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Petropavlovsk launches $300m convertible bond issue

January 22, 2010 | IBTimes

Gold miner Petropavlovsk has launched a $300m offering of convertible bonds due 2015 to international institutional investors.

The company says the proceeds will be used for general corporate purposes and to provide it with an attractive source of low-cost, long-term capital.

They will allow the group to progress the exploration and development of its projects and provide flexibility for future corporate activity, such as investments into the Leader Fund.

Petropavlovsk yesterday (Jan 21) announced its capital expenditure guidance for 2010 of $200m in relation to gold projects excluding exploration. It says its development programme is 'central to maintaining an increasing production profile'.

During 2009 it acquired Aricom and the full $180m nominal of gold exchangeable bonds previously issued by the group. In November it also exercised a call in respect of the $139.8m outstanding of its previous convertible bonds, leading to conversion into the company's shares.

The group went from a net debt position of $389m at the end of 2008 to $24m at December 31 2009. Cash and equivalents at the end of 2009 were $76m.

'In light of the recent corporate activity and the group's significant development opportunities the group has decided to increase its financial flexibility through the issue of the bonds,' said Petropavlovsk.

The bonds will issued with a coupon of 4% and will be convertible into ordinary shares representing about 7% of the issued share capital. The issue size may be increased by up to $50 via an over-allotment option granted to JP Morgan.


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