September 23, 2020

Copper producer CuDeco secures last-ditch Chinese funding to pay down debt to Chinese bank [Valuestone Global to be established in Cayman Islands]


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By Jenny Rogers, From Gold Coast Bulletin

COPPER producer CuDeco has secured last-ditch Chinese funding to cut debt to a Chinese bank.

CuDeco said it will raise $22 million ($15 million) through the issue of a convertible note to a subsidiary of .

The funds will be used solely to pay down CuDeco’s loans from China’s .

CuDeco owes US$60 million to Minsheng Bank, payable in four quarterly payments of US$15 million through to the December quarter 2017.

Yesterday’s transaction accounts for the first payment of US$15 million.

CuDeco said the $22 million convertible note will be issued to Gemstone, a subsidiary of Valuestone Fund, sponsored by and China Construction Bank International.

The 24-month notes carry an interest rate of 6 per cent.

Cudeco is taking advantage of a decision last year by Jiangxi Copper, China’s largest copper producer, to set up a Cayman Islands-based fund to buy into mining projects.

The decision came as the Chinese state-owned copper producer looked for bargains in the resources sector downturn.

Jiangxi said it had allocated $100 million through subsidiaries to establish Valuestone Global in the Cayman Islands with CCB International Asset Management Ltd, part of China Construction Bank Corp.

Valuestone Global was open to domestic and foreign institutional investors and Jiangxi reportedly aimed to raise $300 million in total.

CuDeco in February moved to allay shareholder concerns over its finances and management, saying it was looking at a number of options to service the repayment of its debt to China’s Minsheng Bank.

The loan was due to be repaid on March 31.

CuDeco yesterday said that, despite not meeting the payment deadline, the bank has provided written support for the deal.

The loan is now expected to be paid by mid-April.

CuDeco said the agreement, which requires FIRB approval, allows for accelerated prepayment and repayment if approval is not obtained.

Shareholder approval is not required.

CuDeco’s shares have been suspended from trade while the financing is sorted out.

Its shares last traded at 36.5¢.

The company believes that completion of the deal will enable it to complete financial statements for the half-year to December 31.

The trading suspension then would be lifted.

Trouble-plagued CuDeco has been battling a string of corporate and financial headaches.

It was ordered to shutdown its Rocklands processing facility after failing a safety audit and suffered turmoil at the top with a string of management changes.

CuDeco yesterday said it believes it will benefit from Valuestone’s Fund’s experience and resources and the funding will introduce renewed momentum to Rocklands.

IMAGE: CuDeco’s Rocklands processing plant. The copper producer has secured funding from a Chinese investor to help pay debt.

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