Kenmare advances capital restructuring

JOHANNESBURG (miningweekly.com) – The share price of LSE-listed mineral sands producer Kenmare Resources surged on Monday as the company announced it was making progress with its capital restructuring.

As part of Kenmare’s aim to raise $275-million to $368-million in equity to reduce its debt, it has entered into a cornerstone subscription agreement with SGRF – a sovereign wealth fund of the Sultanate of Oman – for $100-million.

SGRF subsidiary, African Acquisition, would subscribe for 31.93-million Kenmare shares at $3.12 apiece. It would hold a 29.2% stake in Kenmare should $275-million be raised and 24.3% if $368-million is raised by Kenmare.

Kenmare was also continuing discussions with existing and new shareholders that have shown an interest in potentially participating in the company’s capital raise, with three of its biggest shareholders having indicated that they wanted to participate in the capital raise by contributing at least $115-million. M&G, in particular, planned to retain its current shareholding of 19.97% in Kenmare once the capital restructuring was completed.

Meanwhile, certain of Kenmare’s lenders have also agreed to underwrite up to $40.8-million of the capital raise by agreeing to equitise a matching amount of debt should cash proceeds be less than $275-million.

“We are pleased that we have signed an agreement for the investment of $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 $275-million,” MD Michael Carvill said on Monday.

Kenmare would use $200-million of the raised equity to reduce its current $269-million in project debt and accrued interest, while $75-million would be used to cover expenses and future working capital requirements.

Any additional cash proceeds above $275-million would be used to further reduce debt.

Kenmare expected to conclude the capital raise by August.

Meanwhile, Kenmare on Monday said it and another potential cornerstone investor King Ally Holdings had terminated King Ally’s $100-million subscription agreement by mutual consent. The subscription agreement had been entered into in April, but uncertainty around the process for King Ally to execute an investment in Kenmare had prompted the parties to end the agreement.

The mineral sands miner’s share price on the LSE rose by as much 48.6% to 1.4p a share on Monday morning. By 11:57, its shares were trading at 0.83p apiece, up 18.6% compared with Friday’s close of 0.7p.