Petra Diamonds launches $300 million five-year secured notes at 8¼%, to allocate shortly

By Paul A. Harris

Portland, Ore., May 6 – Petra Diamonds Ltd. launched a $300 million offering of five-year senior secured second-lien notes (B2/B+) at 8¼% on Wednesday morning, according to a syndicate source.

The Rule 144A and Regulation S for life deal is set to price and allocate shortly.

The offering launched at the tight end of revised talk in the 8 3/8% area; earlier talk in the 8½% area circulated on Tuesday.

Initially the deal was guided in the mid 8s, according to market sources.

Joint global coordinator and active bookrunner RBC Capital Markets will bill and deliver. Barclays is also a joint global coordinator and active bookrunner. Rand Merchant Bank is a passive bookrunner.

The notes become callable after two years at par plus 50% of the coupon, feature a two-year equity clawback at par plus 35% of the coupon and offer a 101% poison put.

The issuing entity will be special purpose vehicle Petra Diamonds US$ Treasury plc.

The Jersey, Channel Islands-based diamond mining group plans to use the proceeds to repay bank debt and for general corporate purposes, including funding a new plant at the Cullinan mine. The company’s main mining operations are in South Africa and Tanzania.

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