Businessman Dermot Desmond has agreed again to bail out Mountain Province Diamonds (MPD), the Canadian miner he has kept afloat in recent years with a succession of funding deals.
The company, which ratings agency Fitch recently warned may be in danger of defaulting on its debts, has agreed a rollover deal with bondholders owed $190 million (€190.1 million) out of a $300 million tranche of loan notes, which are due for repayment next month.
The bondholders who have agreed to roll over will swap their $190 million of old notes for $195.9 million of new notes, which will be repayable in three years’ time. Mr Desmond, who bought about $60 million of the old notes when they were issued in 2018, will receive $65.3 million worth of the new notes.
In return for kicking out repayment, the interest rate on the new notes will rise from 8 per cent to 9 per cent annually. MPD says it will use whatever cash it has on hand to pay off the owners of the estimated $110 million worth of old bonds with whom it has not agreed a rollover deal.
As Mr Desmond is the company’s biggest shareholder, with about 36 per cent of its stock, the proposed deal must be sanctioned by the Toronto Stock Exchange, as well as by the company’s other shareholders. A meeting of investors is scheduled for December 1st.
Fitch said in September that MPD’s ability to repay its debts was “highly uncertain” and that it “needs to pursue a distressed debt exchange to avoid bankruptcy”. MPD’s chief executive, Mark Wall, told The Irish Times at the time that he “strongly disagreed” with Fitch’s assessment.
To keep it afloat during the pandemic, Mr Desmond pumped about €150 million into MPD in loans and through buying its diamonds.
The company owns 49 per cent of Gahcho Kue, a massive diamond mine in Canada’s Arctic tundra that is operated by South African giant De Beers.