The issuance of the new bond will have a significant positive impact on the company’s free cash flow over the next five years, giving it much greater operational headroom and flexibility compared to the previous debt facilities, the company said.
Further, as part of the refinancing, the equivalent $A149.8 million that was recorded as current borrowings in the 31 December 2015 half year financial statements will be moved to non-current liabilities once long form documentation is executed by all parties. Therefore, the net working capital position of the company improves by equivalent $149.8 million.
As part of the restructure, the financiers have agreed to irrevocably waive $US21 million in interest and deferral fees accrued but not yet paid. This transaction will increase the net asset position of TerraCom by equivalent $28.8 million.
The bond will be traded on Euroclear, will pay interest in arrears on both a fixed and variable basis, and have the option of 50% PIK flexibility at the discretion of the company.
The binding agreement provides that all long-form documentation needs to be agreed by mid-June 2016.
“Work on the long-form documentation has already begun and the company believes this date is achievable,” TerraCom said in a statement.
