Credit to Poster Eureka1963 over on Blueshare Site28 Sep 2019 17:40
"Despite the intended termination of the RCF by the Company, this process has not been a total failure. It has, in fact, presented a route where there is scope for the Company to issue bond(s) outside the RCF umbrella, that being bond(s) with warrants attached.
https://www.investegate.co.uk/siriu...t Mail&utm_campaign=Sirius Minerals plc Alert
The Company has received feedback from a number of potential investors which has indicated that a note issuance could potentially be successful should the offering include warrants (the rights to ordinary shares in Sirius)…
…The Company requested, but did not obtain, a waiver of this condition to enable it to issue warrants as part of the note offering.
This was rejected by JPM due to the all-in effective yield exceeding 15%, and the point being what would the yield be on the second, third etc. bond? The fact the Company will terminate the RCF commitment does not come as a surprise given they requested, but did not obtain, a waiver of this condition to enable it to issue warrants as part of the note offering.
IR would not comment as to whether the full $500m would have been achieved with warrants (however there were 'a number of potential investors' though another JPM condition was that the bonds were to be broadly distributed), similarly, IR would not comment on the all-in effective yield, however, it is clear the Company were more than willing to accept those terms, unfortunately JPM were not. With or without JPM there does appear to be funds available to the Company, and if it comes at a cost of high interest plus warrants, this is more than offset by the $1.5 - 2bn yearly profit (SRK CPR July 2019) plus profits carried forward, when the bond(s) are likely to expire (year-on-year).
IR would not comment as to whether bonds with warrants would form an element of the financing required to finally deliver a financing structure that will lead to first polyhalite and the safety net of revenue generation. However, by taking this warrant option to JPM, the evidence is there to suggest it is.
Raising this initial $500m would demonstrate finance is available to the Company and together with the ongoing comprehensive strategic review and a refocusing on Project spend, this would make the Project a more investable proposition to a major strategic partner, investment fund and, who knows, perhaps the IPA will finally offer some level of support?"
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