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Next news due is from Anglo next week on debeers sight 4 tender. Diamond market (insiders) will already know how that went. Gem Diamonds also showing weakeness after a decent run up to 42p. That's back at 29p now.
The problem for the diamond market at present is more to do with lock downs than demand. Some might say they are the same but they are quite different. Lock downs prevent retail diamond buyers from gaining access to environments where they can see/handle/pick their special stone. Whilst some diamond sales are going on via online, these are mainly at wholesale levels. Shifting these diamonds thereafter is nigh impossible using online channel as consumers need to experience the diamond in person. Finally, anyone that knows what diamond retail shops are like will know that it's very hard to keep a 2 metre distance from the seller/owner as he/she is keen to keep you close for fear of theft. It can be managed but it's going to be very difficult for the market globally to recover and that's without the negative economy/wage/unemployment factors to way up.
Still a big market for large or rare stones as these usually go to the rich and they'll have the diamond seller visit them if necessary and when selling $20m diamonds, the seller will do almost anything to assist the buyer!
Petra's real downfall (in my opinion) is their inability to find larger and rare quality stones of late. Last year was great with 4 to 5 decent large stone finds. But this year it's been far too quiet on that front. Granted... the mines have been closed for Covid but they should be open now and no real update from Petra. Very quiet. I think Duffy is prepared for the worst. Not much he can do about it but PDL do have the funds to pay the $650m debt holders their dues which would buy him a few more months although would need covenants relaxed again. That said, Duffy's not going to pay the debt holders without getting some relaxing of the covenants... that's only fair.
Capital payments are due on 20th May. Interest payments are due by 30th May (including the 30 day grace period) Trading update "May 2020" - No specified date on the financial calendar. Although Petra has said "late May"
So yup, update within the next 15 days on how Petra has gone about this.
Thank you for your response. My average isnt high but i put a lot of money in.. I have over 300k shares at 2.4p so there is a slight loss.. But i cant risk losing everything ive put in. I have other shares however it was a rushed decision investing in petra. Didnt do my due diligence so i only have myself to blame if anything goes wrong. 10p would be a dream if they somehow manage to come through this pandemic
I'd say it's a very big gamble right now. I do see upside in the short term. But considering the current share price, i don't expect it to go much higher. Just depends on the conditions and the talks with the lenders and bondholders.
Petra does have the USD/ZAR currency rate going for them though!
Petra will survive May payments as they have the cash to pay the interests. The repayments due in November are the big one right now, it all depends on the diamond market and Petra's luck with big stones. So far no big stones, which isn't a good start. Petra exceeded their production guidance for first half, but have probably fallen off a cliff following the shutdowns and covid19.
Would asset sales be an option? They need to get fair value for the assets, which again in the market is unlikely. Hope your average isn't very high Syd.
Absolutely banks don't want bond holder's to take there cash what are debeers doing behind the scenes ? I'm very light here at the moment so no worries obviously this company was in poor shape before covid19 and the diamond industry as a whole is a bit of a nightmare however saying all that covid19 might be our saviour as it allows inventories to staberlise so many factors to stay away but when all is clearer will be gone or nearer 10p !
should add, that at a time when Corona is seeing banks get cheap money, it's a bit show to see some debt holders push for admin. That said, the future recovery for diamonds in a post corona world will be a different one to the time before corona. Some mines will close. Some retail will close. Some rich will get out and buy feel good precious items etc etc. Needs time to bed down and see how the diamond market looks after a few months of lock downs lifted.
Not unexpected and understandable that the banks offering the credit facility are not willing to see the cash used to pay bond holders interest. Duffy had an opportunity today to tell shareholders the 'real' cash balance but instead he opted to say that Petra has enough cash to meet the May payment obligations, so that means they have at least $12.3m + $25m = $38m approx cash for certain. Next interest payment would be due in Nov. So there's room for Petra to meet payments end of May and then continue talks. However, it's possible that by end fo May, cash may have reduced to a level whereby they are struggling to meet obligations. Bond holders have them by the curlies but if they are not careful Petra could pull the plug and banks and BEE get paid out first with bond holders last. Last thing Duffy wants to do is pay the bond holders $25m only then to see them hit Petra on covenant issues. The banks don't want petra to pay the bond holders interest either under the circumstances. If the Bond holders agree to some relax terms prior to Nov then perhaps that's worth paying $25m out of cash for??? It's tricky one. Unfortunately for Petra... while the mines are shut there are no chances of finding large or rare diamonds. Petra really needed to find a couple of these to get the neck away from the noose.
There's nothing positive about going into default on your loans. It can be a slippery slope from there and difficult to get out of but it's early days and they have 30 days period now to get a deal done or like most debt talk scenarios, it will likely be rolled over for another 30 days and perhaps continue like this for 3months while Corona continues to do its thing.
The deadline with importance now becomes May31st/June 1st. Bond holders do not have to agree to continue discussions after that date and can assume control via Admin unless of course Petra pay their interest sum due. Petra has the funds to do it which is the good news in this but preserving cash balance important right now as drawing on debt is complicated and tied to NOT paying the 650 loan interest. So chicken and egg.