Petra Diamonds Warns of Lending Breach

RAPAPORT… Petra
Diamonds is likely to breach its lending covenants following strikes at three
South African mines and a dispute over valuation at its operations in Tanzania,
it warned.

The
company has informed its lenders that it might fail to meet certain ratios
related to its earnings before
interest, tax, depreciation and amortization (EBITDA), it said in a statement
last week.

Petra warned
last month that potential changes in diamond prices, exchange rates and
production outlook could affect its ability to comply with two EBITDA-related
measurements for its senior debt facilities for the period ending December 31,
2017.
This compliance “has
been placed further at risk due to the labor disruption at three of the company’s South African
operations and the uncertainty around the final volume of sales for the
Williamson mine in Tanzania in the first half of fiscal-year 2018,” the miner
said in an update last week.

“Taking these
factors into account, a likely breach of the [December 31] EBITDA covenant measurement ratios has been flagged to the lender group and the company
will remain in regular engagement with them on this matter.”

The company, which will publish
its 2017 annual report and accounts on Monday, said it believes it has enough
liquidity to pay off any debts when they are due.

Petra last month
reached a wage agreement with workers at three of its South African mines, bringing
strikes at the projects to an end.

Tanzania
has permitted Petra to resume exports and sales of diamonds from Williamson, after the government seized a parcel containing 71,654 carats of rough in
a disagreement over valuation. Petra paused
production at Williamson for four days as a result of the dispute.