De Beers secures backing of $1 billion rights issue from major shareholders
DE BEERS yesterday won the backing of its shareholders, Anglo American, the Oppenheimer family and the Botswana government, to raise a $1bn (£637m) rights issue to refinance its debt.
The Group is still in talks with its bankers over securing a $1.5bn credit facility from March and the money raised will be used to cut net debt from $3bn to $2bn.
The producer said it remained cautious about the year ahead after recording a 46 per cent year-on-year drop in sales of rough diamonds in 2009.
“With the fragility of the world economy and perceived weakness of the global recovery post recession, the company would only expect a gradual increase in production levels, sales and prices,” DeBeers said.
Results for 2009 were poor with the producer recording an underlying loss of $220m, down from a $515m profit the previous year.
In response to the steep fall in demand production was cut by 49 per cent to 24.6m carats.
Managing director, Gareth Penny, warned that it could be up to two years before the market returns
to normal, although there had been notable improvements in sales since the start of 2010.
“We do think it will take a couple of years before the whole thing normalises … 2010 has started on quite a strong note.
“The main reason for that is Christmas has been better than expected,” he said.