Petropavlovsk says key lenders want quick refinancing deal

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MOSCOW, Sept 16 (Reuters) - Russia-focused gold miner Petropavlovsk (LSE: POG.L - news) said on Tuesday its senior lenders wanted an agreement on refinancing terms to be completed as soon as possible, while one of them could require a partial repayment of its existing facilities.

Petropavlovsk, hit by a fall in gold prices in 2013, is talking with senior lenders to avoid breaching covenants in its banking facilities at end-2014 and with holders of its $310.5 million convertible bonds due for repayment in February 2015.

"The company's continuing goal remains to achieve full repayment of the existing bonds for cash at par value upon maturity. However, in light of the current market and geopolitical environment, this may not be achievable," it said in a statement.

The assets of London-listed Petropavlovsk are based in Russia, hit by Western sanctions over the Kremlin's role in the Ukrainian crisis. The sanctions have limited access of some Russian companies and banks to Western refinancing, but Petropavlovsk has been unaffected by the punitive measures so far.

The company has been working on the issue of new convertible bonds which would be offered to the holders of the existing 4-percent bonds in exchange for the existing bonds with a cash element. The size of the cash element would depend upon the results of the company's proposed equity rights issue, it added.

Excluding the effects of any refinancing, Petropavlovsk previously said it planned to reduce net debt to $850 million by the year end. Its senior creditors are Sberbank and VTB, Russia's largest lenders.

Petropavlovsk said on Tuesday that the company has had detailed discussions with holders of its bonds representing around 20 percent of the principal amount outstanding.

The majority of these holders, or 18 percent by value, have indicated a willingness to support a transaction based on the following terms: maturity - Oct. 2019, coupon: 7.5 percent per annum, size: $310.5 million less net proceeds from the rights issue, conversion price: 60-65 pence, the firm added.

The deal, if completed, "would not see a large step change in the debt position of the group but would buy a lot more time to generate the cash flows to repay the bulk of the current net debt," analysts of Canaccord Genuity (Other OTC: CCORF - news) said in a note.

Petropavlovsk shares were down 14 percent in London on Tuesday at 34.0 pence per share. The company's shares have been volatile this year, reacting sharply on the refinancing. (Reporting by Polina Devitt; Editing by Elizabeth Piper)