Under the terms of the restructuring agreement, Lynas has been given a two-year extension of its principal debt maturity date, from 2016 to 2018. Principal repayments due prior to the maturity of the JARE facility have also been adjusted downwards from $206-million to only $2-million in 2016. A further $20-milion was due in 2017, with the remainder of the loan payable in 2018. A A$60-million liquidity buffer has also been created. Lynas noted that interest repayments during the term of the facilities would continue to be deposited into restricted Lynas accounts, adding that these liabilities would only be paid to the lenders if there was a total of A$60-million cash balance within the account. Further, Lynas would have the potential to reduce its debt service costs over the term of the JARE facility, with the company agreeing to an interest regime able to reduce the effective interest rate on the JARE facility from 7% a year to a floor of 2.8% a year, over time. While the initial interest rate would remain unchanged at 7%, the framework set out specific targets that, if met, would effect a cascading decrease in the interest rate payable on the facility. In addition, a further 174.36-million warrants would be issued to the Mt Kellet-led bondholder group, at a strike price of 3.8c a share to raise up to A$6.6-million of additional cash, if exercised. Lynas CEO Amanda Lacaze said on Monday that the refinancing strengthened the company’s financial position, extended the debt maturity profile and underpinned the recent initiatives to position Lynas as a sustainable and financially viable business. “This announcement marks the end of speculation and uncertainty for all stakeholders. Lynas now has a strong, sustainable financial platform which compliments its significantly improved and continuously improving business performance,” she added. Lacaze noted that the extended term allowed Lynas to consolidate and further improve on the progress made to date. “Importantly, it provides time for Lynas to invest in market development and allows product designers to engineer rare earth solutions confident they have a sustainable supply source.”
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