The US$3.8bn financing will comprise a US$400mln equity fundraising, a US$644mln issue of convertible bonds, a US$500mln senior secured bond issue and a credit facility up to a maximum of US$2.5bn.
"In March we paused discussions with prospective lenders to work on an alternative financing proposal with J.P. Morgan Cazenove,” said Chris Fraser, Sirius chief executive.
“Today we are pleased to announce that, as a result of that work, we are launching a comprehensive markets-led solution for our funding requirements which will enable Sirius Minerals to complete the development of its mine and unlock what we believe to be the world's largest known high-grade polyhalite deposit.”
“The funding package will bring together equity, convertible bonds, high yield debt, and a US$2.5bn revolving credit facility in a multi-stage, flexible structure that balances the availability of capital with the needs of the project.”
Fraser added: “Today's announcement provides a clear pathway to a fully financed project in the months ahead, while enabling us to progress construction at full speed."
Sirius aims to raise US$400mln of new equity in three related issues – it will conduct a fully underwritten firm placing, a regular placing and an open offer to qualifying existing shareholders.
It expects to price the new shares between 15p and 18p (Monday’s closing price was 21.9p). In early morning trading, shares in Sirius Minerals were trading at 18.74p, down 4.4%.
The company anticipates that the majority of the placing shares, about 90%, will be sold to institutional investors.
Some US$644mln will be raised via a convertible bond issue, though around US$244mln of that will effectively replace existing 8.5% convertible bonds.
It will be launched in conjunction with the equity raise.
The issue will take place in two tranches. One will be the fully underwritten issue of US$400mln, to guarantee the new funding, the other US$244mln issue raises capital to use in the buy-back of the existing convertibles.
The separate US$500mln senior secured bond issue is being delivered by JP Morgan Securities which will endeavour to find buyers though it is not under obligation to take the bonds, so the US$500mln raise is not guaranteed.
Revolving credit facility
Sirius has now signed an engagement letter with JP Morgan for the proposed US$2.5bn revolving credit facility. It is contingent upon the completion of the full US$500mln bond issue, before 30 October 2019.
JP Morgan is the sole lead arranger, though it is expected that the facility will be syndicated to other lenders.
Sirius has already this morning launched the ‘buy-back’ convertible bond issue, and it is expected to close in May.
The straight equity components – the underwritten placing, placing and open offer – and the US$400mln convertible bond issue will take place at around the same time (the share placing process launches today).
Together, these elements will raise about US$1bn of new funds which will allow Sirius to continue the advancement of the Yorkshire mine development project.
By September, the company will aim to issue the separate US$500mln senior secured bonds and, so long as it completes before 30 October, the revolving credit facility will be put in place (it will have a maximum of US$2.5bn).
It is anticipated that the initial drawdown under the facility will occur no later than June 2021.
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