Ashanti scraps note restructuring (June 28, 2002)

Thanks to a US$75-million last-minute injection from 32%-owner Lonmin, Ashanti Goldfields (ASL-N) has scrapped a proposed note restructuring.

Instead, the African gold miner will implement an early cash redemption of US$218.5 million worth of outstanding 5.5% Exchangeable Guaranteed Notes (plus accrued interest) due in March and US$48 million outstanding under its existing revolving credit facility.

The redemption will be funded via a US$315-million fund raising effort, including US$40 million by the early exercising of certain warrants, a new US$200-million revolving credit facility, and the issue of US$75 million mandatorily exchangeable notes to Lonmin.

Under the new plan, Lonmin will subscribe for the new shares at a price capped at US$5.40 apiece as part of a wider rights issue, the size of which has not yet been settled, though it will aim to keep Lonmin’s stake in Ashanti virtually unchanged.

Lonmin’s newfound generosity arose after the rising price of gold sent Ashanti’s shares over US$5 apiece. Under Ashanti’s original restructuring plan, bondholders, owed around US$55 million, were set to convert their debt into new Ashanti shares at $3.70 each, a small discount at the time the plan was announced. The deal would also have seen Lonmin’s stake in Ashanti diluted.

In another deal, Lonmin has granted the Ghanaian government, which has about a 20% stake in Ashanti, a call option to buy $28.4 million worth of the new shares.

The previously proposed restructuring plan was head to a shareholder vote on June 28.