Aquarius unveils hefty discount in $225m offer

[miningmx.com] – AQUARIUS Platinum unveiled terms of a $225m rights offer that, if successful, would enable it to buy back some $172.6m in convertible bonds
– a development that would heavily destress the platinum firm’s balance sheet.

The total value of bondholders in the company is about $300m of which just over half tendered into management’s offer last week to cancel the bonds. The remainder of bondholders prefer to take the coupon and convert the bond when it matures in 2015.

This can be construed positively as a sign that bondholders are comfortable enough to stay in the stock and convert at its full value in 2015 rather than the partial value that is being offered now.

Aquarius is offering a hefty 66% discount in a 2:1 rights offer – priced at R2.41/share – to South African shareholders while UK and Australian shareholders will be offered a 65% and 58 discount on the company’s close on April 11 respectively.

Aquarius said the results of the rights issue would be announced on May 15.

In an announcement to the Johannesburg Stock Exchange, on April 7 Aquarius said that uncertainty about its ability to fund the $300m in convertible bonds had affected its share price.

“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.