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Mandalay Resources says debt amendment plan has advantages

GEL is now offering to buy up to US$30mln of the principal amount from the holders at US$52,500 for each US$50,000 in principal.
Mandalay Resources says debt amendment plan has advantages
Mandalay has mines in Chile, Australia and Sweden

Metals miner Mandalay Resources Corp (TSE:MND) says it can benefit from a plan from a lender to buy back up to US$30mln worth of exchangeable bonds in the miner.

Special purpose vehicle Gold Exchange Ltd issued the bonds (US$60mln at 5.875%) holders in 2014 and loaned the proceeds to a Mandalay subsidiary.

GEL is now offering to buy up to US$30mln of the principal amount from the holders at US$52,500 for each US$50,000 in principal.

It will also seek bondholder approval for a number of amendments to their terms, including increasing the interest rate payable from 5.875% a year to 6.375% a year.

It also wants to extend the maturity date by three years to May 13, 2022.

Mandalay's chief executive Mark Sander said: "The proposed amendments to bonds (and in turn to the loan) provide a number of advantages to Mandalay including eliminating the requirement for Mandalay to deploy capital in a non-productive manner to purchase gold shares for escrow in advance of the maturity of the bonds and extending the maturity of the bonds by three years."

He added that any  repurchase of the bonds, which will further de-lever the group's lightly levered balance sheet, will be funded from existing cash balances.

"Our strong balance sheet should allow us to raise additional debt as and when required to fund our capital investment program and for potential acquisitions," he said.

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Mandalay Resources Corp. Timeline

Newswire
February 23 2017

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