LONDON (Reuters) - De Beers, the world’s largest diamond mining group, is close to securing a covenant waiver on $3 billion (1.8 billion pounds) of existing loans, two bankers said on Friday.
De Beers, 45 percent owned by mining conglomerate Anglo America Plc (AAL.L), is seeking a waiver to avoid breaching loan covenants at the end of the second quarter, the bankers said, as the company seeks temporarily to loosen the terms.
The waiver will suspend covenant tests until September by when trading conditions are expected to have improved and is due to be agreed on by Friday, one of the bankers said.
Lenders will receive an upfront fee in return for agreeing the waiver and the interest margin on the existing financing will be increased from 35 basis points to current market levels of around 200 to 300 basis points, he added.
De Beers is also seeking to refinance $1.5 billion of loans maturing in March 2010, according to a company spokesman, adding De Beers’ remaining loans do not mature until 2012.
The spokesman said loan covenants were not an issue, discussions on the $1.5 billion refinancing were progressing after a month of talks and that no deadline had been set for the end of negotiations.
Reporting by Alasdair Reilly; Editing by James Dalgleish