The company put itself up for sale in June as part of a restructuring process but has received no viable offers, it said.
JOHANNESBURG – Petra Diamonds has abandoned plans to sell the business in favour of a debt-for-equity restructuring it said on Tuesday, sending its shares down as much as 18 percent.
The London-listed company, which mines diamonds in South Africa and Tanzania, had put itself up for sale in June as part of the restructuring process but has received no viable offers, it said.
Its shares have slumped by more than 80 percent this year as the Covid-19 pandemic has battered the global diamond sector, with mines forced to shut down while consumer demand collapsed.
Petra said its existing $650 million note debt will be partly replaced by new notes of around $295 million, and debtholders will contribute $30 million.
The remaining note debt will be converted into equity, leaving debtholders together holding 91% of the company, diluting existing shareholders to a combined stake of only 9%.
Petra said it expects to seal a “lock-up agreement” cementing the terms with the noteholder group and South African lenders in early November. It expects the restructuring to become effective in the first quarter of 2021.
The agreement also includes new governance arrangements and cash-flow controls.
Petra chief executive Richard Duffy expressed the company’s gratitude to the noteholder group and South African lenders for their agreement in principle to provide “meaningful additional liquidity” in what has been a difficult period.