2nd Feb 2015 17:36
LONDON (Alliance News) - Petropavlovsk PLC Monday said it has launched a refinancing programme, including a GBP155.1 million rights issue and a new, five-year USD100 million convertible bond, intended to "secure the group's immediate future," which will allow it to increase production in 2015.
In a statement, the company said the fully pre-emptive 157 for 10 rights issue at GBP0.05 per share to raise up to GBP155.1 million. The company said that all but GBP0.4 million of the rights issue is currently underwritten.
Petropavlovsk said its net debt position following the rights issue should be around USD700 million.
"The refinancing package agreed with bondholders and senior lenders gives the shareholders the right (but not the obligation) to preserve their investment from dilution by subscribing for new equity. At the same time, by gaining the necessary equity underwriting commitment, the group has been able to establish what we firmly believe is a stable financial platform," Chairman Peter Hambro said in a statement.
The company will also conduct a debt-for-equity exchange. For shares not taken up in the rights issue or placed in a follow up rump placing, certain bondholders have committed to exchanging existing bonds for new shares for up to GBP104 million, it said in a statement.
The company will also issue a new five year convertible bond worth USD100 million, it added.
During 2014, company production was in line with its guidance, at 624,500 ounces of gold, with a total cash cost below USD900 per ounce. Petropavlovsk has set its production guidance for 2015 at 680,000 to 700,000 ounces of gold, and has said total costs should fall below USD700 per ounce due to the company's cost-cutting programme and the devaluation of the rouble, it said.
"Operationally, we believe, the year has started well and we continue to build on our 2014 achievements. The success of our recent exploration programme has enabled us to increase our gold production target to 680,000 to 700,000 ounces for 2015," Hambro said.
During 2015, Petropavlovsk has set itself a capital expenditure budget of USD35 million.
Both the company's production guidance and capex budget are reliant on Petropavlovsk's new refinancing programme.
"Our operational and exploration success has been overshadowed by a liquidity problem and the need to refinance our outstanding USD310.5 million convertible bonds - with the resulting uncertainty causing a sharp decline in our share price," Hambro said.
"The principal purpose of the refinancing is to address the group's imminent obligation, if the refinancing were not implemented, to repay the existing bonds on March 18, 2015, which the group does not have the cash to do and to enable the company to continue trading as a going concern," Hambro added.
Petropavlovsk shares closed down 7.4% to 12.50 pence per share on Monday.
By Joshua Warner; [email protected]; @JoshAlliance
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