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Petropavlovsk PLC shares tanked on Tuesday after the beleaguered Russian gold miner cautioned it will be unable to pay a key term loan and said it has missed the most recent coupon payment for a guaranteed notes issue.
The company is now assessing its options, weighing up the sale of its interests in operating units. However, it said it is very unlikely shareholders now will see a return due to Petropavlovsk's ‘indebtedness’.
What's more, the company warned it will be unable to complete its annual results audit, even after extending its accounting reference date by two months.
Shares in the company were 17% lower at 1.38 pence each in London on Tuesday afternoon. Shares have plunged 95% since the start of the year.
The gold miner, whose operations are in Russia, said it is unable to pay a $201.0 million term loan at present. It also warned it is ‘very unlikely’ it will be able to refinance the loan in the short term.
Back in April, Moscow-based Gazprombank, which is on the UK sanctions list, sent a notice demanding the repayment of loans. It wanted the immediate repayment of $201.0 million due under Petropavlovsk's committed term facility agreement with the bank and repayment of $87.1 million due under the London-listed company's Russian subsidiaries' revolving credit facilities days.
The revolving credit facilities concerning the Russian subsidiaries have since been assigned to a new creditor, Nordic LLC, Petropavlovsk, said in May.
Back in March, Petropavlovsk explained Gazprombank acted as ‘an off-taker of 100% of the group's gold production’. Sanctions and asset freezes imposed on Gazprombank prevented Petropavlovsk from making further sales of gold to Gazprombank.
‘Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group's gold output,’ Petropavlovsk cautioned in March.
The firm on Tuesday added it is also ‘mindful’ of its $500 million 8.125% guaranteed notes 2022, of which, $304 million is outstanding. It missed its most recent coupon due on the notes.
It has turned to external advisers to help mull the best course of action. Among its options is the sale of interest in its ‘operating subsidiaries as soon as practically possible’. That process is ongoing, Petropavlovsk said.
‘However, it is highly unlikely that any return will be secured for shareholders as a result of that process given the level of the company's indebtedness,’ the company warned.
In addition, Petropavlovsk said it has been unable to complete the audit of its annual report for 2021. As a result, its board extended the accounting reference date to February 28, ‘in order to give the company more time for the audit of its annual report and accounts for that extended period to be completed’.
However, even with that extension, it warned it is unlikely to complete the audit ‘in the absence of a material change in circumstances’.
The added time does, however, extend the period needed to hold an annual general meeting for 2022.
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