http://www.kitco.com/charts/livegold.html

cheers GF.

oooops


Gold Update: Petropavlovsk PLC Shareholders Face Dilution To Fund Bond Swap

By Roland Head - Tuesday, 16 September, 2014 | See also: GBSPOGGLD

The price of gold for immediate delivery hit a 2014 low of $1,225 per ounce on Monday, before strengthening slightly to $1,235 per ounce on Tuesday morning, leaving it down by 3.6% over the last week.

As a result, physical gold ETFs have also drifted lower.

The $33bn SPDR Gold Trust (NYSE: GLD.US) ETF has fallen by 2.8% to $118.64 since last Tuesday, cutting its gains for the year to date to just 2.2%. Over the same period, London-listed Gold Bullion Securities (LSE: GBS) has slipped 2.5% to $118.48, leaving the fund’s shares just 2.4% higher than they were at the start of 2014.

Petropavlovsk debt update

Russia-based gold miner Petropavlovsk (LSE: POG) fell 16% to 33p when markets opened this morning. The reason was the firm’s long-awaited update on its refinancing plans — and the news is not good for shareholders.

As I warned at the end of August, the pressing burden of the Petropavlovsk’s $924m net debt means that the firm’s banks are in the driving seat. Petropavlovsk is planning to swap the $300m of convertible bonds due for repayment in February 2015 for new convertible bonds due in 2019.

The severity of the situation is clear; while the outgoing bonds were issued with a coupon (interest rate) of 4%, the new ones will have a coupon of 7.5%, such is the increased risk that bondholders won’t get their money back.

Shareholders may be wiped out

To persuade bondholders to accept this deal, it will include a cash element, which will be raised with a rights issue.

This gives existing shareholders two equally unappealing choices: put more money into a business that’s struggling to survive, or face significant dilution. To underline the severity of the situation for shareholders, one of Petropavlovsk’s main banks has ruled that the firm cannot use any of its existing cash reserves to fund the planned bondholder payment — the money must come from a rights issue (i.e. from shareholders).

What’s happening is simple: shareholders are being milked, diluted, and potentially wiped out, in order to help Petropavlovsk regain control of its debt mountain. This is a completely normal process, as the rights of debt holders always take priority over shareholders’ rights — hence the huge risks involved in buying shares in companies with debt problems.


What next?

Cheap shares aren't always bargains: sometimes, as with Petropavlovsk, they are cheap for a reason.

In auction +23.9%.

POG
sp is now down to 21.5
while there is good reason for this company to be out of favour, as has indeed been the case for the lase 2/3 years, is the risk/reward now in its favour to a considerable degree?

russian "bad temper" apart, the real unknown at this juncture is whether or not the company will manage to get its refinancing package per the rns below .....

Sept 16 (Reuters) – Shares in Russia-focused gold miner Petropavlovsk fell 14 percent in London on Tuesday to 34.0 pence per share after the company said it was considering an equity rights issue amid discussions over repayments of its Eurobonds.

Petropavlovsk is talking with lenders to avoid breaching covenants in its banking facilities at end-2014 and with holders of its $310.5 million bonds due for repayment in February 2015. The company's shares have been volatile this year, reacting sharply on the progress over refinancing.

being a brave chap this morning, i have just bought a little lump at 22.50 on the basis that i can afford to lose the whole stake if disaster strikes

Dr. Pavel Maslovskiy retires as a Senator and is free to re-join the Board of Petropavlovsk PLC

rights issue at 5p announced
at least ordinary shareholders will be able to take up their allotment unlike so often where only the chosen few get to benefit

have you still got your little clump at 22p in Oct, cyners?

'fraid so

Can't decide whether it's throwing good money after bad! Not one of my better investment decisions.

Bad luck to holders here - I dumped in early summer for a big enough loss - what a pig in a poke!

My worst buy ever.

Try this one

http://www.moneyam.com/InvestorsRoom/posts.php?tid=16873#lastread

http://www.amaramining.com

RIGHTS ISSUE The Company has announced that it is advancing the documentation required to seek approval for the Refinancing from Bondholders, from its Senior Banks and from its Shareholders, and anticipates that the requisite meetings will be held in January 2015, and completion due to take place prior to the maturity of the Existing Bonds. The Company has appointed Bank of America Merrill Lynch and Sberbank CIB as Project Coordinators in connection with the Refinancing.
Terms: The Company is proposing to implement a fully underwritten Rights Issue of Ordinary Shares on a pre-emptive basis (save for regulatory issues) to raise gross proceeds of USD235 Million (including the Nominal Value of Existing Bonds exchanged for equity as part of the Refinancing). It has been agreed that the Rights Issue Subscription Price will be fixed at GBP0.05 per Ordinary Share.

Another new low..6p.

Another goldfinger ramped disaster.

don't be ridiculous .... this thread was started in 2004!!!!

for a long time POG as a company and share performed very well indeed, though certainly what happens next is very much in the lap of the gods and that megalomaniac putin

Gf was still saying the chart "looked brilliant" this year.

it probably was earlier this year
i've bought, sold, gained and lost money with this one on a regular basis
at 22p i reckoned it was a good gamble again and still hold those ...... it's looking very sick at the moment but strange things happen

you could cast similar aspersions about TLW and AFR, but again rather without foundation ..... wrongly i think, you could hold these two up as crackers on the basis of this week's performance