Petropavlovsk talks $100 million five-year convertible bonds to yield 8%-8.5%, up 20%-25%

By Abigail W. Adams

Portland, Me., June 19 – Petropavlovsk plc plans to price up to $100 million of five-year convertible bonds on Wednesday with price talk for a coupon of 8% to 8.5% and an initial conversion premium of 20% to 25%, according to a company news release.

The bonds will be issued by Petropavlovsk 2010 Ltd.

Gazprombank, JPMorgan, Renaissance Capital and VTB Capital are joint bookrunners for the Regulation S offering, which carries a greenshoe of $25 million.

The bonds are callable if 80% or more of the principal amount has been converted, repurchased or canceled.

The bonds will include covenants limiting the company’s debt and asset sales.

Concurrently with the pricing of the new offering, the company is repurchasing the $100 million outstanding of its 9% convertible bonds due March 18, 2020 at a purchase price of $1,080 per $1,000, in addition to accrued interest, which is expected to be $3.75 per $1,000.

The company may also repurchase the existing bonds outside of the repurchase offer through the open market or privately negotiated transactions.

The company is also seeking consent solicitations to enable the redemption of the existing bonds following the completion of the repurchase.

Proceeds from the new bond offering will be used in part to fund the repurchase of the outstanding bonds and for the construction of a floatation facility at the company’s Pioneer mine, which is expected to cost $25 million to $30 million.

Petropavlovsk is a London-based gold mining company with operations in Russia.

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