Petropavlovsk considering offers from third-party investors - company
MOSCOW. Nov 5 (Interfax) - Gold producer Petropavlovsk, which has recently been experiencing financial difficulties, may bring in third-party investors to help resolve its problems, the company said in a press release.
"As part of this ongoing process, the Company has also been in receipt of approaches by various potential third-party investors in recent months. The Company continues to examine all its options and is working towards a solution in as expedient a manner as possible. No transaction has yet been approved or agreed," Petropavlovsk said.
The company released the press release on Tuesday after the Financial Times reported that the company could receive $150-$250 million in an additional issue from a group of investors whose interests are represented by the company Sapinda. Artem Volynets, the former head of Oleg Deripaska's En+, is representing Sapinda in the talks. The Financial Times reported that potential investors include Kirill Androsov's Altera Capital, German businessman Lars Windhorst and South African businessman Rob Hersov, who founded Petropavlovsk, then Peter Hambro Mining, 20 years ago and remains a minority shareholder.
The company's statement does not include specifics on foreign investors' offers. Petropavlovsk only confirms that talks on refinancing its bonds are ongoing.
Petropavlovsk is currently in a difficult financial situation. In February 2015, the company might default on $310.5 million in convertible bonds. The company is considering issuing new convertible bonds in place of existing ones, as well as holding an additional issue to pay bondholders, though a final decision has not yet been made. Petropavlovsk may violate a number of loan covenants in 2014 as well.
In the first half of 2014, Petropavlovsk cut net loss nearly 88% to $95 million. This loss was partially connected with non-cash write-offs. The company was unable to post profit, which disappointed the market.
Petropavlovsk commercially develops gold deposits in the Amur region - the Pokrovsky mine, Pioneer, Malomyr and Albyn. The company decreased gold production by 4% to 741,000 ounces in 2013. Petropavlovsk's gold production target for 2014 is 625,000 ounces. The reduction is due to the sale of alluvial assets (Berelekh) last year.