Polymetal completed restructuring of debt and hedge obligations of Varvarinskoye gold-copper mine
ST. PETERSBURG. November 10. KAZINFORM /Yelena Myagkova/ Russian Company 'Polymetal' has completed the restructuring of debt and hedge obligations of Varvarinskoye gold-copper deposit of Orsu Metals Corporation in Kazakhstan. According to the press-release of the Russian Company as a result of the restructuring, Varvarinskoye obligations owed to a syndicate of banks including Investec Bank Ltd, Investec Bank Plc, Nedbank Limited and Natixis Bank (collectively, the "Lenders") are as follows: Debt obligations in the principal amount of USD 83.6 million, comprising of a USD 34.3 million Export Credit Insurance Corporation, South Africa Loan and a USD 49.3 million Commercial Loan; and Liabilities resulted from crystallization of gold forward sales contracts (entered into historically at a strike price of USD 574.25 per ounce) in the amount of USD 166.4 million in present value terms. The resulting obligations of USD 250.0 million become due in 2013 (35 percent of the total) and 2014 (65 percent of the total) respectively, with interest accruing at a rate of LIBOR + 3 percent per annum during the term. In addition, a cash sweep mechanism will apply to all free cash flows generated from Varvarinskoye until all the obligations are fully repaid. Polymetal has provided the Lenders with a corporate guarantee of USD 90 million, which may be called upon in certain limited circumstances. "We are pleased to have restructured all Varvarinskoye liabilities within a week after completion of its acquisition", said Vitaly Nesis, CEO of Polymetal. "As a result, we received very reasonably priced and long term debt with limited recourse to Polymetal as well as full exposure to gold price upside due to Varvarinskoye's hedge-free status."