Gem and Diamond

Petra to start implementing restructure

Petra to start implementing restructure
Mining News Pro - Petra Diamonds has announced that the scheme conditions effective date has occurred, thereby enabling the start of the implementation of the company’s restructuring.
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The company expects the restructuring`s effective date to be March 10.

Petra started a strategic review of its capital structure on March 27, 2020, to explore options available to settle an outstanding senior secured loan note of $650-million, which is due for repayment by May 1, 2022.

In October last year, Petra announced that it had reached an agreement with its lenders with respect to a long-term solution for the recapitalisation of the group and that it was no longer planning to sell the company or parts of the business.

The company, which in June 2020 announced that it was considering selling the company or parts of the business, reported that it has been engaged in an extended period of discussions with its South African lender group, as well as an ad-hoc group of noteholders (AHG) regarding the recapitalisation of the group.

Petra’s weak financial position has been a product of stagnant demand and heavy borrowing to expand its mines, particularly the Cullinan mine.

In January, Petra’s shareholders voted in favour of a resolution to restructure the business and provide it with a more stable, deleveraged capital structure that will ensure the short- and long-term viability of the company.

The resolution involves the company reducing the nominal value of all ordinary shares from 10p to 0.001p, as well as increasing the authorised share capital of the company through the creation of 8.5-million ordinary shares. The company also authorised directors to allot just over 8.8-milllion ordinary shares.

Petra’s restructuring will include the partial reinstatement of existing notes debt and the contribution by holders of existing notes of new funding; the conversion of notes debt into equity, which will result in the AHG holding 91% of the enlarged share capital of Petra; the restructuring of the first lien facilities provided by the South African lender group; and new governance arrangements and cash flow controls.

As a result of the in-principle agreement reached with its lenders and noteholders, and given that it has not received any offers that provide a viable alternative to the restructuring, Petra decided to not proceed with the sale of the company or its assets.


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