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Kenmare to raise minimum of $275m

20 June 2016 07:53

Kenmare Resources intends to raise a minimum of US$275 million of new equity through a cornerstone placing with State General Reserve Fund of the Sultanate of Oman and a firm placing.

SGRF has, through its subsidiary African Acquisition Sarl, signed a cornerstone subscription Agreement for a US$100 million equity investment.

Kenmare says of the $275m, US$200m will used to repay and discharge US$269m in debt and accrued interest under the terms of the amendment, repayment and equitisation agreement, leaving no more than US$100m of residual group debt and provide the Kenmare Group with additional liquidity by retaining US$75m for working capital and to cover expenses. Certain lenders will underwrite up to a maximum of US$40.8m of the capital raise by agreeing to equitise a matching amount of debt, in the event that cash proceeds are less than US$275m. All funds raised in excess of US$275m (including under the open offer) will be applied to reduce or eliminate any debt equitisation and reduce or eliminate debt on the basis that every US$3 of cash will discharge US$4 in debt. The maximum funds raised, including through a proposed open offer, would be approximately US$368 million, a level which would fully extinguish all group debt of US$392 million (assuming a closing date in early August) and provide US$75 million for working capital and to cover expenses.

Managing director Michael Carvill said: "We are pleased that we have signed an agreement for the investment of US$100 million by SGRF and are encouraged by the level of interest shown by a broad range of investors in the Capital Raise. Early indications of investment from three of the main shareholders of Kenmare, in combination with lender underwriting position the Company well to achieve the minimum target of US$275 million. With the finalisation of key transaction agreements as announced today, we look forward to further engagement with investors and the completion of the Capital Restructuring in the next few weeks.

"Production and cost guidance for 2016 remains unchanged and the product market is already showing a long awaited improvement in prices, reversing four years of significant downward pressure. With increased power stability at the Mine, a recapitalised balance sheet, a new strategic investor and a higher free float than would have existed with two strategic investors, we believe that the completion of the Capital Restructuring will leave Kenmare in a strong position in an industry with expectations of a growing supply deficiency."

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Related Company: KMR

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