Dannemora's bond loan creates flexibility and added value
Dannemora's bond loan creates flexibility and added value
Last week's bond loan of USD 120 million has secured the loan financing for the resumption of Dannemora Mineral's iron ore mine in Uppland. This means that the Company is already initiating work on all urgent investment projects. Dannemora Mineral will also accordingly attain the objective of commencing operations in the spring of 2012.
"The time-saving is one of the decisive advantages of our choice of the type of financing. Now we will be able to start production much quicker, resulting in that Dannemora Mineral can derive maximum benefit from the high iron ore prices and thereby reduce the financial risk. We also believe that this will facilitate negotiations and the conclusion of contracts with the steelworks' clients while strengthening the position of Dannemora in terms of negotiations with equipment suppliers. The Company's future recruitments will also be facilitated as the entire funding is in place," comments the Company's CEO, Staffan Bennerdt.
The Company is also well-prepared since it already has a project organisation in place to conduct investments, which include a new sorting plant, overground and underground infrastructure and a lift for the main shaft.
"All in all we believe that the type of financing we have chosen definitely benefits the Company and shareholders despite being more expensive in the short-term than a bank loan. This is due to the fact that it guarantees an earlier operational start and secures positive cash flows quicker," adds Staffan Bennerdt.
The bond loan is for five years and the Company has the option of repaying the loan after two, three or four years at a rate of 106, 104 and 102 per cent respectively. The coupon rate is 11.75 per cent. The loan is subject to Dannemora Mineral also strengthening its capital by a minimum of SEK 100 million.
In order to fulfil the condition of strengthening its capital Dannemora Mineral is planning a new issue of class B shares. The Company is now examining the possibility of a targeted issue of a minimum of SEK 100 million for institutional investors.
Given that the financing of the iron ore project in Dannemora has now been secured, the Company will investigate the prerequisites for listing the Company's class B shares on one of the regulated lists of the Stockholm Stock Exchange, Small Cap or Mid Cap.
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