London-listed gold miner Petropavlovsk, which is currently under siege from a mysterious group of shareholders who want to eject the board, has today warned it could have to pay $234m to a Chinese lender.
Petropavlovsk has been negotiating for several weeks with the Industrial and Commercial Bank of China (ICBC), regarding a $340m project finance facility.
The facility is owed by Hong Kong-listed IRC, an iron ore mining company which is 31 per cent owned by Petropavlovsk. Petropavlovsk had guaranteed the multi million-dollar debt, but IRC has said it won't be able to find the funds to make a £35.16m payment due next month.
If IRC defaults, Petropavlovsk could have to stump up the entire $234m left of the loan at ICBC's demand.
The gold miner said it is pursuing a number of other avenues to make sure this does not happen. One way would be to refinance the whole debt facility, and Petropavlosk said talks “with a leading Russian lender” regarding this option were “well progressed”.
Alternatively, Petropavlovsk said it would consider providing a short-term advance to IRC to fund a portion of the June repayment.
A tussle over debt arrangements is likely to be the last thing Petropavlovsk needs, as a shareholder revolt is on the horizon at its June AGM.
Two new investors, under the names of Cabs Platform and Slevin, want to reinstate former directors Pavel Maslovskiy, Roderic Lyne and Robert Jenkins who were ousted last year by shareholders disappointed with the company's performance.
One top Petropavlovsk shareholder told City A.M. that the two investors had bought their stakes from an entity controlled by Petropavlovsk's mining magnate founder Peter Hambro and Pavel Maslovskiy, and were likely to be closely connected to the two former executives.
More recently, Petropavlovsk's largest shareholder – Kazakh entrepreneur Kenges Rakishev – came out in support of the new boardroom shake-up, though he had said he did not know the identities of the two activists proposing the changes.