By Susanna Moon
Chicago, Sept. 16 – Petropavlovsk plc said it is proposing to issue new convertible bonds in exchange for its 4% convertible bonds due Feb. 15, 2015.
The company is discussing the proposed exchange offer with holders representing about 20% of the principal amount of bonds outstanding, according to a company press release.
These holders agreed to be restricted from trading in the group’s securities in order to review the proposed terms for the new bonds, the release noted.
A majority of these holders, or 18%, plans to support a deal based on new terms, the company said. The 7.5% bonds will mature in October 2019 with a size of $310.5 million less the rights issue proceeds.
The conversion price will be 60p to 65p, which is a 50% to 62.5% premium to the company’s closing price on Tuesday.
The company’s stock (London: POG) closed at 40p on Sept. 15.
The proposals require shareholder and bondholder approval as well as senior lender and regulatory consent.
The amount of cash available for bondholder repayment under the exchange offer and the size of the bond issue will depend on the proceeds of the rights issue, the release said.
“I am pleased to note that we have received a number of unsolicited approaches from third-party investors and this gives comfort that the successful half-year results that we recently announced have encouraged greater confidence in the group,” Peter Hambro, the company’s chairman, said in the press release.
“I welcome these expressions of interest in supporting the refinancing by taking part in underwriting a rights issue and hope that others who are authorized to do so may also come forward and make contact with Bank of America Merrill Lynch.”
The company said its goal remains to repay the bonds for cash at par value upon maturity but that, “in light of the current market and geopolitical environment, this may not be achievable.”
The company said it is negotiating the terms of the refinancing with Sberbank and VTB, its senior lenders, which may relax financial covenants in the loan facility agreements on a conditional basis.
Petropavlovsk, formerly Peter Hambro Mining plc, is a London-based gold mining company that operates in Russia.
| Issuer: | Petropavlovsk plc
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| Issue: | Convertible bonds
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| Maturity: | October 2019
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| Coupon: | 7.5%
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| Conversion price: | 60p to 65p
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| Conversion premium: | 50% to 62.5%
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| Stock ticker: | London: POG
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| Stock price: | 40p at close Sept. 15
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