Discovery Metals Limited (DML) and its lenders have agreed to reduce the former’s existing interest bearing debt by close to P516 million to bring it down from P874 million and re-profile repayments of the outstanding debt.
According to DML’s recently published market release, the re-profiling of the debt was agreed under a legally binding Term Sheet which was subject to the parties entering into definitive, long form documents which reflect the terms of the Term Sheet in all material respects by 11 July 2014.
“Discovery Metals Limited is pleased to announce that it has satisfied the Condition (Term Sheet). Discovery and its lenders have executed definitive long form documents for the debt re-profile consistent with the terms of the Term Sheet,” the release said.
DML’s Executive Chairman, Jeremy Read, was quoted in the statement as saying; ”The execution of the definitive, long form documents is a turning point for the Company. With the completion of the debt re-profile, the Company can now focus on its proposed recapitalisation, transition to underground mining and continued operational improvements. I would particularly like to thank our lenders for their strong support during this process.”
The market release said the remaining balance has a loan term of nine years with interest capitalised for the first four years of the term. “Interest rate is now LIBOR plus 5 per cent, with interest capitalised until September 2018. Scheduled principal repayments will be made commencing in year 5 of the loan. The parties have agreed to a mechanism that will provide for the lenders to be returned incentive payments in addition to repayment of the loan, up to a maximum aggregate amount of P175 million commencing after final repayment of the loan,” it explained the agreement further.
It said; “The debt re-profile is conditional on usual and customary administrative conditions for a financing of this nature and will become effective on satisfaction of those conditions. The conditions include the provision of share certificates, documents, stock transfer forms and other requirements as part of the security arrangements under the Amended and Restated Facility Agreement and Ancilliary Documents.
The lenders have granted further waivers in relation to principal and interest repayments owing under the Project Finance Facility and the Revolving Credit Facility until 18 July 2014 to allow the Company sufficient time to satisfy the conditions precedent.”
Meanwhile, DML’s wholly owned subsidiary, Discovery Copper Botswana (Proprietary) Limited (DCB), is required to deliver an updated financial model and development plan for the underground mining operations in a form and substance acceptable to the lenders and a lender appointed independent technical expert, by 31st August, 2014. DCB is required to achieve an agreed benchmark production from underground operations to be determined by reference to the plan within 18 months.