Petra Diamonds and BEE Partners Agree $98M Loan Refinancing

The Cullinan mine.

(IDEX Online) – Petra Diamonds and its Black Economic Empowerment (BEE) partners in the Finsch and Cullinan mines in South Africa have entered into agreements with Absa Corporate and Investment Banking and FirstRand Bank to finance the BEE partners' loans due to Petra of $98 million for the acquisition of the BEE partners’ interests in the mines.

The BEE partners in Finsch and Cullinan are Senakha Mining Investments (Pty) Limited, Thembinkosi Mining Investments (Pty) Limited and the Petra Diamonds Employee Trust (PDET).

When Petra and the BEE partners acquired the Finsch and Cullinan mines from De Beers, Petra agreed to finance the BEE partners’ 26-percent share in each mine. These loans to the BEE partners by Petra were subject to normal commercial interest rates and were due to be repaid to the company out of the Finsch and Cullinan mine free cashflows.

The refinancing means that the loans due by the BEE partners to Petra will be settled some three to four years sooner than previously would have been the case; and the employees of Petra’s South African operations (the beneficiaries of the PDET) will receive their first trust distribution in December 2014, some three to four years earlier than was previously expected.

Petra said it will use the cash from the refinancing to further strengthen its balance sheet and confirmed the start of dividends for the current financial year (which ends on 30 June, 2015).

Johan Dippenaar, Chief Executive of Petra, commented: “The re-financing of the BEE partner loans is a validation by Absa and RMB of the quality of Petra’s asset base, cashflows and management team. The repayment of these loans significantly strengthens the company’s balance sheet, enhances flexibility and places Petra in a strong position financially.”