Diamond producer Petra Diamonds has launched an £18.8-million rights issue as the final step in completing a long-term refinancing agreement that extends the company’s debt maturities by up to four years.

The company announced on August 8 that the refinancing follows extensive engagement with its financial stakeholders and formed part of Petra’s internal restructuring programme aimed at simplifying and streamlining its business and operating model.

The agreement extends the maturity date of Petra’s senior secured bank debt from January 2026 to December 2029 and the maturity of its 9.75% senior secured second lien notes from March 2026 to March 2030.

Under the new arrangement, the company has also introduced a “payment in cash or equity” mechanism that allows Petra, at its discretion, to make interest payments on the notes in company shares rather than cash.

The cash interest rate on the notes will increase to 10.5%, or 11.5% if the company opts to make payments in equity.

Petra noted in an October 17 statement to shareholders that the rights issue, fully underwritten by existing shareholders, represented the final leg of the refinancing process, alongside the launch of a consent solicitation process to amend and extend the notes.

The company stated that noteholders representing more than 99% of the outstanding principal amount of the notes had agreed to support the consent solicitation under a lock-up agreement.

“The launch of the rights issue and consent solicitation marks the final leg of Petra’s refinancing. Petra has undergone immense change over the past 18 months . . . to become a streamlined business that is now positioned to deliver sustained value for its stakeholders.

“This has enabled us to refinance our debt with a fit-for-purpose solution that allows capital execution, while providing the headroom and flexibility to weather current market conditions,” Petra interim joint CEO Vivek Gadodia said.

Gadodia added that the refinancing would substantially strengthened Petra’s capital structure and allowed the company to focus on delivering its business plan.

Petra said the rights issue involved the issue of more than 114.2-million new ordinary shares at 16.5p a share. The issue was fully underwritten and committed by a group of existing shareholders who had agreed to back the transaction under a backstop agreement.

The company said the rights issue aimed to raise about $25.1-million before costs, or about $22.4-million after expenses. Shareholders must pay in full by November 21.

Petra said the plan was still subject to shareholder approval at a special general meeting to be held on November 6 and on final agreements being completed before the new shares started trading, which was expected to happen by November 7.

Petra noted that if shareholders did not approve the resolutions, the rights issue and refinancing would not proceed, and the company would not receive the expected net proceeds of about $22.4-million.

In that event, Petra said, it did not have sufficient working capital for its present requirements for at least the next 12 months.