Newfield Resources has retired approximately $40 million worth of corporate bond debt and roughly $2.1m of associated accrued interest for its Tongo diamond mine in Eastern Sierra Leone. Additionally, the company raised $12.5 million through a capital raise with the combined exercise significantly strengthening its balance sheet and reducing long-term bond debt to zero.
The equity restructuring and capital raise removes the obligation to repay approximately $5 million of interest on an annual basis and over $15 million for what would have been the remaining life of the corporate bonds.
Binding agreements with its Australian corporate bondholders and certain former Australian bondholders will receive a total of $15 million that will be converted to equity by the issue of 42,857,143 shares at an issue price of $0.35 per share.
For US bond holders US$7.5 million of corporate bonds will be converted to equity by the issue of 29,354,208 shares at a price of A$0.35 per share. A further US$10 million of the US corporate bonds will be repaid in cash through Newfield’s existing cash reserves.
A firm commitment has been made by a sophisticated investor of A$2.5m by issue of 7,142,857 shares at an issue price of $0.35 per share.
Townshend Capital has also stepped up to the plate with a partially underwritten allocation of up to A$10m representing 28571,429 shares at $0.35 per share.
The underwriting arrangement together with the firm commitment for $A2.5m are intended to replace Newfield’s cash reserves and to repay the US$10m of corporate bonds.
Outstanding interest payments of approximately A$2.1m to corporate bondholders will also be settled by converting to 24,744,513 options exercisable at $0.50 each which have a two year term from the date of their issue.
Money raised is intended to fund the company’s Tongo diamond project that covers approximately 134 square kilometres in eastern Sierra Leone – an area renowned for high quality diamonds. To date, 11 diamond bearing kimberlites have been identified at the project, of which only 5 have been incorporated into the current JORC-compliant, 8.3 million carat diamond resource estimate.
The Directors are very pleased with the successful negotiation, led by the Company’s corporate adviser, Townshend Capital, to capitalise a majority of its outstanding bond debt and accumulated interest. Furthermore, the additional $2.5 million firm commitment from a sophisticated investor, and the $10 million underwriting arrangement, made as part of the shortfall from the Company’s recent rights issue, provides further capital to advance the Tongo Mine development.
According to Newfield, the equity reshuffling will allow it to avoid paying substantial ongoing interest in turn bolstering Newfield’s balance sheet substantially and ultimately help improve the company’s ability to deliver greater value to its shareholders.
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