(Alliance News) - Firestone Diamonds PLC on Monday has received a waiver from a lender for some covenants part of a senior secured term facility.
The waivers are on Firestone's USD82.4 million loan from Absa Bank Ltd, and are for 75%-owned subsidiary Liqhobong Mining Development Co Pty Ltd.
Firestone sought the waivers because the average value of diamonds sold for the three quarters to March 31 was below expectations at USD74 million per carat.
"The lower average value was impacted mainly by lower prices realised for the smaller, lower value goods, which has also affected many other diamond mining companies and the wider diamond industry," said Firestone.
Some of the Absa covenants are forward-looking and require estimates, Firestone said. As a result of the weaker pricing than expected, it has used lower than average dollar-per-carat values in calculations, meaning it had to ask for waivers for two of the six covenants on the loan.
As part of the waiver, bondholders have waived a requirement for Firestone to pay quarterly interest in either cash or shares on series A eurobonds between July 1 and June 2020. Talks have started over how Firestone can service the interest another way.
Chief Executive Paul Bosma said: "We are grateful for the strong support we have received from Absa, the Export Credit Insurance Corp of South Africa and our bondholders in what is a tough period for the smaller stone segment of the diamond market.
"Operations continue to perform well, and we aim to ensure that we remain in a strong position to benefit from an improvement in the pricing environment in the future."
Shares were down 3.0% on Monday afternoon in London at 1.31 pence each.
