COPPER 360 on Friday unveiled plans to recapitalise its under-pressure balance sheet in which it would issue shares and convert debt to the tune of R1.15bn – more than twice its current market value.
“Copper 360 is in a process of restructuring, the aims of which are three-fold: raise sufficient funding for short- and medium-term growth, reduce the debt burden to improve profitability, and mine several orebodies that have achievable growth potential,” the company announced in a statement to the JSE.
Some R250m of the new equity issue will be underwritten by Differential Capital which will also nominate four of its representatives in an overhaul of the board.
The key features of the recapitalisation are a R400m rights offer to existing shareholders with shares offered at 50 South African cents per share, and a maximum of R750m in new shares in return for debt.
As part of this debt conversion arrangement, Copper 360’s founding directors have agreed to exchange royalty payment agreements – some at the revenue level – for shares. Typically these agreements see founding executives receive preferential rights over ebitda, revenue and dividends. These will now be cancelled.
A maximum of 1.5 billion new shares in Copper 360 will be issued in terms of the debt conversion portion of the recap.
Copper 360 has been under pressure after missing production targets last year. It previously forecast a jump in output for the year ended-February to 8,000 tons from 1,500t previously. Copper 360 also said it expected to hit steady state production target at 40,000 tons in copper concentrate a month this year and to double production in the next two.
Copper 360 said today the rights offer and debt conversion agreements would enable the company to “grow in stages, initially reaching 40,000 milled tons per month within 12 to 18 months, with further growth to 60,000 milled tons per month within 24 months”.
Shares in Copper 360 fell 4.2% to 68 cents per share on the JSE.