Aim-listed Bushveld Minerals has entered into a nonbinding, investment-committee-approved term sheet with Orion Mine Finance to refinance its existing convertible loan note.
The proposed agreement envisages that the convertible debt obligations of about $45-million due in November will be refinanced into a three-year term loan totalling about $27-million, repayable in escalating capital amounts; a new convertible loan note of about $13.5-million, maturing in June 2028; the conversion of about $4.5-million of existing convertible loan notes into shares; and a supplemental production financing agreement (PFA) at not more than 0.22% of gross revenues – reducing by 80% at loan maturity.
The new structure has a sculpted repayment schedule to align with expected internal cash generation projections.
The transaction is conditional on several items, including due diligence, shareholder approval at a general meeting and definitive documentation.
In 2020, Bushveld agreed a $65-million financing transaction with Orion, which included a $35-million convertible loan note (CLN) maturing in November, as well as a $30-million PFA.
The CLN was primarily intended to finance expansion plans at the company’s Vametco mining and processing plant in South Africa; however, this was subsequently amended, following further studies, to also fund the refurbishment and expansion of the Vanchem processing facility including the commissioning of Kiln 3.
The total amount outstanding of the CLN facility (including accrued interest) is expected to be about $45-million by the end of the second quarter.
“I am pleased to announce today’s proposed refinancing agreement with Orion and wish to express my and our board’s appreciation at the support and confidence shown by Orion in our business and future plans.
“The proposed refinancing will resolve a large liability that became current in 2023 and will remove significant near-term pressure on the company’s balance sheet, in the process supporting sustainable growth and cash generation of our business,” says Bushveld CEO Fortune Mojapelo.
“The new maturity profile is designed to allow the group to repay the debt from internally generated cash flows in the years ahead as we see the benefits of our recent expansion plans at Vanchem come to fruition.
“The proposed restructuring will be conditional upon shareholder approval which is expected to be sought at a general meeting. I would encourage all shareholders to vote in favour of the proposed refinancing,” he adds.