Aeris Resources has announced a major debt and capital restructure, to unlock value and deliver a pathway to future growth for the business. Under the restructure, senior debt has been reduced by 53 per cent to $US30 million while share capital has been reduced by 50 per cent. About 467 million convertible redeemable preference shares held by Standard Chartered Bank are to be redeemed for $1 and then cancelled. The transaction will materially improve Aeris’ balance sheet.
Restructuring transaction unlocks value and delivers pathway to growth for Aeris
3 value enhancing events in 1 transaction
(~$107 million* excluding price participation)
- Senior Debt reduced by 53%
- from US$63.3 million to US$30 million (includes US$5 million Arranger Fee)
- Share Capital reduced by 50% (for $1)
- 467 million (80%) of Convertible Redeemable Preference Shares held by Standard Chartered Bank (SCB) to be redeemed for $1 and then cancelled
- Copper Price Participation Agreement with SCB cancelled for $1
- Aeris retains full benefit of copper prices above A$8,000/t
Established Australian copper producer, Aeris Resources Limited (ASX: AIS) (Aeris or the Company), is pleased to announce a significant restructuring transaction that will materially improve its balance sheet, and represents a key step in unlocking Aeris’ potential to deliver its future growth strategy.
Commenting on the restructuring transaction, Aeris’ Executive Chairman, Andre Labuschagne, said:
“This is the best position the Company has been in for the last five years. With debt reduced, potential shareholder dilution reversed, and the capital structure simplified, the Company is now positioned to attract renewed interest from quality investors and trade on a normalised basis, reflective of the fundamental value and growth prospects of the Company.”
“From an Aeris shareholder perspective, the debt restructure agreement is a significant and value‐ accretive event. As well as a 53% reduction in the Senior Debt level, the cancellation of the preference shares effectively halves the fully diluted shares on issue.”
“Together, these measures which comprise the restructuring transaction are expected to create material value for Aeris shareholders and position the Company to take advantage of future organic and M&A opportunities. We will continue our focus on taking advantage of the favourable copper price environment and pursuing our growth strategy to create shareholder value.”
“Once SPOV converts its preference equity shares into ordinary shares it will become our major shareholder with a 50% stake, which was approved by shareholders in December 2015. PAG has been supportive of our business since becoming involved in 2015 and has been instrumental in facilitating this restructure transaction. Agreeing to become our largest shareholder as part of this transaction is a further sign of support for Aeris and its vision for growth.”
The restructuring transaction involves the sale of the senior term debt (Senior Debt provided under the SCB Facility) provided to Aeris by Standard Chartered Bank (SCB) to Special Portfolio Opportunity V Limited (SPOV), a subsidiary of a fund managed by PAG. SPOV is the provider of Aeris’ existing Working Capital facility.
To facilitate the overall restructuring, SPOV and Aeris have entered into an agreement (Restructuring Agreement) to reduce the Senior Debt from US$63.3 million (including accrued interest) to US$30 million (including a US$5 million Arranger Fee). The new Senior Debt facility has a term of 2 years and an interest rate of 12.5% per annum. However, if Aeris has not reduced the Senior Debt by a minimum of US$20 million within the first 6 months, the interest rate increases by an additional 3.0% per annum on the balance of the facility above US$10 million.
The Restructuring Agreement is conditional on the execution of key underlying new facility documentation and security variations and other Conditions Precedent usual for this type of transaction. Preparation of these documents is in process and it is expected that the restructure will be completed without delay. Shareholder approval is not required for this restructure transaction.
*$107M calculated as follows:
– US$33m debt reduction @ AUD/US exchange rate of $0.78 = A$42 million; and
– 467 million CRPS cancelled multiplied by closing price of AIS ordinary shares on 27 February 2018 (14 cents) = $65 million