Paladin says debt worries ease following bond offer
Peter Ker
April 24, 2012 - 6:20AM
Paladin Energy boss John Borshoff says concerns over his company's short-term debt have been "largely put to bed" thanks to a $US274 million convertible bond issue last night.
The convertible bonds were snapped up by investors in Paladin's home territories of Australia and Canada, and the maximum of $US275 million was all but reached with the help of Asian investors and early trading on European markets last night.
Mr Borshoff said the bonds were issued on five year terms on a 6 per cent coupon with a 25 per cent premium. European markets opened sharply lower last night, and Mr Borshoff said that mood "caused an adjustment" to the process, but he said enough momentum had been built up earlier to ensure the raising was completed.
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The five year debt will be used to pay down some much shorter-term debt, in the form of a $US325 million convertible note that is due to mature in March 2013.
That convertible note had been worrying analysts who feared the uranium miner could not meet the repayments through standard cash-flows. Patersons Securities were recently moved to downgrade Paladin to a "sell" rating on the back of the debt concerns.
"That is now largely put to bed and I would expect a correction because the underlying metrics of the company are very good," said Mr Borshoff.
Last night's raising means all but $US50 million of the troublesome 2013 convertible note is now taken care of, and the company is expected to cover the remainder with the imminent sale of some non-core assets.
Mr Borshoff said negotiations to sell down some of Paladin's assets could be complete with two months.
"That whole process we are still evaluating and we should come to some sort of conclusion in that June or July period," he said.
Paladin could fetch a higher price if it sold stakes in its operating mines - Kayelekera and Langer Heinrich - but Mr Borshoff said he was only looking to divest non-producing assets.
"There is still a lot of meat on the bone that we can deal with while still maintaining our primary metrics," he said.
Paladin has struggled to achieve its production targets in recent years and as recently as last week revealed that it had missed another set of production targets. But Mr Borshoff defended the company against claims it was a repeat-offender on missing targets.
"Yes we've been a little bit behind on guidance but when you look at it over a seven year period the industry regards us with a high amount of credibility", he said.
Paladin shares could emerge from a trading halt as early as today now the convertible bond issue is complete. Many analysts expect shares could initially trend lower as participants in yesterday's raising recalibrate their exposure to the stock, however most expected the raising would improve confidence in the stock longer term.
Read more: http://www.smh.com.au/business/paladin-says-debt-worries-ease-following-bond-offer-20120424-1xhuf.html#ixzz1sttT3Jvq
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