Ashanti Goldfields in Move to Ease Debt Burden

ASHANTI Goldfields, the Ghanaian goldminer, on Tuesday last week moved to ease further its debt burden by announcing it had secured a $100million revolving credit facility and the conversion of debt into equity.

In order to implement the proposed restructuring plan announced in January, the company, which nearly went bust in late 1999 because of problems in its large portfolio of gold derivatives, has also entered into an agreement with its counterparties in hedge contracts to continue dealing with the firm on a margin-free basis.

Dr. Sam Jonah, Chief Executive said: "it (Ashanti) has secured approval from those of the hedge counterparties whose support is required to implement the proposed restructuring to continuing margin-free arrangements".

However, the company is yet to receive approval from Credit Suisse First Boston (CSFB), the investment bank.

It said it would continue to explore ways in which it can persuade CSFB to sign the interim margin-free agreement so that, once those agreements became effective, it would be able to benefit from ongoing margin free trading with all of its hedge counterparties.

Whilst Ashanti could not give assurances that this could be achieved, neither the proposed restructuring nor the written undertakings were conditional on the CSFB agreement.

In January, Ashanti concluded a conditional deal to refinance $219million of convertible bonds in an effort to repair its balance sheet. Ashanti - once one of the world's largest goldminers - said then that its creditors had agreed to extend the maturity of 75 per cent of the bonds due in 2003 by five years.

A further $54.6million of the debt would be exchanged for equity by the issue of Ashanti shares at their market value of $3.70.

However, the majority of holders had agreed to a conversion price of debt into equity at $5.75, a 55 per cent premium to the closing share price on the day prior to the announcement of the proposed restructuring on January 25.

The four banks that have provided Ashanti with the $100million, five-year revolving credit facility are: Barclays Capital, Bayerrische Hypo-und Vereinsbank AG, NM Rothshchild & Sons and Standard Bank London.