Kenmare Resources plc ("Kenmare" or "the Company")
14 February 2014
Moma Mine Debt Financing Update
Kenmare Resources (LSE: KMR, ISE: KMR), one of the leading producers of titanium minerals, is pleased to announce that it has agreed with its lender group a restructuring of project financing for the Moma Mine in Mozambique. The restructuring removes the requirement to repay all deferred subordinated debt by 1 August 2015, and instead reschedules all deferred subordinated debt that is unpaid as of 31 July 2015.
This restructuring has been designed to enable the Project Companies to service the project debt in a sustainable manner; and in due course to pay down the debt on an accelerated basis from available cash while making distributions to Kenmare.
Managing Director Michael Carvill commented: "We are extremely pleased to have concluded this milestone restructuring with the co-operation of the project lenders. This restructuring better aligns the terms of the project financing with the projected cash flows of the Moma Mine and offers a sustainable solution for both the Company and our lenders."
Under the terms of the project financing applicable before this restructuring, if cash is insufficient to pay interest and scheduled principal on the subordinated loans on a payment date, interest is capitalised and both interest and scheduled principal are deferred and become payable on the next semi-annual payment date, subject, again, to the availability of cash. However, under the previous arrangement, it was necessary for the Project Companies to be able to repay all deferred subordinated debt obligations by 1 August 2015. The deferred subordinated debt and accrued interest as at 31 December 2013 was US$143.3 million and the weighted average interest rate, including the additional margin of 1% agreed in 2009, was 10.16%. As at 31 December 2013, the total subordinated debt was US$247.3 million and total senior debt was US$94.6 million.
The principal provisions of the agreed restructuring are as follows:
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On 31 July 2015, all deferred subordinated debt will be rescheduled as follows:
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50% of the deferred subordinated debt will be amortised in nine equal semi-annual instalments commencing on 1 August 2015 and ending on 1 August 2019.
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The balance will be repaid in one instalment on 1 August 2019 (the "Deferred Bullet").
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Commencing 1 August 2015, the Project Companies will no longer be able to defer subordinated debt, other than in respect of certain margin elements described below.
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The additional 1% per annum margin on subordinated debt agreed under the Deed of Waiver and Amendment entered into in 2009 will continue to accrue after Completion (which will occur upon meeting certain financial, legal and permitting requirements) and shall be payable following the repayment of all senior debt.
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A further 2% margin will accrue on the outstanding amount of the Deferred Bullet from 1 August 2015 and shall be payable following the repayment of all senior debt.
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Subject to certain conditions, subordinated lenders will be entitled to receive 50% of cash available for distributions by the Project Companies, with the balance of such cash available for restricted payments (i.e. distributions to group companies). Subject to available cash, such prepayment would accelerate repayment of subordinated debt prior to its scheduled maturity in August 2019.
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As part of the restructuring, the back-stop date for the Project achieving Completion is removed, but achieving Completion remains a condition to the Project Companies making restricted payments.
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Subordinated lenders will receive a risk fee equal to 1% of the principal amount of subordinated debt outstanding as at 31 December 2013 and lenders are to be paid work fees totalling US$180,000.
For further information, please contact:
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
Virginia Skroski, Investor Relations Manager
Tel: +353 1 671 0411
Mob: + 353 87 739 1103
Murray Consultants
Joe Heron
Tel: +353 1 498 0300
Buchanan
Bobby Morse / Louise Mason / Gordon Poole
Tel: +44 207 466 5000
Note: Kenmare Moma Mining (Mauritius) Limited and Kenmare Moma Processing (Mauritius) Limited are wholly owned subsidiaries of Kenmare Resources plc and collectively referred to herein as "the Project Companies".