TIDMKMR
This announcement ("Announcement") does not constitute, or form part of,
an invitation or offer of ordinary shares or other securities to be
issued, offered or sold in connection with the Capital Restructuring (as
defined below) for subscription, sale or purchase by any person.
The distribution of this Announcement, and any other document issued by
the Company in connection with the issue, offer or sale of ordinary
shares or other securities in connection with the Capital Restructuring
into jurisdictions other than Ireland and the United Kingdom may be
restricted by law and therefore persons into whose possession these
documents come should inform themselves about and observe such
restrictions. Any failure to comply with any such restrictions may
constitute a violation of the securities laws or regulations of such
jurisdictions. In particular, subject to certain exceptions, this
announcement should not be distributed, forwarded to or transmitted in
or into any the United States, Canada, Australia or Japan.
Kenmare Resources plc ("Kenmare" or "the Company")
29 April, 2016
Update on Proposed Deleveraging Plan
Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the leading global
producers of titanium minerals and zircon, which operates the Moma
Titanium Minerals Mine (the "Mine" or "Moma") in northern Mozambique, is
pleased to provide the following update on its proposals to materially
reduce the Group's outstanding debt (from outstanding debt of US$367.8
million as of 31 December, 2015 to not more than US$100 million); to
provide the Group with additional liquidity from part of the net
proceeds of a capital raise; and to amend the terms of residual loans.
It is expected that existing events of default under the current debt
facilities would also be remedied upon implementation of the proposals.
These proposals represent the components of a material deleveraging plan
("Deleveraging Plan") required to be delivered to the Group's lenders
(the "Lenders") under the terms of the project loan amendment agreement
entered into in April 2015 ("the April 2015 Amendment"). While it was a
requirement of the April 2015 Amendment that a Deleveraging Plan be
delivered to, and agreed with, Lenders by 31 January, 2016, a
Deleveraging Plan has not yet been agreed. However, significant progress
has been made on such a plan and the Lenders continue to work with the
Group on satisfaction of the pre-conditions necessary for the
implementation of a Deleveraging Plan.
Deleveraging Plan and Summary Details of the Capital Restructuring
The Deleveraging Plan includes the following key elements (together "the
Capital Restructuring"):
1. A US$100 million placing of new ordinary shares with State General
Reserve Fund, a sovereign wealth fund of the Sultanate of Oman ("SGRF"),
and a US$100 million placing of new ordinary shares with King Ally
Holdings Limited ("King Ally") (in aggregate US$200 million) ("the
Cornerstone Placing") and an additional firm placing, at the same issue
price ("Issue Price") as the Cornerstone Placing, of not less than US$75
million ("Firm Placing") for which participation commitments will be
sought from a number of new and existing institutional shareholders;
2. Application of US$200 million of the proceeds of the Cornerstone Placing
and Firm Placing to repay US$250 million of debt, together with the
discharge of an amount equal to interest accruing on project loans
(excluding the Super Senior Facility) from 25 November, 2015 until the
date of receipt of Lender approvals, with the balance of the net proceeds
(after expenses of the issue and of the Capital Restructuring) of the
Cornerstone Placing and Firm Placing being retained by the Company for
working capital purposes;
3. An open offer ("Open Offer") to existing shareholders to subscribe for
new ordinary shares on the same terms as under the Cornerstone Placing
and Firm Placing. The maximum size of the Open Offer will be such as to
enable the discharge of all remaining outstanding indebtedness in the
event of full subscription under the Open Offer on the basis that for
every US$3 raised under the Open Offer US$4 of debt obligations are
extinguished;
4. To the extent that subscriptions under the Open Offer are insufficient to
reduce outstanding indebtedness to US$100 million, the amount of debt in
excess of US$100 million will be equitised at the Issue Price;
5. A share capital reorganisation will also be proposed as part of the
Capital Restructuring pursuant to which ordinary shares in issue will be
consolidated, with all new ordinary shares to be issued under the Capital
Restructuring being on a post-consolidation basis.
The net effect of these arrangements will be that the amount of debt
remaining outstanding following the completion of the Capital
Restructuring will not be more than US$100 million and (dependent on the
level of subscription for new ordinary shares under the Open Offer)
could be less.
The participants in the Cornerstone Placing are each expected to hold
new ordinary shares representing a maximum of 29.9% in the enlarged
issued share capital of the Company following completion of the Capital
Restructuring. The actual percentage represented by their respective
interests will depend on the funds raised in excess of the required
minimum of US$275 million. Similarly, the percentage of equity (if any)
owned by the Lenders following completion of the Capital Restructuring
will depend, amongst other things, on the funds raised in excess of the
required minimum of US$275 million.
Objectives of the Capital Restructuring
The primary objectives of the Capital Restructuring are to:
1. achieve a new and simplified capital structure for the Group, with a
strengthened balance sheet and a more appropriate debt service and
maturity profile, taking account of the difficult trading conditions
which have characterised the titanium dioxide feedstocks industry in the
period from 2013 to 2016 (inclusive);
2. ensure the Group has sufficient resources to meet its general corporate
and working capital needs;
3. allow the Group to conserve cash resources pending a recovery in product
prices (there will be no principal repayments (semi-annual) in respect of
outstanding debt following completion of the Restructuring until 1
February, 2018));
4. recognise and respect the interests of the stakeholders of the business,
in particular the senior lenders, the subordinated lenders and the
shareholders;
5. avail of the conditional commitment from King Ally and the expected
commitment from SGRF to make a material investment in the Company.
6. provide other institutional investors with the opportunity to invest, in
aggregate, not less than US$75 million at the same Issue Price;
7. provide all shareholders (subject only to jurisdictional selling
restrictions) with an opportunity, alongside, and at the same price as,
the participants in the Cornerstone Placing and the Firm Placing, to
re-invest in the Company and the Mine with a right-sized debt structure,
with such investment reducing (and potentially eliminating) the
proportion of new ordinary shares which would otherwise be held by
Lenders on completion of the fundraising, and in certain circumstances
reducing (and potentially eliminating) total outstanding debt; and
8. deliver the material deleveraging required by the Lenders under the April
2015 Amendment
The Capital Restructuring has been structured so as to recognise the
primacy of cash investment and maximise the debt reduction achieved at
this time. Accordingly, the application of the first US$200 million of
proceeds raised under the capital raise will be applied to repay US$250
million of debt and discharge an amount equal to certain interest
accrued; and, to the extent that additional cash (supplemental to the
US$75 million under the Firm Placing, which will be used to discharge
expenses and for working capital purposes), is raised this will retire
additional debt at a ratio of 4:3.
All of the characteristics of Moma which enabled its original
development and its subsequent expansion in 2010, and which formed the
basis for the additional accommodations and investments since made by
the Lenders and shareholders respectively, still subsist. Moma
constitutes a resource large enough to support very long mine life, is
capable of being mined at low operating cost with surface mineralisation
enabling dredge mining, has access to relatively low cost hydro power,
has a coastal location requiring minimal over land transportation and
the ability to mine and export directly using a dedicated shipping
terminal, and has a diversified worldwide customer base and significant
co-product revenue stream and ilmenite products suitable for both
sulphate and chloride pigment processes without further beneficiation.
The Board believes that, with the implementation of the Capital
Restructuring and the attendant material deleveraging and near-term risk
mitigation in relation to the financial position of the Group, together
with the benefit of the considerable operational experience gained,
efficiencies and improvements being implemented at Moma over recent
years (including in relation to mitigating poor power reliability issues,
increasing the effectiveness of the rutile and zircon circuits and
decreasing operating costs primarily through reductions in the cost and
size of the workforce), the Group will be well placed to benefit from a
recovery in product pricing. While the timing of any such recovery
cannot be foreseen with accuracy, both supply and demand dynamics
(MORE TO FOLLOW) Dow Jones Newswires
April 29, 2016 02:02 ET (06:02 GMT)
(further detail in relation to which is set out in the Kenmare Annual
Report published today) indicate that conditions are conducive to an
improvement in pricing.
Risks to Implementation
The Deleveraging Plan is a complex initiative with multiple
counterparties. As of the date of this announcement, it remains subject
to significant third party, internal and external risks. Moreover any
investment by King Ally and/or any commitment by SGRF, if made, will be
subject to a number of key conditions, including, inter alia, their
being respectively satisfied with the form and content of a prospectus
to be prepared by Kenmare, that a final agreement with lenders is
entered into and reflects the envisaged debt restructuring, and that not
less than, in aggregate, US$275 million is raised by way of an equity
issue, as well as conventional conditions for an equity issue of this
nature. The Lenders have not yet agreed to the Deleveraging Plan.
In addition, the Capital Restructuring will require publication of a
prospectus and convening of an extraordinary general meeting at which
approval of a number of resolutions (expected to include ordinary
resolutions, special resolutions and resolutions on which only certain
independent shareholders can vote) will be required.
Having regard to the uncertainties relating to the Capital Restructuring,
the audit report for the year ended 31 December, 2015 includes an
emphasis of matter regarding a material uncertainty in respect of going
concern for the Kenmare Group.
Kenmare Resources plc
Michael Carvill, Managing Director
Tel: +353 1 671 0411
Mob: + 353 87 674 0110
Tony McCluskey, Financial Director
Tel: +353 1 671 0411
Mob: + 353 87 674 0346
Jeremy Dibb, Corporate Development and Investor Relations Manager
Tel: +353 1 671 0411
Mob: + 353 87 943 0367
Murray
Joe Heron
Tel: +353 1 498 0300
Mob: +353 87 690 9735
Buchanan
Bobby Morse
Tel: +44 207 466 5000
J&E Davy (Davy), which is regulated in Ireland by the Central Bank, is
acting exclusively for Kenmare Resources plc in connection with the
Capital Restructuring and for no one else and will not be responsible to
any other person for providing the protections afforded to customers of
Davy or for providing advice in connection with the Capital
Restructuring or any other arrangement referred to in this Announcement.
Apart from the responsibilities and liabilities, if any, which may be
imposed on Davy by the Central Bank or by FSMA or the regulatory regime
established thereunder, Davy does not accept any responsibility
whatsoever and makes no representation or warranty, express or implied,
for the contents of this Announcement, including its accuracy,
completeness or verification or for any other statement made or
purported to be made by Davy, the Company or any other person, in
connection with the Company or any other matter described in this
Announcement and nothing in this Announcement shall be relied upon as a
promise or a representation in this respect, whether as to the past or
the future. Davy accordingly disclaims all and any liability whatsoever,
whether arising in tort, contract or otherwise (save as referred to
above), which it might otherwise have in respect of this Announcement or
any such statement.
Rothschild, which is authorised and regulated in the United Kingdom by
the Financial Conduct Authority is acting exclusively for Kenmare
Resources plc and is acting for no one else in connection with the
Capital Restructuring and will not be responsible to any other person
other than Kenmare Resources plc for providing the protections afforded
to clients of Rothschild or for providing advice in connection with the
Capital Restructuring or any other arrangement referred to in this
Announcement. Apart from the responsibilities and liabilities, if any,
which may be imposed on Rothschild by FSMA or the regulatory regime
established thereunder, Rothschild does not accept any responsibility
whatsoever and makes no representation or warranty, express or implied,
for the contents of this Announcement, including its accuracy,
completeness or verification or for any other statement made or
purported to be made by Rothschild, the Company or any other person, in
connection with the Company or any other matter described in this
Announcement and nothing in this Announcement shall be relied upon as a
promise or a representation in this respect, whether as to the past or
the future. Rothschild accordingly disclaims all and any liability
whatsoever, whether arising in tort, contract or otherwise (save as
referred to above), which it might otherwise have in respect of this
Announcement or any such statement.
This document and any materials distributed in connection with the
Capital Restructuring may contain certain forward-looking statements
regarding the belief or current expectations of Kenmare, the Directors
of Kenmare and other members of its senior management about Kenmare's
financial condition, results of operations and business and the
transactions described in this document. Generally, but not always,
words such as 'may', 'could', 'should', 'will', 'expect', 'intend',
'estimate', 'anticipate', 'assume', 'believe', 'plan', 'seek',
'continue', 'target', 'goal', 'would' or their negative variations or
similar expressions identify forward-looking statements. Such
forward-looking statements are not guarantees of future performance.
Rather, they are based on current views and assumptions and involve
known and unknown risks, uncertainties and other factors, many of which
are outside the control of Kenmare and are difficult to predict, that
may cause the actual results, performance, achievements or developments
of the Group or the industries in which it operates to differ materially
from any future results, performance, achievements or developments
expressed or implied from the forward-looking statements. A number of
material factors could cause actual results to differ materially from
those contemplated by the forward-looking statements. The
forward-looking statements herein relate only to events or information
as of the date on which the statements are made and, except as
specifically required by law, the Listing Rules of the Irish Stock
Exchange or the UK Listing Authority, the Market Abuse Regulations and
Rules of the Central Bank, or the Prospectus Regulations and Rules of
the Central Bank, Kenmare undertakes no obligation to update or revise
any forward-looking statements, whether as a result of new information,
estimates or opinions, future events or results or otherwise.
This Announcement is not a Prospectus.
This announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: Kenmare Resources via Globenewswire
HUG#2008218
http://www.kenmareresources.com/
(END) Dow Jones Newswires
April 29, 2016 02:02 ET (06:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Kenmare Resources (LSE:KMR)
Historical Stock Chart
From Jun 2024 to Jul 2024
Kenmare Resources (LSE:KMR)
Historical Stock Chart
From Jul 2023 to Jul 2024