Petropavlovsk shareholders approve refinancing plan

By Angela McDaniels

Tacoma, Wash., Feb. 26 – Petropavlovsk plc’s refinancing plan received shareholder approval, according to a company announcement.

As previously reported, Petropavlovsk launched the refinancing on Feb. 2, saying it was necessary to keep the group continuing as a going concern.

The refinancing required the approval of both bondholders and shareholders at their respective general meetings.

The shareholder meeting was held Feb. 26. The company needed approval of 75% of shareholders.

The bondholders approved the refinancing at their meeting on Feb. 24. Two-thirds of the principal amount of bonds by value was needed for a quorum. In addition, 75% of those voting needed to approve the changes.

Refinancing details

The transaction consists of an underwritten rights issue, a debt-for-equity exchange, new convertible bonds and bank waivers and consents from senior lenders.

Holders tendered $186,333,333 of the company’s $310.5 million of 4% guaranteed convertible bonds due 2015 in the voluntary debt-for-equity exchange.

The company also received $58,012,860 of cash underwriting commitments.

Because of the response to the debt-for-equity exchange, there will be no mandatory exchange, the company said.

The voluntary debt-for-equity commitments will be scaled back to $158,194,620 using a factor of 84.9%.

In addition, the cash underwriting commitments will be scaled back to $47,177,625, a factor of 81.3%.

The fully preemptive 157-for-10 rights issue at 5p per share will raise £155.1 million.

The cash underwriting of £50.8 million was arranged by Peter Hambro and chief executive officer Pavel Maslovskiy and committed to by certain bondholders. All but £400,000 of the rights issue will be underwritten.

For new ordinary shares not taken up in the rights issue or placed, some bondholders have agreed to exchange their bonds for new ordinary shares in an amount of £104 million.

The company will launch a new, five-year $100 million convertible bond issued by Petropavlovsk 2010 Ltd. and guaranteed by Petropavlovsk plc.

The new convertibles will mature on Dec. 31, 2019 and pay a quarterly coupon of 9%. The conversion price will be a 50% premium to the theoretical ex-rights price. Petropavlovsk will be able to call the new convertibles after three years subject to a trigger of 150% of the conversion price.

For the bank waivers, Petropavlovsk said on Feb. 2 that VTB, ICBC and Sberbank have signed waiver documentation and it added that a waiver between Sberbank and some of the company’s subsidiaries was expected to be executed shortly.

Some bondholders agreed to provide $45 million in cash by participating in the rights offering, and they were to receive priority in receiving cash or new convertible bonds for their existing holdings, with the cash capped at their commitment to the rights offering. Bondholders participating in the agreement were also to participate in the debt-for-equity exchange and were to gain second priority in receiving cash or new convertible bonds for the existing convertibles that they owned, capped at the level of their commitment to the exchange.

Any remaining cash raised in the rights issue and any remaining new convertibles were to be allocated to redeem at par any of the existing convertibles that were still outstanding after these two steps. Accrued interest on the existing convertibles will be paid in cash.

An early consent fee of 0.25% was expected to be paid to bondholders who voted in favor of the recapitalization by an early deadline.

A fee of 5% would be paid for the cash commitments from existing holders of the convertibles and from Hambro and Maslovskiy. Investors who committed to the voluntary debt-to-equity exchange were to receive 4%.

BofA Merrill Lynch and Sberbank CIB are coordinators of the refinancing.

Petropavlovsk, formerly Peter Hambro Mining plc, is a London-based gold mining company that operates in Russia.

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