TIDMFDI
RNS Number : 3436O
Firestone Diamonds PLC
01 October 2019
1 October 2019
Firestone Diamonds plc
("Firestone" or the "Company")
Shareholder Circular and Notice of General Meeting
Firestone Diamonds plc, the AIM-quoted diamond mining company,
announces that a circular (the "Circular") has today been posted to
shareholders convening a general meeting to be held at 11.00 a.m.
on 17 October 2019 to approve, inter alia, the continued issue of
ordinary shares of 1 pence each ("Ordinary Shares") as interest
payments under the terms of the U$30 million Series A Eurobond debt
facility (the "Series A Bonds") to Pacific Road Resources Fund II
L.P. and Pacific Road Resources Fund II (together "Pacific Road")
and Resource Capital Fund VI L.P. ("RCF").
This follows the announcement on 1 July 2019, in which ABSA Bank
Limited agreed a waiver (the "ABSA Waiver") for certain of its
covenants measured as at 30 June 2019 under the terms of the
US$82.4 million senior secured term facility agreement.
As a condition to the ABSA Waiver, the Company obtained an
undertaking from RCF and Pacific Road (together, the "Bondholders")
to waive the requirement for the Company to pay quarterly interest
in cash on the Series A Bonds for the 12-month period from 1 July
2019 to 30 June 2020, subject to an agreement on alternative
arrangements being reached with the Bondholders.
Previously the Company has issued Ordinary Shares to pay
quarterly interest which had accrued in respect of the Series A
Bonds. However, due to consequences of the Takeover Code, and the
terms of the Series A Bonds, the Company requires Independent
Shareholder approval to permit the Bondholders to receive further
Ordinary Shares from 30 September 2019 (the "September Interest
Date") (which would, if such Ordinary Shares are issued, result in
an increase in each of their shareholdings to 30 per cent. and
above) without triggering a mandatory offer to shareholders under
Rule 9 of the Takeover Code.
The Company wishes to continue to service the interest on the
Series A Bonds through the issuance of Ordinary Shares (the "Series
A Interest Shares") to the Bondholders and is therefore seeking
approval to issue up to 195,309,376 Series A Interest Shares, in
aggregate, to the Concert Parties (as defined in the Circular) on a
non-pre-emptive basis in respect of the settlement of the interest
due under the Series A Bonds for the 12 month period, from and
including the September Interest Date to and including 30 June
2020, comprising a further four quarterly payments in September
2019, December 2019, March 2020 and June 2020 (the "Share Issuance
Period").
The Series A Bonds are repayable in two tranches, US$20 million
due on 4 August 2022 and US$10 million due on 3 January 2023 and
require the servicing of interest until those dates; arrangements
for interest payments beyond 30 June 2020 will be addressed in due
course.
In addition, the Company has not been able to issue shares on a
non-pre-emptive basis for the June Interest Date because the
authorisations provided at the AGM to issue shares on a
non-pre-emptive basis would be exceeded. Therefore, the Directors
are separately seeking approval to issue 16,391,523 Series A
Interest Shares to the RCF Concert Party and 16,391,523 Series A
Interest Shares to the Pacific Road Concert Party on a
non-pre-emptive basis in respect of the interest due under the
Series A Bonds as at the June Interest Date (with the Bondholders
having agreed for interest to be paid no later than 30 October 2019
as per the Deferral Letter). The resultant voting rights of the RCF
Concert Party would be 29.82 per cent. and the resultant voting
rights of the Pacific Road Concert Party would be 29.72 per
cent.
The issue of Series A Interest Shares to the RCF Concert Party
during the Share Issuance Period will increase the interest of the
RCF Concert Party in the voting rights of the Company from 29.82
per cent. (including the deferred issue of 16,391,523 Series A
Interest Shares issued pursuant to the June Interest Date) up to a
maximum of 34.79 per cent. (assuming a maximum of 97,654,688 Series
A Interest Shares are issued throughout the period at one pence per
Series A Interest Share). Equally, the issue of Series A Interest
Shares to the Pacific Road Concert Party during the Share Issuance
Period will increase the interest of the Pacific Road Concert Party
in the voting rights of the Company from 29.72 per cent. (including
the deferred issue of 16,391,523 Series A Interest Shares issued
pursuant to the June Interest Date) up to a maximum of 34.71 per
cent. (assuming a maximum of 97,654,688 Series A Interest Shares
are issued throughout the period at one pence per Series A Interest
Share).
The Takeover Panel has agreed to waive the obligation on each
Concert Party to make a mandatory offer to all Shareholders under
Rule 9 of the Takeover Code which would be triggered as a result of
the increase in the voting rights in the Company of each Concert
Party above 30 per cent., due to the issuance of the Series A
Interest Shares, subject to the approval of the Independent
Shareholders.
At the Company's AGM, the Directors were granted authority to
allot Ordinary Shares up to an aggregate nominal amount of
GBP261,969 (representing 26,196,900 Ordinary Shares) on a
non-pre-emptive basis. Since the AGM this share authority has been
fully utilised. In order for the Company to continue issuing
Ordinary Shares in respect of the quarterly interest payments
pursuant to the Series A Bonds and, in particular, ensuring that
its obligations to the Bondholders at the next quarterly interest
payment date are met, the Directors are seeking Shareholder
authority to issue further Ordinary Shares on a non-pre-emptive
basis.
Trading update
Save as described in the paragraph below, there has been no
significant change in the trading or financial position of the
Company since 31 December 2018, the date up to which the most
recent unaudited interim financial statements were published.
As announced previously, trading conditions continue to be
challenging due to the ongoing depressed pricing of rough diamonds
across the industry as well as fewer valuable stones recovered
resulting in lower than expected average values being realised; and
recovered grades lower than the expected reserve grade. While the
Group's cash balance is US$21.0 million as at 30 September 2019,
the trading environment remains difficult and as a result the
Company is actively engaging with its debtholders to ensure it can
sustain operations through the current downturn. However further
deterioration in the financial or trading position is possible and
may have material implications for the solvency of the Company
independently of the passing of the Resolutions.
General Meeting
A general meeting of the Company, notice of which is set out in
the Circular, will be held at 11.00 a.m. on 17 October 2019 at the
offices of Gowling WLG (UK) LLP, 4 More London Riverside, London
SE1 2AU to seek Shareholders' support for the Resolutions.
The Company has received irrevocable undertakings from certain
Shareholders (including Sustainable Capital Ltd and Edwards Family
Holdings Ltd) to vote in favour of the Resolutions at the general
meeting in respect of, in aggregate, 126,186,966 Ordinary Shares
representing approximately 22.32 per cent. of the existing issued
ordinary share capital of the Company and 52.14 per cent. of the
Ordinary Shares entitled to vote on the Whitewash Resolutions.
Document availability
An electronic copy of the shareholder circular can be accessed
at the Company's website: www.firestonediamonds.com
Terms not otherwise defined in this announcement shall have the
meaning given to them in the Circular.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
For more information please visit: www.firestonediamonds.com or
contact:
+44 (0)20 3319
Firestone Diamonds plc 1690
Paul Bosma
Grant Ferriman
Macquarie Capital (Europe) Limited
(Nomad and Broker)
Nick Stamp +44 (0)20 3037
Alex Reynolds 2000
+44 (0)20 7920
Tavistock (Public and Investor Relations) 3150
Jos Simson
Gareth Tredway
Annabel de Morgan
Background information on Firestone
Firestone is an international diamond mining company with
operations in Lesotho. Firestone commenced commercial production in
July 2017 at the Liqhobong Diamond Mine. Liqhobong is owned 75% by
Firestone and 25% by the Government of Lesotho. Lesotho is one of
Africa's significant new diamond producers, hosting Gem Diamonds'
Letšeng Mine, Firestone's Liqhobong Mine, Namakwa Diamonds' Kao
Mine and Lucapa's Mothae Mine.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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