Shanta Gold Limited Debt Restructuring (5644I)
20 June 2017 - 4:01PM
UK Regulatory
TIDMSHG
RNS Number : 5644I
Shanta Gold Limited
20 June 2017
20 June 2017
Shanta Gold Limited
("Shanta" or the "Company")
Debt Restructuring
Shanta Gold Limited (AIM: SHG), the East Africa-focused gold
producer, developer and explorer, is today pleased to announce a
proposed debt restructuring which includes:
-- The Company having accepted a credit approved commitment
letter with Investec Bank plc regarding a new US$50 million
facility to replace the current US$40 million facility, of which
US$35.3 million is outstanding ("New Investec Facility"). The
Company and Investec are now working on the definitive
documentation;
-- The Company is intending to repurchase the outstanding
unsecured subordinated convertible loan notes due April 2019 (the
"Notes"), at par, through a subsidiary of the Company ("Loan Notes
Buyback" and together with the New Investec Facility, the "Debt
Restructuring") following completion of definitive documentation
relating to the New Investec Facility. The Loan Notes Buyback will
be funded using the proceeds of the New Investec Facility.
Indicative support received from 77% of noteholders to vote in
favour of the Loan Notes Buyback; and
-- The Loan Notes Buyback is subject to the approval of 75% of
the nominal value of the Notes and the Company has received
indications from more than 75% of the nominal value of the Notes
that they intend to support the Loan Notes Buyback.
Key Highlights
-- The proposed Debt Restructuring, when completed, will provide
the Company with a simplified debt structure, a reduced interest
burden and enhanced working capital position;
-- Significantly reduces cost of debt (convertible loan note
coupon of 13.5% versus proposed New Investec Facility interest of
approximately 5.9% over LIBOR);
-- The term sheet for the New Investec Facility includes debt
repayment holiday until March 2018; and,
-- Capitalises on the improved reserve and resource position at
New Luika Gold Mine ("NLGM") announced in the Revised Mine Plan
("RMP").
New Investec Facility
The drawing of the increased facility with Investec is subject
to agreeing definitive documentation as well as satisfying various
customary conditions. It is also a requirement that the New
Investec Facility is utilised to fund the Loan Notes Buyback and
that the Loan Notes Buyback is therefore completed out of the New
Investec Facility;
Key terms of the New Investec Facility:-
(i) interest will be 5.9% above LIBOR;
(ii) the final capital repayment date is 31 December 2020 (an
extension from the current repayment date);
(iii) the first capital repayment will be 31 March 2018 (which
provides an approximate nine months capital repayment holiday as
Shanta substantially completes its capital expenditure program at
NLGM for the RMP);
(iv) requirement to hedge 50% forecast production for the next 18 months; and
(v) financial undertakings including a Debt Service Cover Ratio
(>1.10x), Loan Life Cover Ratio (>1.20x), minimum cash
balance of US$5 million, and a minimum reserve tail ratio of
30%.
The Company and Investec are now working on the definitive
documentation and it is currently anticipated that formal
agreements in relation to the New Investec Facility will be entered
into in August 2017. The New Investec Facility is otherwise on
terms usual for a transaction of this nature.
Loan Notes Buyback
Following the execution of the definitive documentation for the
New Investec Facility and satisfaction of any conditions to
drawdown, the Company intends to repurchase the outstanding Notes
at par through a subsidiary of the Company (Shamba Limited). As the
Loan Notes Buyback is to be funded through the above-mentioned
facility from Investec, it is conditional on the New Investec
Facility being drawn down by the Company.
A written resolution will be sent to the convertible noteholders
today which, if passed by the requisite 75% of nominal value of
Notes, will enable the Company to implement the buyback (subject to
the condition above being satisfied). The Company has received
indications from holders of 77% by nominal value of the Notes that
they intend to support the Loan Notes Buyback.
A further announcement will be made in due course, upon the
passing of the written resolution or execution of irrevocable
undertakings to approve the written resolution.
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
Enquiries:
Shanta Gold Limited
Toby Bradbury (CEO) +255 (0) 22 292
Eric Zurrin (CFO) 5148
Nominated Adviser and Broker
Peel Hunt LLP
Matthew Armitt / Ross Allister + 44 (0)20 7418
/ Chris Burrows 8900
Financial Public Relations
Tavistock
Emily Fenton / Jos Simson /
Barney Hayward +44 (0)20 7920 3150
About Shanta Gold Limited
Shanta is an East Africa-focused gold producer, developer and
explorer. It currently has defined ore resources on the New Luika,
Nkuluwisi and Singida projects in Tanzania and holds exploration
licences over a number of additional properties in the country.
Shanta's flagship New Luika Gold Mine commenced production in 2012
and produced 87,713 ounces in 2016.
For further information please visit: www.Shantagold.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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