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    PDL   BMG702781417

PETRA DIAMONDS LIMITED

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Petra Diamonds shares fall on debt-for-equity deal

10/20/2020 | 06:22am EDT
FILE PHOTO: A visitor holds a 17 carat diamond at a Petra Diamonds mine in Cullinan

(Reuters) - Petra Diamonds has abandoned plans to sell the business in favour of a debt-for-equity restructuring, it said on Tuesday, sending its shares lower because of the deal's dilutive effect on existing stakeholders.

The London-listed company, which mines diamonds in South Africa and Tanzania, had put itself up for sale in June as part of the restructuring process but has received no viable offers, it said.

Its shares have slumped by more than 80% this year as the COVID-19 pandemic has battered the global diamond sector, with mines forced to shut down while consumer demand collapsed. The shares opened with an 18% drop and by 0952 GMT were down 3.6%.

Petra said its existing $650 million of bond debt will be partly replaced by up to $337 million of new notes, including $30 million of new money contributed by debtholders.

The remaining note debt will be converted into equity, leaving debtholders with a combined 91% of the company while diluting existing shareholders to a combined stake of only 9%.

"For existing equity holders it is very dilutive, as expected," wrote Liberum analyst Ben Davis.

Existing shareholders will be diluted to "next to nothing", Shore Capital analysts wrote.

Peel Hunt analysts took a more optimistic view, saying the restructuring would give Petra a more sustainable balance sheet and help it to benefit from a recovery in markets for rough diamonds. They calculated that Petra would be left with $444 million of gross debt.

Petra said it expects to seal a "lock-up agreement" cementing the terms with the noteholder group and South African lenders in early November. It expects the restructuring to become effective in the first quarter of 2021.

The agreement also includes new governance arrangements and cashflow controls.

Petra Chief Executive Richard Duffy expressed the company's gratitude to the noteholder group and South African lenders for their agreement in principle to provide "meaningful additional liquidity" in what has been a difficult period.

(Reporting by Helen Reid in Johannesburg and Yadarisa Shabong in Bengaluru; Editing by Louise Heavens and David Goodman)

By Helen Reid and Yadarisa Shabong


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
DOW JONES AFRICA TITANS 50 INDEX 0.00% 548.91 Delayed Quote.3.71%
DOW JONES SOUTH AFRICA(ZAR) 0.00% 1962.89 Delayed Quote.10.93%
GOLD -0.04% 1865.4 Delayed Quote.-1.28%
PETRA DIAMONDS LIMITED -0.07% 1.433 Delayed Quote.-20.83%
S&P AFRICA 40 INDEX 0.06% 178.94 Delayed Quote.3.69%
SILVER -0.53% 27.6898 Delayed Quote.5.59%
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Financials (USD)
Sales 2021 374 M - -
Net income 2021 54,1 M - -
Net Debt 2021 348 M - -
P/E ratio 2021 -4,19x
Yield 2021 -
Capitalization 196 M 196 M -
EV / Sales 2021 1,46x
EV / Sales 2022 0,92x
Nbr of Employees 3 696
Free-Float 78,9%
Chart PETRA DIAMONDS LIMITED
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Technical analysis trends PETRA DIAMONDS LIMITED
Short TermMid-TermLong Term
TrendsBearishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 8
Average target price 0,04 $
Last Close Price 0,02 $
Spread / Highest target 250%
Spread / Average Target 77,7%
Spread / Lowest Target -30,8%
EPS Revisions
Managers and Directors
NameTitle
Richard Neil Duffy Chief Executive Officer & Executive Director
Jacques Breytenbach CFO, Finance Director & Executive Director
Peter J. Hill Non-Executive Chairman
Alexander Gordon Kelso Hamilton Independent Non-Executive Director
Octavia Matshidiso Matloa Independent Non-Executive Director
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