Gold mining company Petropavlovsk has launched a package to refinance $310.5m (£206.5m) of its debt, but it requires share and bond holder approval.
The plan, described in a statement released yesterday evening, includes a new five-year $100m convertible bond and a £155.1m rights issue.
The firm will also look to go ahead with a debt-for-equity exchange.
The main job of the refinancing is to address the repayment of existing bonds on 18 March.
“Our operational and exploration success has been overshadowed by a liquidity problem and the need to refinance our outstanding $310.5m convertible bonds – with the resulting uncertainty causing a sharp decline in our share price. The refinancing is required in order for the group to continue as a going concern,” said chairman Peter Hambro.
In order for the refinancing to be implemented, the approval of both bondholders and shareholders is required.
“The quorum required is holders of two-thirds of the principal amount of bonds by value, and the majority needed in favour is 75 per cent of those voting. At the time of this announcement, a group of bondholders representing over 71 per cent of the principal amount of bonds have already signed up to a recapitalisation agreement giving their support to this refinancing,” Hambro said.
“The next important event is the shareholders’ meeting, which is scheduled for 26 February 2015, at which the company needs the approval of 75 per cent of those shareholders who vote in order to effect the refinancing.” The company has a market capitalisation of less than £30m. Its net debt is $900m which it plans to shrink to $700m once the refinancing is completed.