Gold firm Petropavlovsk saw its share price slashed by almost 30 per cent yesterday, after announcing that chairman Peter Hambro is to lead a $235m (£150m) rights issue in order to refinance around 62 per cent of the company’s bonds.
The rights issue will be carried out at 5p per share, and will be underwritten by Hambro, along with Petropavlovsk chief executive Dr Pavel Maslovskiy and the support of a “substantial group of bondholders”.
The share price dropped from to 11.25p yesterday, however a spokesman for the company said that a reduction like this had been anticipated and was actually a positive for the company as it complied with the theoretical ex-rights price, which is the market price that a stock will theoretically have following a new rights issue. Petropavlovsk has also agreed the terms of a new five year convertible bod with a target size of $100m.
The refinancing is expected to complete before the maturity date for the existing bonds, which is in February 2015.
According to the company, this will reduce net debt to around $700m – net debt was reported at $902m as at 30 September 2014.
Hambro said the refinancing would secure the future of the group and give it “the opportunity to take full advantage of the significant operating margin and the substantial reserves and resources that it now enjoys”.