17th Feb 2015 16:05
LONDON (Alliance News) - Sapinda Holdings BV, which claims to represent a group of shareholders with a 10.7% interest in Petropavlovsk PLC, has said Tuesday that it plans to vote against restructuring proposals the Russia-focused gold miner put forward earlier this month.
Sapinda plans to vote against the restructuring of Petropavolovsk's convertible bonds, and said that it believes other holders of a significant proportion of shares also support its position to vote against the proposal.
On February 2, Petropavlovsk said it had launched a refinancing programme, including a GBP155.1 million rights issue of new shares and a new five-year USD100 million convertible bond, intended to "secure the group's immediate future" and allow it to increase production in 2015.
Sapinda argued Tuesday that the proposal unfairly favours bondholders at the expense of shareholders, diluting them by 94% and issuing the new shares at a price of just 5p, 80% below Petropavlovsk's share price prior to the bondholder proposal.
Shares in Petropavlovsk are trading up 11% at 17.50 pence Tuesday afternoon.
Additionally, it argues that the bondholder proposal "fails in its aim to put the company on a secure financial footing because it fails to satisfactorily address Petropavlovsk's working capital deficiencies and imminent payment due to its senior lenders, and leaves it still with USD700 million of debt, which we believe is too high."
"Instead, proceeds are directed to repay bondholders at par and pay fees and 'underwriting' costs. The deal fees, which could be nearly a third of the cash raise, also appear very high," Sapinda said.
Sapinda said it has signalled it is willing to inject a "substantial amount of money into the company as part of an alternative recapitalisation that is fairer for all shareholders."
It notes that the resolution, which will be put to shareholders at the upcoming general meeting, can be rejected by only 25% of the shares being voted at the meeting.
"We believe that careful analysis of the proposal dissuades shareholders from investing further in the company - and that shareholders can, and should, vote against the resolution," Sapinda said.
"The company's current proposal essentially ignores equity investors. Shareholders have virtually nothing to lose by opposing it. But they have everything to gain by insisting that the company goes back to the negotiating table to get them a better deal," Sapinda said.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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