$25m Rights Issue to Keep Petra Afloat
October 22, 25
(IDEX Online) - Petra Diamonds has announced details of a lifesaving $25m (£18.8m) rights issue to keep the company afloat as it battles falling prices and production, together with rising debt and cash flow difficulties.
Existing shareholders will be offered 114 million new ordinary shares at 16.5p each in a fully underwritten rights issue, if the move is approved at a special general meeting in London on 6 November.
Failure to obtain approval could leave Petra vulnerable to insolvency or forced asset disposals.
The rights issue is part of a broader refinancing program that includes extending the repayment dates on bank debt and notes to 2029 and 2030, and revising terms to allow interest payments to be made in shares instead of cash.
The UK-based company now operates two mines - Cullinan and Finsch mines in South Africa - after selling off Williamson (in Tanzania) and Koffiefontein (in South Africa) in recent years as part of a restructuring plan.
Vivek Gadodia, interim joint CEO, said on Friday (17 October): "Petra has undergone immense change over the past 18 months in order to become a streamlined business that is now positioned to deliver sustained value for its stakeholders.
"This has enabled us to refinance our debt with a fit-for-purpose solution that allows capital execution while providing the headroom and flexibility to weather the current market conditions."
Petra announced in early August that it had reached agreement in principle with its financial stakeholders for a long-term solution for the refinancing plan.
Revenue for FY2025 was $206m, down 33 per cent year-on-year from $309m and net debt increased to $264m.
Petra's latest sales results show some positive momentum in the market with an increase in like-for-like rough diamond prices at its latest tender, but revenue for Q4 was down 49 per cent year-on-year to $50m.
Pic, courtesy Petra Diamonds, shows Cullinan mine, South Africa.