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Petra Lenders Take Majority Control of Company

Banks write off sizable debts in return for 91% of shares.
Oct 20, 2020 7:09 AM   By Leah Meirovich
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RAPAPORT...
Petra Diamonds has called off its formal sales process, as its lenders have acquired majority ownership in the company in exchange for writing off sizeable debts.

The groups reached the agreement following discussions on a long-term restructuring plan for the company that would allow it to pay back the $650 million in secured debt it currently owes, Petra said Tuesday. The miner had been considering its options — including a sale of all or part of its operations — amid financial struggles brought about by the Covid-19 pandemic.

Under the new deal, lenders will give Petra $30 million in new bond notes that will provide the miner with liquidity. The $650 million in previous bond notes will be reduced, so that Petra will owe a total of $337 million between the old and new notes. In exchange, the debtholders will own 91% of Petra, and will oversee new governance arrangements and cashflow controls, the company noted.

“[The agreement] puts Petra on a viable footing going forward, for the benefit of all our stakeholders,” said Petra CEO Richard Duffy. The lenders “have provided meaningful additional liquidity to the company during this difficult period.”

The miner has also stopped the formal sale process it began in June, noting that it did not receive any viable offers that represented a better alternative to the restructuring deal.

The debt-for-equity deal is long overdue, Panmure Gordon analyst Kieron Hodgson told Rapaport News. “It’s a central part of the company’s rehabilitation, and it was essential,” he noted. “It’s a chance for Petra to recover its former glory.”

Petra expects the agreement with lenders to be finalized in November, subject to shareholder approval. It will begin implementing the restructuring plan in the first quarter of 2021.

Image: Rough diamonds and tweezers. (Petra Diamonds) 
Tags: Covid-19 pandemic, Kieron Hodgson, Leah Meirovich, Panmure Gordon, petra, Petra Diamonds, Rapaport News, Richard Duffy
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