De Beers rights issue to raise $1bn
Wednesday 02 December 2009
De Beers, the world's largest diamond miner, is set to launch a rights issue to raise up to $1bn (£601m).
After a difficult year that saw diamond prices collapse and De Beers profits fall by 99 per cent, the group faces a $1.5bn debt refinancing in March, out of total net debt of $4bn.
The new money will be used to pay down the debt and also help De Beers take advantage of a recovery in the global economy, the company said yesterday. "By reducing De Beers' level of external debt and improving its capital structure, this investment would better enable the company to take advantage of new opportunities... as the recession gives way to recovery," the company said.
Mining giant Anglo American owns 45 per cent of the diamond producers' shares. A further 40 per cent is held by South Africa's Oppenheimer family, and the remaining 15 per cent is owned by the government of Botswana.
De Beers said yesterday that all three shareholders have agreed in principle to support the issuing of new equity. It has already borrowed nearly $750m in shareholder loans.
In July the company blamed the "extraordinarily difficult" trading environment for half-year profits of just $3m, compared with $316m the year before. It was forced to cut production in South Africa, Botswana and Canada as the global economy slipped into recession and spending on diamonds plummeted.
Stephen Lussier, a De Beers' director, said last month that a deal with the creditor banks was expected around Christmas, although the full refinancing was not likely before early 2010.
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