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Petra Diamonds Warns of Lending Breach

Miner tells banks it might fail to meet certain earnings ratios.
Oct 15, 2017 8:32 AM   By Rapaport News
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Petra Diamonds is likely to breach its lending covenants following strikes at three South African mines and a dispute over valuation at its operations in Tanzania, it warned.

The company has informed its lenders that it might fail to meet certain ratios related to its earnings before interest, tax, depreciation and amortization (EBITDA), it said in a statement last week.

Petra warned last month that potential changes in diamond prices, exchange rates and production outlook could affect its ability to comply with two EBITDA-related measurements for its senior debt facilities for the period ending December 31, 2017. This compliance “has been placed further at risk due to the labor disruption at three of the company’s South African operations and the uncertainty around the final volume of sales for the Williamson mine in Tanzania in the first half of fiscal-year 2018,” the miner said in an update last week.

“Taking these factors into account, a likely breach of the [December 31] EBITDA covenant measurement ratios has been flagged to the lender group and the company will remain in regular engagement with them on this matter.”

The company, which will publish its 2017 annual report and accounts on Monday, said it believes it has enough liquidity to pay off any debts when they are due.

Petra last month reached a wage agreement with workers at three of its South African mines, bringing strikes at the projects to an end.

Tanzania has permitted Petra to resume exports and sales of diamonds from Williamson, after the government seized a parcel containing 71,654 carats of rough in a disagreement over valuation. Petra paused production at Williamson for four days as a result of the dispute.
Tags: Debt, ebitda, petra, Petra Diamonds, Rapaport News, South Africa, tanzania
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