Petra Diamonds said on Monday that it has entered into agreements with Absa and Rand Merchant Bank (RMB) who will directly finance its black economic empowerment (BEE) partners for loans due to the company.
FirstRand Bank Limited acting through RMB and Absa Corporate and Investment Banking agreed to finance the $98 million loans due to Petra relating to the original acquisition of the BEE partners interests in Finsch and Cullinan.
The BEE Partners will now repay Absa and RMB from their share of cashflows from Finsch and Cullinan. The loan repayment schedules have been prudently structured to allow for flexibility around on-mine cashflows and loan repayments, said Petra.
The BEE partners are Senakha Mining Investments, Thembinkosi Mining Investments and the Petra Diamonds Employee Trust.
The loans were subject to normal commercial interest rates and were due to be repaid to the company out of the Finsch and Cullinan mine free cashflows.
The loans due by the BEE partners to Petra are settled some three to four years sooner than previously would have been the case, reported Petra.
Petra in strong position
“The re-financing of the BEE Partner loans is a validation by Absa and RMB of the quality of Petra’s asset base, cashflows and management team,” commented Petra chief executive Johan Dippenaar.
“The repayment of these loans significantly strengthens the company’s balance sheet, enhances flexibility and places Petra in a strong position financially.”
Petra in a statement said it would apply the funds flowing from the refinancing to its Group treasury, further strengthening the balance sheet and confirming the commencement of dividends for the current financial year to June 2015.