Petra Diamonds Seeks Debt Deal to Avoid Loan Default

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Mirny, Sakha Republic, Russia, November 14, 2013.

Enterprise Television- Petra Diamonds Seeks Debt Deal to Avoid Loan Default

The London-listed mining company said last week it had started negotiations with its lenders for debt agreements relating to its EBITDA for December 2017 and June 2018.

The confiscation of a consignment of its diamonds in Tanzania and a labour strike at its South African mines were the main reasons that Petra flagged in October that it was likely to fall short of its loan obligations.

Petra, which operates five mines in South Africa and Tanzania, reached peak capital expenditure in its last financial half year after seven years of investing more cash than it generated into expanding its operations.

The company has spent nearly $1.5 billion over the last seven years at the Finsch and Cullinan mines.

Dippenaar said Petra would now focus on cutting its debt, adding that acquisitions and explorations were not on the table.

Net debt at the end of December stood at $644.7 million but is expected to fall to $560–$600 million by the end of June. The company has a syndicated loan of about $120 million with South African banks.

Petra, which was accused of under-declaring the value of the stones, is caught up in an industry-wide crackdown by the Tanzanian government in an effort to reap more mineral revenue. Petra has denied the accusation.

The consignment, which was confiscated in September, has not yet been returned but the company resumed exporting other diamond packages after a brief government-mandated stoppage.

Dippenaar said the Tanzanian government had concluded questioning its employees but it was unclear whether the full investigation was over.