24th Feb 2015 08:55
LONDON (Alliance News) - Sapinda Holdings BV, which represents a group of shareholders of Petropavlovsk PLC with a collective 10.9% stake, Tuesday said it has delivered a refinancing plan to the company which represents an acceptable "compromise".
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.
In response, Sapinda argued the proposal unfairly favours bondholders at the expense of shareholders, diluting them by 94% and issuing the new shares at a price of just 5 pence, 80% below Petropavlovsk's share price prior to the bondholder proposal.
Sapinda added that the proposed bondholder proposal would still leave Petropavlovsk with USD700 million in debt, and offered to inject a "substantial amount of money into the company as part of an alternative recapitalisation that is fairer for all shareholders."
Although Petropavlovsk had welcomed Sapinda's interest in attempting to provide a refinancing solution, it said the proposals were flawed and urged shareholders to support the company's proposed refinancing programme to ensure Petropavlovsk did not enter insolvency.
On Tuesday, Sapinda said it has delivered its refinancing proposal to Petropavlovsk "in order to facilitate discussions with other parties in interest."
Sapinda said the letter outlined its own proposals, which were a "compromise" it was willing to accept in order to support the company's refinancing proposals.
Sapinda said it will vote in favour of Petropavlovsk's proposals if all parties commit to a follow-on private placement with Sapinda and other current shareholders of USD100 million at 3.0 pence per share and to allow the option to take the issue of up to USD125 million if necessary to meet the demand from current shareholders.
Sapinda said all existing shareholders must be allowed to participate in the proposed placement, but said it will purchase a minimum of USD50 million itself. It said it will sell down its stake after the placing if it exceeds 25% "as necessary to comply with Russian Strategic Industries Law," it said.
It also said unsubscribed shares after the placing should be made available to bondholders.
Sapinda said it expects Petropavlovsk and the board to recommend the proposals to bondholders and other associated people. It said it wants the right to appoint two directors to the board of the company, but reiterated its support for the company's chief executive.
Sapinda said the proposals would lead to a minimum of USD100 million being injected into the company and claimed its is "beneficial to all existing shareholders", whilst giving the "opportunity for bondholders to participate in the fresh cash injection."
Petropavlovsk shares were trading down 0.5% Tuesday morning at 15.70 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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