Volcan Investments has funded its purchase of a 19.35% in
stake in mining giant Anglo American via the issuance of two
three-years mandatory exchange bonds. The transaction is a
first in Europe.
The landmark structure, which now makes Volcan one of the
largest shareholders in Anglo American, relies on the sale of a
combined £3.5 billion ($4.6 billion) of secured limited
recourse mandatorily exchangeable bonds over two separate
transactions. It is also known as a purchase of equity via
mandatory securities (POEMS) transaction, though this is sole
bookrunner JP Morgan’s own label for this
The structure is believed to have been used only once before
in the US, but using derivatives instead of bonds.
An initial £2 billion was raised via the issuance of
3.875% notes in March, while the second sale, on October 10,
comprised £1.5 billion of 4.125% notes.