Petra falls on debt warning
The firm said in a stock market announcement that it has “flagged” the expected breach to its lender group.
Shares in Petra Diamonds slumped on Monday after the firm warned that it is at risk of breaching loan terms this year.
Petra said in a stock market announcement that it has “flagged” the expected breach to its lender group, adding that it will remain in “regular engagement with them on this matter”.
Shares dipped over 3% to 80.5p in morning trading.
“The company’s forecasts indicate that the group retains sufficient liquidity from existing cash resources, operating cashflows and existing facilities to meet its liabilities as they fall due under the forecasts and reasonably possible sensitivities,” Petra added.
The news comes after the firm last month was forced to suspend operations at a Tanzanian mine following a government probe into the diamond market.
Later in September, Petra was permitted to continue operations.
Ben Davis, analyst at Liberum, said: “As expected following the issues over the past few weeks, Petra has notified its lenders (two South African banks) that it will likely breach its Dec 1 EBITDA covenants.
“However we would be surprised to see anything punitive arise from the negotiations given how close Petra Diamonds is to a sharp deleveraging as its two key assets ramp up, and credit fears will likely dissolve.”