The recapitalisation will be done through the refinancing of a total of US$207.5 million of outstanding debt, equitising the outstanding preferred shares and raising $45 million by way of a gold forward sale.
“This recapitalisation is expected to reduce debt, improve liquidity, and position the company to optimise operations and enhance its substantial gold mining assets in the Democratic Republic of the Congo,” said Banro.
The recapitalisation contemplates the refinancing of the maturing $175 million senior secured notes and $22.5 million loan with new $197.5 million senior secured notes with a 4-year maturity; the conversion of the outstanding exchangeable preferred shares and gold-linked preferred shares of Banro and certain of its subsidiaries into common shares of the company; the execution of a gold forward sale agreement to raise $45 million to be used for working capital and general corporate purposes, including to fund transaction costs and repay an interim loan facility; and the extension of the maturity dates on an existing $10 million loan from 15 July 2018 and 1 September 2018 to 1 March 2020.
Banro intends to implement the recapitalisation by way of a corporate plan of arrangement under the Canada Business Corporations Act, while continuing to do business as usual.
Banro said the company explored a number of potential alternatives to refinance outstanding instruments with upcoming maturities while improving its capital structure and concluded that the recapitalisation represents the best available alternative to maximise and preserve value for Banro and its stakeholders.
Banro’s board of directors unanimously recommends that all existing noteholders support the recapitalisation.
“We are pleased to have reached agreement with our key stakeholders on the terms of a recapitalisation that will strengthen the company and enhance the long-term viability of our business without impacting our continued operations,” said Dr. John Clarke, President and CEO.
“The recapitalisation will result in an improved balance sheet and position us to improve working capital, continue optimising the current operations and advance the development projects, all of which are expected to contribute substantially to the long term value of Banro.”