Image credit: Petra Diamonds
The diamond group said it reached an agreement in principle with an ad-hoc group (AHG) of noteholders and South African lenders on key terms of a restructuring programme.
They agreed to have a partial reinstatement of the notes debt and the contribution by holders of the existing notes of $30 million in new money.
It is expected that the new notes will amount to about $337 million (including the new money and fees paid as part of the transaction in new notes).
Petra will convert the remainder of the notes debt into equity, which will result in the noteholder group holding 91% of the enlarged share capital of the company.
New governance arrangements and cash flow controls will also be installed as part of the agreement.
The group estimated that it will have $699 million in notes outstanding as of November, reflecting the $650 million principal amount and $49 million of accrued coupons for May and November.
"The board believes the agreement in principle … provides the business with a stable, deleveraged capital structure that will ensure the short and long-term viability of the company," said Petra chief executive Richard Duffy.
"…we will continue to work constructively with our financial stakeholders to convert the agreement in principle into legally binding agreements and implement the restructuring."
Petra had commenced a formal sale process for the group or its assets last June as it was saddled with the $650 million debt.
However, it has now decided to conclude the formal sale after as it had not produced any offers for the group or its assets that were considered to be a viable alternative to the restructuring in terms of improving the company's capital structure.
Petra's South African mines are now back at normal operating levels, despite being subject to stringent COVID-19 precautionary measures.
The Williamson mine in Tanzania remains on care and maintenance, but the group is continually evaluating when it can recommence operations, subject to more favourable market conditions.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
