PERTH (miningweekly.com) – Nickel miner Poseidon Nickel has renegotiated its convertible notes, reducing the face value of the notes from $35-million to $17.5-million and extending the term of the notes by 42 months.
The notes were originally issued in two tranches for a total face value of $35-million as an investment in Poseidon made in 2008 and 2011 respectively. The notes were used to finance the company’s assets.
The notes were bought by the current owner in November 2012.
Subject to shareholder approval, the original notes would now be terminated and replaced by a single new convertible note. The new note would have a face value of $17.5-million and would be repayable in cash at the end of September 2020.
The noteholder could convert the whole or part of the note to shares in Poseidon, priced at 9c each, at any time during the term of the note. The conversion price represented a 70% premium to the company’s share price on November 3.
The interest coupon was 5% of the outstanding note amount and would be payable quarterly in arrears in either stocks or cash.
Poseidon MD and CEO David Singleton said on Thursday that shareholder approval for the new note would be sought before the end of January.
“We are clearly in the low point of the commodity cycle and over the term of the notes fully expect that nickel prices will recover and that the company can commence nickel sulphide production as planned.”
Singleton said that, under those conditions and given the equity conversion price of the new notes, Poseidon would expect them to convert to equity and thereby eliminate the potential debt component.
“When these new notes were originally issued, we stated that the terms were class leading and this renegotiation continues that position in our opinion. Investors can now be clear that we have substantial head room and time to successfully and sequentially fund our projects as the market improves.”
Poseidon previously placed all of its projects on care and maintenance as a result of the historically low nickel prices and the company was hoping to minimise costs where possible, while maintaining the option to restart both its Lake Johnston and Silver Swan operations rapidly when a more favourable price point was reached.