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Shares in Petropavlovsk PLC dropped on Thursday after saying it is exploring its options as it struggles to make interest payments on its loans due to Russian sanctions.
Petropavlovsk shares were trading 23% lower at 2.29 pence each in London on Thursday. The stock has tumbled 91% over the past 12 months.
Petropavlovsk is a London-based gold mining company with operations in Russia. It has ‘substantial commercial and financial relationships’ with Gazprombank, or GPB, a Moscow-based private-owned Russian bank that is currently included on the UK sanctions list.
Petropavlovsk has a $200 million term committed term loan and $86.7 million in revolving credit facilities with the bank. The company remains unable to make interest payments due to the sanctions.
Petropavlovsk said it is ‘mindful’ of an interest payment of $12.4 million due on May 14, as part of $500 million notes maturing in November 2022. Of this amount, $304 million currently remains outstanding.
The company said it will be ‘very challenging’ to refinance the notes, considering that it has limited cash reserves outside Russia. Further, there are legal restrictions in Russia which limit its ability to transfer cash out of the country.
Petropavlovsk said it appointed London-based business consulting firm AlixPartners UK LLP to assist with exploring its options. It noted that one option would be to sell its entire interests in its operating subsidiaries as soon ‘as practically possible.’
‘It is not currently clear what return, if any, may be secured for shareholders or the holders of the bonds or notes as a result of this process,’ the firm warned.
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