Banro Corporation (USA)(NYSEMKT:BAA) has entered into a support deal with prime stakeholders to recapitalize the firm by refinancing outstanding debt of $207.5 million, equitizing the due preferred shares and generating 45 million via a gold forward sale. This process of recapitalization is anticipated to reduce debt, enhance liquidity, and improve the position to enhance substantial gold mining assets in the “DRC” and optimize operations.
The Recapitalization contemplates the refinancing of the maturing senior secured notes worth $175 million and term loan of $22.5 million with new senior secured notes valued at $197.5 million with a 4-year maturity. Next it takes into account the conversion of the unpaid exchangeable preferred shares and gold-linked preferred shares of Banro and some of its subsidiary units into firm’s common shares.
The recapitalization also accounts for the implementation of a gold forward sale deal to raise $45 million to be deployed for working capital and other purposes, comprising to fund transaction expenses and re-compensate an interim loan facility.
Banro plans to execute the Recapitalization by course of a corporate plan of arrangement under the “CBCA.” It will continue to function in the ordinary course of operations trade payables, banks, operations and employees in the Canada and DRC will be not impacted by the Recapitalization.
The company assessed numerous prospective options to refinance unpaid instruments with looming maturities while enhancing its capital structure and, consequently, stated that the Recapitalization exhibits the best available option to preserve and maximize value for Banro and its investors.
Banro’s board has decided that the Recapitalization provides advantages to the firm and is in the interests of company and its shareholders. The Recapitalization will offer stability for all of company’s stakeholders and lessen risks linked with upcoming debt maturities.
In the last trading session, the stock price of Banro declined over 12% to close the day at $0.162.