Sirius Minerals plc (lon:sxx)
Sirius Minerals – Another Share Issue Instead Of Bonds?

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Title: Sirius Minerals – Another Share Issue Instead Of Bonds?
Company: SXX - Sirius Minerals plc
Share Price Then: 10.4p
Author: Ian Smith
Date: Wed 07 Aug 2019
Comments: Sirius announced a delay to the issue of $500 million worth of bonds apparently because of “market conditions”, which as far as I can tell means that the market wants 13.5% interest and Sirius wants to offer 10%-12%.

Although it was announced that the issue would be revisited when condition change, the general opinion seems to be that the current cash will run out in September and apparently the offer from JP Morgan of a RCF of $2.5 billion expires at the end of October.

So will Sirius accept the higher interest rate or go back to shareholders and issue more shares?

If they did a 1 for 1 new issue at 10.4p it would raise around £730 million, although it is not clear that this would be an acceptable substitute for the bond issue in terms of activating the JP Morgan RCF.

Certainly the plan was no more share issues, but with about $1.6 billion already spent would shareholders decide enough is enough or would they cough up once more?

Back in April when $400 million was raised in a share issue, the $400 million bond issue was announced and JP Morgan offered a $2.5 billion revolving credit facility we were told "Successfully securing the stage 2 financing is effectively key to unlocking Sirius's vast potential, and we expect should catalyse a major re-rating of the shares."

At that time most reports gave the impression that the bond issue was pretty much a done deal and it was just a matter of going through the formalities, this now appears not to be the case.

Certainly one more share issue seems possible as so many private investors have already put so much in and nothing has really changed. If you believed in the project yesterday then today it is still as good.

Equally new investors may see an opportunity as the risk decreases and the new post issue share price may start to look attractive.

So in a few months will we be seeing 7p as the new stable price?
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