[miningmx.com] – AQUARIUS Platinum has unveiled an ambitious $225m restructure of its balance sheet which it will finance through a rights issue and that once completed will give it the financial flexibility to launch new projects.
The group said today that it would seize the opportunity afforded by an aggressive rescoping of its operations over the last two years – and cannily ahead of renewed wage negotiations later in the year – to reduce debt in convertible bonds worth $300m.
Including cash on hand, Aquarius currently has net debt of about $200m which it said was too large for a company of its size. Aquarius is currently capitalised at $280m. The refinance plan will leave Aquarius with $50m in net debt and $25m in net cash.
The structure of the refinancing is that bondholders equating to some $138m in debt have agreed to sell their bonds to Aquarius such that a minimum repurchase of $150m will be launched up to a maximum of $225m.
The $225m maximum repurchase is governed by the rights offer Aquarius is planning with a prospectus due on April 15. The refinancing is also possible owing to some $64m in pretax income from the sale of non-core assets including its Blue Ridge prospect.
In an announcement to the Johannesburg Stock Exchange, Aquarius said uncertainty about its ability to fund the $300m in convertible bonds had affected its share price. The shares were just under 4% weaker in Johannesburg at R6,05/share today, but it has gained 34% since it hit a low of R4.50/share in August 2012.
“After a period of significant operational change, the board is of the view that operational performance has returned to satisfactory levels, both in terms of costs and production parameters,” it said in its announcement.
“Greater stability and improved performance enables increased cash flow generation, enhances the likelihood of the Aquarius Group accessing debt financing, increases the board’s confidence in the business and its financial outlook, and assists the board to
plan capital requirements more efficiently,” it said.
Jean Nel, CEO of Aquarius Platinum, said during the presentation of the group’s interim results in February that the company was now in a better position as it had more certainty in respect of debt carrying position of its assets.
“We are now in a position where the board can assess the refinancing of the bond and the capital structure of the company with an increased level of certainty, knowing where the assets can deliver and their debt carrying capacity,” Nel said.
Interim headline earnings were $22m in the six months ended December 31, a $34m improvement year-on-year. Cash holdings increased $5m to $83m, and there was a $62m turnaround in net cash flow from its South African operations against a $57m deficit in the previous period.
It said today that it was assessing the viability of a number of “… smaller projects aimed at increasing production at capital- and cost-efficient rates”. Implementation of these projects would be less complicated if the group’s balance sheet was restructured to a sustainable level, it said.
