De Beers Shareholders to Provide $500M Loan, As Sights Shrink

With a dismal outlook for rough diamond sales in the coming year, De Beers turned to its shareholders for a $500 million loan, an Anglo American release reveals. Anglo American holds a 45 percent stake in De Beers, The two other shareholders are the Oppenheimer family (40%) and the Republic of Botswana.

“In light of the weak outlook for diamond sales, the shareholders of De Beers have agreed to provide loans to De Beers, proportionate to their shareholdings, totaling $500 million in 2009," Anglo American announced. According to that, Anglo American will provide a loan of up to $225 million, the Oppenheimers will provide up to $200 million and Botswana up to $75 million.

De Beers said on Friday that net interest bearing debt fell to $3.55 billion from $4.06 billion in 2007 as a result of a stronger U.S. dollar, the repayment of debt "and shareholder support.”

Following a growth period in the first nine months of 2008, during which time De Beers achieved record sales of rough diamonds and prices increased by 16 percent, the company expects retailers to reduce inventories in 2009.

Therefore, the company is planning to have "smaller than usual" Sights, according to Managing Director Gareth Penny. Adding that "extraordinary times call for extraordinary actions," De Beers plans on "running a sustainable business in 2009 at lower levels of sales."