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Petra Diamonds Announces US$178 Million Rights Issue to Reduce Debt Levels
The fund raising is reportedly underwritten by RBC Capital Markets, BMO Capital Markets and Barclays.
By: Diamond World News Service
May 26 2018 12:13PM
Reference: 16384  


Petra Diamonds plans to raise US$178 million by way of a 5 for 8 Rights Issue. The Rights Issue is fully underwritten by the Joint Bookrunners pursuant to the terms of the Underwriting Agreement.

The Issue Price of 40.0 pence per Rights Issue Share represents a 47.4 per cent discount to the Closing Price of 76.0 pence on 23 May 2018 and a 35.6 per cent discount to the TERP of 62.15 pence per Existing Share calculated by reference to the Closing Price on 23 May 2018.

“If the resolutions to be proposed at the special general meeting are not passed, the rights issue will not take place and the company will not receive the net proceeds from the rights issue of approximately US$170 million,” Petra said in a statement announcing the new share issue.

In the event that the resolutions are not passed, the Rights Issue will not take place.

In such circumstances, Petra Diamonds is of the opinion that the working capital available to the Group may not be sufficient during the Working Capital Period.

The fund raising is underwritten by RBC Capital Markets, BMO Capital Markets and Barclays.

 “Whilst Petra Diamonds has successfully delivered on the majority of milestones associated with our expansion programmes, cash flow generation over the last two years has been impaired by a combination of the operational delays in FY 2017, combined with a number of business challenges experienced in the first half of FY 2018," explains chief executive Johan Dippenaar.

"These factors, in conjunction with the impact of a much stronger Rand versus the US Dollar, have led to the company’s debt levels being higher than anticipated and have impacted its ability to deleverage in line with expectations.”

“By improving the Group’s financial and operational flexibility, the board believes this Rights Issue is in the best interest of its shareholders, positioning Petra Diamonds to reap the benefits of this capital intensive phase by moving the focus to cost efficient production from the new undiluted mining blocks, with a reduced capital spend profile," comments Dippenaar.

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