Petropavlovsk plummets as debt deadlines loom

29th Apr 2014 13:31

Forecast breaches of Russia-focused gold miner Petropavlovsk's debt covenants and the need to repay 310.5m dollars of bonds has sent shares in the company crashing. Although full year results from the company were broadly in line with consensus forecasts, Chairman Peter Hambro said management had repositioned the FTSE Smallcap company as a "significantly lower cost, cash generative gold producer" in order to reflect the lower gold price environment. He said that while net debt was cut by $115m on the previous year, the group remained highly leveraged at just under $1bn, due to the last few years' extensive capital expenditure having been followed by a sharp decline in the gold price."It is clear that the group requires the successful completion of a refinancing process to strengthen its balance sheet in 2014," the company admitted in a statement.In the absence of such refinancing, internal forecasts show breaches of certain covenants in its banking facilities at December 31st 2014, including a facility with ICBC to fund the development of the K&S mine which is guaranteed by the company. In addition, the $310.5m outstanding convertible bonds fall due for repayment in February 2015 and the group admitted it does not currently have sufficient committed funding to refinance this debt.Hambro said: "The board and the executive committee, supported by our advisers, have for some time treated the need for a refinancing plan to resolve these issues as one of paramount importance. A plan to execute the refinancing is well advanced and the board looks forward to announcing this in due course. Petropavlovsk's consolidated financial statements for 2013 are unqualified."As for financials, revenue was in-line at $1.2bn, compared to consensus $1.21bn, with EBITDA of $325m better than expectations on the back of lower admin costs. Pre-exceptional EPS of a 40 cent loss was much better than forecasts of 62 cents.Shares in the company were down 15.2% to 70.75p by 13:20 Tuesday.OH