Kenmare finalises multimillion balance sheet restructuring

Company launching $122m open share offer aimed mainly at existing small holders

Kenmare managing director Michael Carvill and his family will retain a minority stake. Photograph: Bryan O’Brien/The Irish Times

Kenmare managing director Michael Carvill and his family will retain a minority stake. Photograph: Bryan O’Brien/The Irish Times

 

Kenmare Resources has pulled the trigger on the final stage of a tortuous balance sheet restructuring that will raise between $275 million (€249m) and $345 million in fresh equity and slash its debts from $370 million to less than $100 million.

The mining company has announced an open share offer of up to $122.7 million aimed mainly at existing small shareholders, closing on July 22nd.

The cash raised under this offer will be added to $100 million committed by a sovereign wealth fund from the Sultanate of Oman. Kenmare has also received commitments of $145.7 million under a so-called firm placing with major institutional investors, some of whom are already investors in Kenmare.

Its lenders have also agreed to underwrite shares of $29.3 million, although this commitment will disappear if this threshold is breached in the open offer that closes next month.

Take out debt

The cash raised will be used to take out debt and fund Kenmare’s operations, which include a substantial titanium minerals mine in Mozambique. An initial chunk of $200 million will take out debts of $269 million. About $75 million will be set aside to fund the company’s working capital and to pay expenses.

Whatever is raised beyond this under the open offer will be used to pay debts at a discount of 25 per cent. If the open offer is fully subscribed, its debts will fall to zero.

The final composition of its shareholder register will depend upon who subscribed for what in the open offer, but Kenmare’s existing largest shareholder M&G is guaranteed to maintain a stake of just under 20 per cent.

The Oman fund will have a stake of between 20 per cent and 29 per cent, depending on the open offer. The Dublin-based Carvill family, including managing director Michael Carvill, will retain a small minority stake.

An extraordinary general meeting of shareholders will be held on July 25th to ratify the restructuring.

Kenmare defaulted on its debts earlier this year after talks with its lenders stalled, but it now looks set to emerge from a troubled period with its balance sheet reinvigorated. It should also benefit from a boost in the price of titanium minerals.

Mr Carvill said the restructuring will give Kenmare an “excellent platform” to deliver returns to its shareholders.