Jervois Global (ASX:JRV) Signs Recapitalisation Agreement
Recapitalisation Overview
Jervois Global Limited (ASX: JRV) has reached a significant funding and recapitalisation agreement with Millstreet Capital Management. This newly formed partnership is set to enhance Jervois’ balance sheet through a prepackaged United States Chapter 11 procedure, effectively transforming it into a private entity. The deal aims to provide US$145 million in new equity capital for the company’s operational needs, including the restart of the São Miguel Paulista nickel cobalt refinery in Brazil.
Debt Reduction and Financial Restructuring
The proposed transaction includes an extensive forecast debt reduction of US$170 million. This reduction encompasses a full debt-to-equity conversion of US$100 million in ICO Bonds and US$25 million in Convertible Notes. Additionally, Jervois anticipates a US$44.5 million repayment of the JFO Working Capital Facility principal upon transaction close. Millstreet will also extend its existing US$150 million Working Capital Facility from March 2025 to March 2026 under amended conditions.
Operational Continuity
Jervois assures that this recapitalisation process will not interfere with its commercial operations. The Chapter 11 procedure is set to commence in January 2025, enabling the company to operate as usual while ongoing negotiations take place. According to Bryce Crocker, CEO of Jervois, “We are committed to ensuring stable operations and growing our market presence through this successful recapitalisation.”
Future Outlook and Delisting Plans
Following the recapitalisation, Jervois is poised for a substantial transformation. The company plans to delist from the ASX, pending approval, and will seek to wind up operations without any anticipated return for existing equity holders. The implementation of the recapitalisation will also require shareholder and creditor approvals, alongside compliance with ASX listing rules.
Conclusion
The strategic moves Jervois is undertaking are crucial for revitalising its business model and managing financial challenges in the cobalt market. Through thorough negotiations and diligence, the company aims to solidify its future and restore operational strength.
Motley Fool contributor Abbie Stokes has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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