Kalamazoo
orebody. Based on the current mine plan, this project is scheduled to
produce 2.13 billion pounds of copper during the period from 1996 to 2009.
Florence. In July 1992, the Company completed the acquisition of a
large copper deposit near Florence, Arizona. The Company's project team has
begun a pre-feasibility study to determine the opportunity for the use of
SX-EW leaching technology at this deposit.
Smelting and Refining Complex. The Company is in the process of
expanding and upgrading its smelting and refining complex. During 1993, the
smelter produced 681 million pounds of copper in anode form, significantly
in excess of its design capacity of 600 million pounds. The expansion will
increase design capacity to 720 million pounds per year. The increase in
design capacity, scheduled to be completed in the second quarter of 1994,
should enable the Company to maintain its custom smelting business even with
the expected increase in smelting from Magma source copper when the Robinson
Mining District begins production. In addition, the smelter project, which
includes the addition of a new, large acid plant, will further improve the
smelter's environmental performance.
Capital Requirements. Based on present estimates development of the
Robinson Mining District could require capital expenditures on the order of
approximately $300 million for traditional concentrate production,
development of the lower Kalamazoo orebody could require capital
expenditures of approximately $140 million and expansion of the Company's
smelting and refining complex is expected to require capital expenditures of
approximately $85 million, for an aggregate of approximately $500 million.
Of this amount, $105 million had been expended toward these projects as of
December 31, 1993, $90 million is expected to be expended in 1994 and the
remainder is expected to be spent over the next four years. The foregoing
estimates are subject to change. The Company has not yet made any
determination of the cost to develop the Florence property.
The Company intends to finance any projects that it undertakes with
internal cash flow, cash reserves and additional financings if necessary.
The completion or success of these projects or, in some cases, the decision
to undertake them is subject to a number of factors, including the price of
copper and, where appropriate, the completion of favorable feasibility
studies, permitting and other factors. Many of these factors are outside of
the Company's control. There can be no assurance that the Company will
undertake all of these opportunities or that, if undertaken, they will prove
successful. If the Company is unable to replace its reserves from the mine
development projects being pursued or evaluated, or with other reserves
identified or acquired in the future, the Company's dependence upon third-
party sources to supply copper concentrate to its smelting and refining
operations would increase.
Refinancings and Related Matters
In the past three years, the Company has taken a number of significant
actions in an effort to enhance its financial position on a prospective
basis, including the following.
Debt Refinancing. Through a series of new debt offerings and
redemptions of previously outstanding indebtedness, the Company has
refinanced almost all of its outstanding public indebtedness, reducing the
weighted average interest rate on its outstanding debt from 14.1% to 10.7%.
The refinancings resulted in a $9.7 million decrease in net interest expense
in 1992 over 1991, which was partially offset by a $3 million extraordinary
loss related to premiums paid on early debt repayments.
In May 1993, the Company established a $200 million unsecured revolving
credit facility. The facility has a five-year term and matures in May 1998.
The loan agreement evidencing the facility limits the ability of the Company
and its subsidiaries to encumber their assets and property, to enter into
sale and leaseback transactions, to enter into mergers and consolidations or
to sell all or substantially all of their assets (or certain identified
assets), and to repurchase or redeem subordinated indebtedness, including
Senior Subordinated Debt Securities and Subordinated Debt Securities, except
in certain circumstances. The loan agreement also limits the incurrence of
indebtedness by the Company's subsidiaries, requires that the Company and
its subsidiaries maintain a minimum consolidated net worth, and establishes
a maximum ratio of debt to capitalization and a minimum interest coverage
ratio. As of March 15, 1994, there were no outstanding borrowings under the
revolving credit facility. Any borrowings under the credit facility will
constitute Senior Indebtedness with respect to each series of Senior
Subordinated Securities and Subordinated Securities, and will rank senior in
right of payment thereto.
Enhanced Capital Base. During 1993, the Company raised $200 million of
additional equity through two convertible preferred stock offerings. In a
public offering completed in July 1993, the Company issued $100 million of
convertible preferred stock that carries a 5-5/8% cumulative dividend. In
December 1993, the Company completed a public offering of $100 million of
convertible preferred stock that carries a 6% cumulative dividend.
In December 1992, the Company conducted an exchange offer under which
all of its then outstanding Series B Cumulative Convertible Exchangeable
Preferred Stock was exchanged for Common Stock. This preferred stock
carried a cumulative dividend obligation in excess of $9 million per year,
which would have been payable solely in cash beginning in November 1993.
In October 1992, the Company's stockholders voted to amend the
Company's Certificate of Incorporation to eliminate the dual class,
disparate voting rights structure of its Common Stock. The Company now has
one class of Common Stock, $.01 par value per share.
Accounting Adjustments. At the end of 1991, the Company implemented
various accounting adjustments in conjunction with the reorganization of the
Company into distinct profit centers. Although these adjustments reduced
stockholders' equity and lowered prior earnings, they did not impact the
Company's cash position or cash flow.
INVESTMENT CONSIDERATIONS
Copper Price Volatility. The profitability of the Company's operations
is largely dependent upon the worldwide market price for copper. A one cent
per pound change in the average price received for the Company's 1993 output
would have affected earnings before interest, taxes, depreciation and
amortization by an estimated $5.6 million. Copper prices have historically
been subject to wide fluctuations and are affected by numerous factors
beyond the control of the Company, including international economic and
political conditions, levels of supply and demand, the availability and cost
of copper substitutes, inventory levels maintained by copper producers and
others and, to a lesser degree, inventory carrying costs (primarily interest
charges) and international exchange rates. From time to time the Company
engages in hedging activities in an effort to stabilize the Company's cash
flow in the event of declining copper prices. Depending upon the hedging
program employed, market conditions and other factors, hedging activities
could reduce the cash flow which the Company would otherwise realize.
Competition. Certain foreign and domestic copper producers benefit
from higher-grade orebodies than those owned by the Company. Further, most
foreign producers benefit from lower labor rates and less stringent
environmental regulation than United States producers. Many foreign
producers maintain maximum production to meet government-imposed employment
and foreign exchange revenue goals, sometimes without regard to the
condition of the world copper market or the profitability of their mining
operations. The Company and other copper producers also compete with
manufacturers of other materials, including aluminum, stainless steel,
plastics and fiber optic cables. Should copper prices increase, use of
these alternative materials may also increase.
Environmental Regulation. The mining and mineral processing industries
are subject to extensive regulations for the protection of the environment,
including regulations relating to air and water quality, mine reclamation,
remediation, solid and hazardous waste handling and disposal and the
promotion of occupational safety. From time to time the Company is cited
for noncompliance with applicable environmental laws and regulations.
However, the Company believes that it is currently in material compliance
with these laws and regulations and it is not aware of any identified
violation or potential violation that is likely to have a material adverse
effect on its results of operations. Future regulations or regulatory
interpretations could require the Company to modify or curtail its
operations or incur substantial additional expense. In this regard, the
Company cannot predict, at this time, the level of new emissions controls
and related costs which may be required for it to comply with standards
governing emissions of sulphur, particulates and air toxics that are
expected to be adopted under the federal Clean Air Act Amendments of 1990
and the Arizona Clean Air Act.
Industry Risks; Reserves. The Company is subject to the normal risks
encountered in the mining industry, such as unusual or unexpected geological
formations, cave-ins, flooding, fires, environmental issues and water
issues. The Company's mineral reserves may not conform to geological,
geomechanical, metallurgical or other expectations with the result that the
volume and grade of reserves recovered and rates of production may be less
than anticipated. Further, market price fluctuations in copper, changes in
operating and capital costs and other factors may affect ore reserves.
Development Projects. The existing open pit and underground mines at
the Company's San Manuel Division are scheduled to close in 1994 and 1998,
respectively, and its open pit mine at the Pinto Valley Division is
scheduled to close in 1999. The Company is pursuing or evaluating several
development opportunities in an effort to enhance its ore reserves. The
Company is also in the process of expanding and upgrading its smelting and
refining complex. Development of these projects will require several
hundred million dollars in capital investment. To the extent undertaken,
the Company intends to finance its development projects with internal cash
flow, cash reserves and additional borrowings as necessary. The success of
these projects is subject to a number of factors, some of which are outside
of the Company's control. The cost estimates for these projects are subject
to change. If the Company is unable to replace its reserves from the mine
development projects being pursued or evaluated, or with other reserves
identified or acquired in the future, the Company's dependence upon third-
party sources to supply copper concentrate to its smelting and refining
operations would increase.
SELLING SECURITYHOLDERS
The following table provides certain information with respect to the
Common Stock owned by each Selling Securityholders as of March 25, 1994.
Percentage Percentage
of Common of Common
Shares Shares
Beneficially Beneficially
Number of Owned Number of Owned
Common Prior to Common After
Shares Offering Shares Offering
Name Owned (1) Offered (2)
---- ---------- ------------ ---------- ----------
DBL Liquidating Trust 86,022 * 86,022 0 %
Morgenthaler Venture
Partners II 76,319 * 21,505 *
Warburg Pincus Capital
Company, L.P. 19,220,216(3) 41.1% 3,213,073 34.2%
TOTAL 19,382,557 41.5% 3,320,600 34.4%
========== ====== ========== ======
_________________________
* Represents less than 1% of the Company's outstanding Common Stock.
(1) Includes all shares of Common Stock beneficially owned by the Selling
Securityholder as a percentage of the sum of (i) the Common Stock
outstanding at March 25, 1994, and (ii) the 1,000,000 shares of
Common Stock reserved for issuance in connection with the Class B
Warrants.
(2) Assumes that the Selling Securityholder disposes of all of the shares
of Common Stock covered by this Prospectus and does not acquire any
additional shares of Common Stock.
(3) Includes 892,473 shares of Common Stock underlying Class B Warrants
held by the Selling Securityholder and 2,320,600 shares of Common Stock
previously acquired by the Selling Securityholder.
PLAN OF DISTRIBUTION
This prospectus relates to shares of Common Stock issuable upon
exercise of Class B Warrants. Each Class B Warrant is exercisable at any
time prior to November 30, 1995 to purchase one share of Common Stock for
$8.50 per share, subject to adjustments in certain events. Upon the
exercise of a Class B Warrant, the Company will issue shares of Common Stock
directly to or for the order of the holder of the Class B Warrant.
Additionally, this prospectus relates to the resale by the Selling
Securityholders of any shares of Common Stock acquired by a Selling
Securityholder upon the exercise of a Class B Warrant and to the resale by
Warburg, Pincus Capital Company, L.P. ("Warburg"), one of the Selling
Securityholders, of 2,320,600 shares of Common Stock previously acquired by
Warburg. The Selling Securityholders may from time to time sell Common
Stock through underwriters, dealers or agents, who may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Selling Securityholders and/or the purchasers of the securities for whom
they may act as agent. At the time a particular offering of Common Stock is
made, to the extent required, a Prospectus Supplement will be distributed
with this Prospectus which will set forth the aggregate number of shares
being offered and the terms of the offering, including the names of any
underwriters, dealers or agents, any discount, commissions and other items
constituting compensation from the Selling Securityholders and any discounts
or concessions allowed or reallowed or paid to dealers.
Alternatively, the Selling Securityholders may from time to time effect
sales of Common Stock in one or more transactions pursuant to Rule 144 under
the Securities Act, in privately negotiated transactions, through the
facilities of the NYSE, or otherwise, at market prices prevailing at the
time of sale, at prices relating to such prevailing market prices, or at
negotiated prices. It is anticipated that any broker-dealers participating
in such sales of securities will receive the usual and customary selling
commissions.
The Company will pay substantially all of the expenses incident to the
registration of the Common Stock offered hereby, other than underwriting
discounts, commissions and selling expenses with respect to Common Stock
being sold by the Selling Securityholders.
USE OF PROCEEDS
The Company anticipates that the net proceeds from the exercise of the
Class B Warrants will be used for general corporate purposes. The Company
will not receive any proceeds from the sale of Common Stock by the Selling
Securityholders.
DESCRIPTION OF SECURITIES
Class B Warrants
The Company issued and sold 1,000,000 Class B Warrants to Warburg in
connection with a recapitalization of the Company on November 30, 1988.
Warburg subsequently transferred 107,527 of the Class B Warrants to two
other institutional investors (collectively with Warburg, the "Selling
Securityholders").
Each Class B Warrant entitles its holder to purchase one share of
Common Stock at an exercise price of $8.50 per share, subject to adjustment,
at any time prior to the Class B Warrants' expiration date of November 30,
1995. The Class B Warrants are not callable by the Company at any time.
The Class B Warrants may be exercised by surrendering to the Company at
the principal office of the Warrant Agent a Warrant certificate signed by
the Warrantholder or his duly authorized agent indicating such
Warrantholder's election to exercise all or a portion of the Class B
Warrants evidenced by such certificate. Surrendered Class B Warrant
certificates must be accompanied by payment of the aggregate exercise price
of the Class B Warrants to be exercised (the "Exercise Price").
Upon surrender of the Class B Warrants and payment of the Exercise
Price, the Company shall deliver or cause to be delivered, to or upon the
written order of the exercising Warrantholder, certificates representing the
number of shares of Common Stock so purchased. If fewer than all of the
Class B Warrants evidenced by any Class B Warrant certificate are exercised,
the Warrant Agent shall deliver to the exercising Warrantholder a new Class
B Warrant certificate representing the unexercised Class B Warrants.
The number of shares purchasable upon exercise of a Class B Warrant is
subject to adjustment pursuant to anti-dilution provisions if, among other
circumstances (i) the Company declares a dividend or makes a distribution on
outstanding shares of Common Stock in shares of Common Stock, (ii) the
Company subdivides, combines or reclassifies the Common Stock, (iii) the
Company issues Common Stock (or securities convertible into, or exercisable
or exchangeable for, Common Stock) for consideration less than 95% of the
most recent closing price for Common Stock, (iv) the Company declares a
dividend or other distribution on the Common Stock, except for a cash
dividend or distribution which is in an amount less than the excess of (x)
11% of the average of the daily closing price for Common Stock for the
trading days during the preceding twelve consecutive calendar months
multiplied by the weighted average number of shares of Common Stock
outstanding during such twelve-month period (the "Annual Market Price") over
(y) the fair market value of the consideration used to repurchase Common
Stock during such twelve-month period, or (v) the Company repurchases Common
Stock for consideration that, when aggregated with all other repurchases
during the preceding twelve months, has a fair market value greater than the
excess of (x) 11% of the Annual Market Price over (y) the cash dividends
paid on such twelve month period.
Upon exercise of a Class B Warrant or Warrants, the Company will not be
required to issue fractional shares and a holder of Class B Warrants shall
receive the number of whole shares to which the Class B Warrants to be
exercised entitle such holder. In determining the number of shares to be
issued upon exercise, a holder may aggregate all fractional shares
represented by the Class B Warrants to be exercised into whole shares. If
after such aggregation any fractional share amount remains, the Company will
pay the holder an amount in cash equal to such fraction multiplied by the
closing price of the Common Stock on the day of exercise.
If the Company is unable for any reason to issue shares of Common Stock
upon exercise of the Class B Warrants, then the Class B Warrants will be
exercisable for such number of shares of the Company's Series C Convertible
Preferred Stock as equals the number of shares of Common Stock otherwise
issuable upon the exercise of the Class B Warrants. The Series C
Convertible Preferred Stock has rights substantially identical to the rights
of the Common Stock, except that such preferred stock has a liquidation
preference equal to $.10 per share. In the event that Series C Convertible
Preferred Stock becomes issuable upon exercise of the Class B Warrants, the
Company will comply with any applicable registration requirements under the
federal securities law, and will apply for the listing of such shares on the
principal stock exchange or market system on which the Company's securities
are traded at the time.
Common Stock
The following summary of terms of the Company's Common Stock does not
purport to be complete and is subject to, and qualified in its entirety by,
the provisions of the Company's Certificate of Incorporation.
The Company's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of Common Stock. As of March 25, 1994, there were
45,742,901 shares of Common Stock outstanding (excluding the 1,000,000
shares of Common Stock reserved for issuance in connection with the Class B
Warrants). The Common Stock is traded on the NYSE. On March 25, 1994,
the closing sale price of the Common Stock, as reported on the NYSE was
$15-7/8.
All outstanding shares of Common Stock are, and the shares offered
hereby, upon issuance, will be, fully paid and non-assessable.
The holders of Common Stock are entitled to receive dividends when and
as declared by the Board of Directors of the Company out of funds legally
available therefor, provided that if any shares of preferred stock are at
the time outstanding, the payment of dividends on Common Stock or other
distributions (including purchases of Common Stock) may be subject to the
declaration and payment of full cumulative dividends, and the absence of
arrearages in any mandatory sinking fund, on outstanding shares of preferred
stock. As of the date hereof, the Company has two series of preferred stock
outstanding, $100 million of Series D Cumulative Convertible Preferred
Stock, which carries a 5-5/8% cumulative dividend, and $100 million of
Series E Cumulative Convertible Preferred Stock, which carries a 6%
cumulative dividend.
The holders of Common Stock are entitled to one vote for each share on
all matters voted on by stockholders, including elections of directors. The
holders of Common Stock do not have any conversion, redemption or preemptive
rights. In the event of the dissolution, liquidation or winding up of the
Company, holders of Common Stock are entitled to share ratably in any assets
remaining after the satisfaction in full of the prior rights of creditors,
including holders of the Company's indebtedness, and the aggregate
liquidation preference of any preferred stock then outstanding.
Certain provisions of the Company's Certificate of Incorporation and
Bylaws may be considered as having an anti-takeover effect. Such provisions
empower the Board of Directors to fix the rights and preferences of and to
issue shares of preferred stock; limit certain substantial stockholders of
the Company from significantly increasing their interest in the stock or
assets of the Company without the consent of the Board of Directors and/or a
supermajority of the stockholders of the Company; prohibit stockholders of
the Company from calling a special meeting; place restrictions on the
ability of stockholders to nominate persons for the position of director;
and require that the Board of Directors be divided into three classes. In
addition, certain provisions of law may have the effect of protecting the
Company against undesired takeover attempts. Specifically, under Delaware
law (and a similar provision of the Company's Certificate of Incorporation),
in certain instances, significant holders (as specified) of the Company's
voting stock may not, without approval of a specified vote of the other
stockholders, or approval of the Company's Board of Directors (or the
independent members thereof) prior to becoming a significant holder, acquire
additional interests in the Company's assets or capital stock.
Transfer Agent
The transfer agent for the Common Stock is Mellon Financial Services,
111 Founders Plaza, 11th Floor, East Hartford, Connecticut 06108.
EXPERTS
The consolidated balance sheets as of December 31, 1993 and 1992, and
the consolidated statements of operations, changes in stockholders' equity
and cash flows and the related schedules for each of the three years in the
period ended December 31, 1993, incorporated into this Prospectus and
elsewhere in the Registration Statement, have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their
reports with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in giving said reports.
VALIDITY OF THE SECURITIES
The validity of the issuance of the securities offered hereby will be
passed upon for the Company by Streich Lang, P.A., 100 West Washington,
Suite 2100, Phoenix, Arizona 85003, counsel to the Company.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses in connection with the issuance and distribution
of the securities being registered are as follows:
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . $ 18,402
Legal fees and disbursements . . . . . . . . . . . . . . . . . . $ 15,000
Accounting fees and disbursements . . . . . . . . . . . . . . . . $ 5,000
Miscellaneous (including transfer agent and listing fees) . . . . $ 5,000
$ 43,402
Item 15. Indemnification of Directors and Officers.
The Certificate of Incorporation provides that the directors of the
Company shall be under no liability to the Company for monetary damages for
breach of fiduciary duty as a director of the Company except for those
specific breaches and acts or omissions with respect to which the Delaware
General Corporation Law (the "Delaware Law") expressly provides that a
corporation's certificate of incorporation shall not eliminate or limit such
personal liability of directors. Section 102(b)(7) of the Delaware Law
provides that a corporation's certificate of incorporation may not limit the
liability of directors for (i) breaches of their duty of loyalty to the
corporation and its stockholders, (ii) acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
transactions from which a director derives improper personal benefit and
(iv) unlawful dividends or unlawful stock repurchases under Section 174 of
the Delaware Law.
Under the Delaware Law, directors and officers as well as other
employees and individuals, may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation, a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to
the best interest of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
A similar standard of care is applicable in the case of a derivative action,
except that indemnification only extends to expenses (including attorneys'
fees) incurred in connection with defense or settlement of such an action
and the Delaware Law requires court approval before there can be any
indemnification where the person seeking indemnification has been found
liable to the Company. The Company's By-laws provide that each person who
was or is made a party to, or is involved in, any action, suit or proceeding
by reason of fact that he or she is or was a director, officer or employee
of the Company (or was serving at the request of the Company as a director,
officer, employee or agent for another entity) will be indemnified and held
harmless by the Company to the full extent authorized by the Delaware Law,
against all expense, liability or loss (including attorneys' fees,
judgments, fines or penalties and amounts to be paid in settlement)
reasonably incurred by such person in connection therewith. The Company's
By-laws provide that rights conferred thereby are contract rights and will
include the right to be paid by the Company for the expenses incurred in
defending the proceedings specified above, in advance of their final
disposition, except that, if the Delaware Law so requires, such payment will
only be made upon delivery to the Company by the indemnified party of an
undertaking to repay all amounts so advanced if it is ultimately determined
that the person receiving such payments is not entitled to be indemnified
under such provision or otherwise. The Company's By-laws provide that
persons indemnified thereunder may bring suit against the Company to recover
unpaid amounts claimed thereunder, and that if such suit is successful, the
expense of bringing such a suit will be reimbursed by the Company.
Item 16. Exhibits and Financial Statements.
Exhibit Page or
Number Description Method of Filing
4.1 Specimen certificate representing Incorporated by reference to
shares of the Common Stock Exhibit 2 to the Registrant's
Form 8-A dated October 30,
1992
5.1 Opinion of Streich Lang, P.A. Filed Herewith
24.1 Consent of Arthur Andersen & Co. Filed Herewith
24.2 Consent of Streich Lang, P.A. Included in its opinion filed
as Exhibit 5.1
25.1 Powers of Attorney Included on Signature Page
_______________
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Magma
Copper Company certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Tucson and State of
Arizona on March 28, 1994.
MAGMA COPPER COMPANY,
a Delaware corporation
By /s/ J. Burgess Winter
-----------------------------
J. Burgess Winter
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Donald J. Donahue, J. Burgess Winter,
Douglas J. Purdom and Andrew A. Brodkey, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Form S-3 Registration
Statement, and to file the same, with all exhibits thereto, and other
documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
and to all intents and purposes as he might or could do in person hereby
ratifying and confirming all that said attorneys-in-fact and agents, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Donald J. Donahue Chairman of the Board and March 28, 1994
- -------------------------- Director
Donald J. Donahue
/s/ J. Burgess Winter President, Chief Executive March 28, 1994
- -------------------------- Officer, Director
J. Burgess Winter (Principal Executive
Officer)
/s/ Douglas J. Purdom Vice President and Chief March 28, 1994
- -------------------------- Financial Officer
Douglas J. Purdom (Principal Financial and
Accounting Officer)
/s/ Christopher W. Brody Director March 28, 1994
- --------------------------
Christopher W. Brody
/s/ Judd R. Cool Director March 28, 1994
- --------------------------
Judd R. Cool
/s/ John W. Goth Director March 28, 1994
- --------------------------
John W. Goth
/s/ John R. Kennedy Director March 28, 1994
- --------------------------
John R. Kennedy
/s/ Thomas W. Rollins Director March 28, 1994
- --------------------------
Thomas W. Rollins
/s/ Henry B. Sargent Director March 28, 1994
- --------------------------
Henry B. Sargent
/s/ Simon D. Strauss Director March 28, 2994
- --------------------------
Simon D. Strauss
/s/ H. Wilson Sundt Director March 28, 1994
- --------------------------
H. Wilson Sundt
/s/ John L. Vogelstein Director March 28, 1994
- --------------------------
John L. Vogelstein
EXHIBIT 5.1
March 28, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Magma Copper Company - Form S-3 Registration
Statement
Ladies and Gentlemen:
We have acted as counsel to Magma Copper Company, a Delaware
corporation (the "Company"), in connection with its Registration Statement
on Form S-3 (the "Registration Statement") filed under the Securities Act of
1933 relating to (i) the issuance of 1,000,000 shares of Common Stock, $0.01
par value per share (the "Common Stock"), issuable upon the exercise of an
equal number of Common Stock Purchase Warrants (the "Class B Warrants"),
(ii) the resale by three selling securityholders of any shares of Common
Stock they may acquire upon exercise of the Class B Warrants, and (iii)
the resale by one selling securityholder of 2,320,600 additional shares of
Common Stock previously acquired by such selling securityholder. We have
also acted as counsel for the Company with respect to certain matters in
connection with the sale of the Common Stock and in preparation of the
required filings with the Securities and Exchange Commission and the various
state regulatory agencies involved.
In that connection, we have examined such documents, corporate records
and other instruments as we have deemed necessary or appropriate for
purposes of this opinion, including the Amended and Restated Certificate of
Incorporation, as amended, and the Bylaws of the Company.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware.
2. The Common Stock, when issued, will be duly and validly
issued, fully paid and nonassessable.
We acknowledge that we are referred to under the heading "Validity of
the Securities" of the Prospectus that is part of the Registration
Statement, and we hereby consent to such use of our name in such
Registration Statement and to the filing of this opinion with state
regulatory agencies in such states as may require such filing in connection
with the registration of the Common Stock for offer and sale in such states.
Very truly yours,
/s/ Steven D. Pidgeon
---------------------
Steven D. Pidgeon
For the Firm
EXHIBIT 24.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 registration statement of our reports dated Janu-
ary 27, 1994 included in Magma Copper Company's Form 10-K for the year ended
December 31, 1993, and to all references to our Firm included in this regis-
tration statement.
/s/ Arthur Andersen & Co.
- --------------------------
Tucson, Arizona,
March 25, 1994.
