Lenders approve Kenmare Resources restructuring plan
Deal will see mining group cut its debt by $269 million through a share sale
Lenders to Irish mining group Kenmare Resources have approved the company’s restructuring plan, which will see the group cut its debt by $269 million (€238m) through a share sale. (Photograph: ARIEL MARINKOVIC/AFP/Getty Images)
Lenders to Irish mining group Kenmare Resources have approved the company’s restructuring plan, which will see the group cut its debt by $269 million (€238m) through a share sale.
In a statement on Monday, Kenmare said that “significant progress” had been made ahead of the proposed capital raise and it is “confident” that it will be able to deliver the agreed debt restructuring and working capital requirements of the group. The company defaulted on its debts earlier this year after failing to reach agreement with lenders on a deleveraging plan.
Kenmare is now set to raise a minimum of $275 million of new equity by way of a Cornerstone Placing with State General Reserve Fund of the Sultanate of Oman(SGRF) and a firm placing. Of this $275 million, $200 million will repay and discharge $269 million in debt, leaving no more than $100 million of residual group debt and provide the Kenmare Group with additional liquidity by retaining $75 million for working capital and to cover expenses.
Michael Carvill, managing director said: “We are pleased that we have signed an agreement for the investment of US$100 million by SGRF and are encouraged by the level of interest shown by a broad range of investors in the capital raise. Early indications of investment from three of the main shareholders of Kenmare, in combination with lender underwriting position the company well to achieve the minimum target of $275 million. With the finalisation of key transaction agreements as announced today, we look forward to further engagement with investors and the completion of the capital restructuring in the next few weeks”.
Looking to 2016, Kenmare said that production and cost guidance remains unchanged and the product market is already showing “a long awaited improvement in prices, reversing four years of significant downward pressure”.
“With increased power stability at the Mine, a recapitalised balance sheet, a new strategic investor and a higher free float than would have existed with two strategic investors, we believe that the completion of the capital restructuring will leave Kenmare in a strong position in an industry with expectations of a growing supply deficiency,” Mr Carvill said.