Irish-based miner Kenmare reschedules Mozambique debt

DUBLIN, Feb 14 (Reuters) - Kenmare Resources (LSE: KMR.L - news) is restructuring $143.3 million of debt on its Moma mine project in Mozambique, rescheduling payments as of July 2015 due to low prices for titanium minerals, it said on Friday.

It removes the requirement to repay all deferred subordinated debt by 1 August 2015, and reschedules all that is unpaid by then, said Kenmare, which mines titanium mineral ilmenite and zirconium mineral zircon at Moma.

"Titanium (Frankfurt: TMD.F - news) minerals are going through a cyclical downturn," managing director Michael Carville told Reuters. "If they stay low or go lower, that repayment of that (August 2015) bullet might have become an issue."

In October Kenmare raised short term liquidity after weak pricing for minerals and lower production caused a funding squeeze, using the cash to pay near-term obligations of about $20 million and to apply against a $40 million loan that it was also hoping to extend.

Under the restructuring, half of the debt will be amortised in nine equal semi-annual instalments, starting Aug 1 2015 and ending Aug 1 2019, and the balance will be repaid in one instalment on Aug 1 2019.

Subordinated lenders will receive a risk fee of 1 percent of the principal amount of subordinated debt outstanding as at 31 December 2013 and will be paid work fees of $180,000.

The weighted average interest rate on the deferred subordinated debt was 10.16 percent. At the end of 2013, Kenmare also had subordinated debt of $247.3 million and total senior debt of $94.6 million.

Kenmare's shares have been under pressure from low pricing and its debt repayment schedule and closed at 0.1951 euros on Friday, from more than 0.70 a year ago.

"This arrangement has relieved significant pressure on the balance sheet and should have a positive impact on share price performance," said RBC Europe analyst Des Kilalea.