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Sirius Minerals to swap US$63.8mln of bonds for shares

The UK mine developer expects to save US$27mln as a result of the early conversion

Sirius minerals North Yorkshire mine project
The mine development continues to advance in North Yorkshire

Sirius Minerals PLC (LON:SXX) has told investors that its debt-for-equity offer has received acceptances accounting for US$63.8mln.

The UK mine developer earlier this month offered holders of its convertible bonds the opportunity to make an early switch to equity, offering them additional incentive shares along with the due equity.

Before the offer, there were around US$300mln of the original US$400mln convertible bond series which carry an 8.5% coupon and are due in 2023. There will subsequently be US$244.2mln remaining in issue.

READ: Sirius Minerals' second fundraising round is expected in 2018

The offer was designed to reduce indebtedness ahead of an anticipated second round of project financing, earmarked for later this year, and the conversions would allow an amount of cash held back for interest payment to be released to the company.

Today, Sirius confirmed that some US$27.1mln otherwise due in interest would now be saved by the company, and it will have an immediate positive cash impact as it will receive US$5.4mln which would have been paid to the bondholders this year.

"We are pleased with the level of participation in our tender process,” said Thomas Staley, Sirius Minerals finance director.

“The total cost of incentivising conversion through the issue of shares was more than offset by the release of escrowed cash and removal of the need to pay interest payments beyond year two. 

“This has enabled us to facilitate an orderly conversion for bondholders and optimise our capital structure ahead of stage two financing later this year."

As a result of the bond conversions, some 218mln new Sirius Minerals shares will be issued.

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