24th May 2018 10:52
LONDON (Alliance News) - Mining firm Petra Diamonds PLC proposed Thursday to raise up to USD178 million through a five-for-eight rights issue of new shares in order to deleverage its balance sheet, as it reported that its fourth quarter trading remains in line with expectations.
Petra will offer 332.8 million new shares at a price of 40 pence each. This is a 36% discount to the theoretical ex-rights price of 62.15p each as of the close on Wednesday, and a 47% discount to the actual 76.0p share price on Wednesday.
Shares in Petra were 14% lower at 65.70p on Thursday.
Around USD120 million of the net proceeds will be used to pay down its drawn indebtedness. The remainder will be used for general working capital purposes.
"Whilst Petra has successfully delivered on the majority of milestones associated with our expansion programmes, cash flow generation over the last two years has been impaired by a combination of the operational delays in financial 2017, combined with a number of business challenges experienced in the first half of financial 2018," Petra Chief Executive Officer Johan Dippenaar said.
In 2018, Petra has suffered from strikes in South Africa and saw 71,655 carats of diamonds from its Williamson mine in Tanzania being blocked from export. Partial export of the diamonds has now begun.
"These factors, in conjunction with the impact of a much stronger rand versus the US dollar, have led to the company's debt levels being higher than anticipated and have impacted its ability to deleverage in line with expectations", Dippenaar added.
"By improving the group's financial and operational flexibility", Dippenaar added, "the board believes this rights issue is in the best interest of its shareholders, positioning Petra to reap the benefits of this capital intensive phase by moving the focus to cost efficient production from the new undiluted mining blocks, with a reduced capital spend profile."
Petra added trading for the fourth quarter of financial 2018 has been "in line." The company remains on track to produce 4.6 million to 4.7 million carats of diamonds for the year.
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