Tuesday 22 August 2017

Brexit vote almost shut door on company-saving Kenmare deal

Michael Carvill of Kenmare
Michael Carvill of Kenmare
Gavin McLoughlin

Gavin McLoughlin

Britain's vote to leave the European Union could have scuppered a company-saving debt restructure announced by Kenmare Resources just days before the referendum, according to the mineral explorer's managing director Michael Carvill.

The deal enabled the heavily indebted Kenmare - which had run into trouble with its lenders - to raise around $300m of equity capital and involved lenders taking a haircut on what they were owed.

In an exclusive interview with the Sunday Independent, Carvill admitted that there were "loads of points" where it looked "highly improbable" that the company would survive. It announced lenders had agreed to the restructure on June 20, three days before Britons voted.

"They didn't immediately leap at this, and it took a little discussion with them - but at the end of the day they did... they came through with what we think was a great deal," Michael Carvill said.

"We just did it. If we had been later, I think Brexit shut the door. If we had been later, I think it would have been very difficult," he added.

The deal gives Kenmare a platform to grow, with prices for ilmenite - a mineral the company mines in Mozambique - now improving after a long downturn. The company estimates the mine has a life of more than 100 years.

"For the next couple of years what we have to do is ratify the faith that investors have put in the company by demonstrating to them that production can grow and be smooth, and costs can be kept down and drop lower, and that we can eventually pay dividends," Carvill said.

Sunday Indo Business

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