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Penrice debt deal switched

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Local chemicals company Penrice Soda Holdings Limited has terminated its proposed debt restructure agreement announced last month.

It’s entered negotiations with another lender for a second deal, which it claims offers a better alternative.

The company’s debt has increased markedly in the last few financial years, most recently reaching more than $112 million.

Penrice announced on 28 February 2014 a heads of agreement with a lender for a debt restructure and refinancing planned for the end of March 2014.

“That heads of agreement is terminated with the signing of another new heads of agreement being announced today,” the company said in a statement to the stock exchange.

“Today, Penrice announces that it has signed a new heads of agreement with another new lender for a superior debt restructure and refinancing proposal by the end of April 2014.

“The terms of this new debt restructure and refinancing are similar to the previous proposal but provide for improved outcomes for Penrice, namely reduced senior debt load and new working capital funding.”

The new heads of agreement provides for a debt restructure and refinancing planned by the end of April 2014, with the new lender to purchase part of Penrice’s existing senior debt and a restructure involving the forgiveness and/or conversion to equity of the majority of Penrice’s senior debt. The company said specific details remained confidential, but will require the approval of shareholders at a specially convened general meeting.

Penrice Chairman David Trebeck said; “As previously advised, the company continues to actively pursue a debt restructure and refinancing to reduce its net debt and obtain a working capital facility, to put the company on a more solid and sustainable footing.

“Our restructured business is turning around under the new operating model. We are confident that our three businesses – Penrice Quarry & Mineral, Penrice bicarbonate and the new Penrice lime business – will together provide a platform for strong growth in the future.”

The company has continually added to its debt in recent years.

Local chemicals company Penrice Soda has dipped into the debt well again, confirming another $2 million borrowing to fund capital and cost over-runs.

In December TMPA Investment Trust, a special purpose vehicle representing a private investor, had agreed to provide $2 million to fund “working and maintenance capital” to meet short term needs.

In 2012 the company negotiated a $97 million senior debt facility including the extension of a $67.8 million facility to August 2017, with interest on that facility to be capitalised and not paid, to assist the company’s cash flow.

In August 2013 it’s full year financial results showed an underlying net loss after tax of $21.4 million (FY2012: $6.7 million) and statutory net loss after tax $50.1 million (FY2012: $63.6 million).

It also showed net debt had increased to $112.1 million.

An auditor’s report released in February stated that the company’s liabilities exceeded its assets by $58.7 million.

Shares in Penrice opened at 5 cents.

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