Ireland’s Kenmare Resources plans to raise capital and restructure its debt to shore up its balance sheet after Iluka Resources withdrew its offer for the company, the titanium miner said on Monday.
After nearly two years of talks to snare a large mineral sands mine in Mozambique, Australia’s Iluka on Monday scrapped its $77 million all-share bid after Kenmare’s top shareholder refused to back the bid.
Under Irish rules, Iluka is blocked from making another offer for 12 months, but it may still be able to grab the Mona mine if debt-laden Kenmare fails to meet its lenders’ requirements in 2016.
Kenmare’s lenders have said if a deal fails to go ahead, the company must set out a timetable by the end of January 2016 for cutting debt and Kenmare said it expected to do so by carrying out a firm placing and open offer.
It said it has agreed to secure a $100 million investment from Oman’s State General Reserve Fund (SGRF), the sultanate’s wealth fund, subject to a commitment from other shareholders to invest at least another $75 million of capital.
“Really the only thing that is wrong with the company is that the financial structure isn’t appropriate and we need to deleverage and restructure the balance sheet,” Kenmare Chief Executive Michael Carvill told Reuters in a telephone interview.
“With this investment from SGRF and the indicated support from major shareholders, we believe that we are in a position to do that and allow Kenmare come out of it as a strong, restructured company sitting on this fantastic ore body.”
Carvill said he expected that some debt would be partially converted to equity as part of the deal.
Kenmare said it would engage in negotiations with its lenders and major shareholders over the coming weeks and that there remained a number of material matters to be agreed to enable it to deliver the planned capital raising.