Under the new terms, Lynas will pay just $US2 million ($A2.7 million) instead of $205 million off its debt this year. A further $US20 million is due in financial year 2017 and the remainder of the loan in 2018.
Under the restructure the maturity date of the principal debt facility held with JARE has been extended by two years to June 30 2018 while the bondholder facility from Mt Kellett has been extended from July 25 2016 to September 30 2018.
The debt providers have also agreed to the creation of a $A60 million liquidity buffer, under which interest liabilities will only be paid to the extent that there is a total cash balance of $60 million in each restricted bank account held by Lynas for each facility.
The balance of the restricted accounts will be available for Lynas to use at the discretion of the lenders.
Meanwhile, measures have been included in the JARE facility that will allows Lynas to reduce the effective interest rate of 7% per annum on the facility to as low as 2.8%.
To do so Lynas must meet a series of production targets, scheduled repayments and principal repayments. Interest penalties can also be incurred if the company does not meet the set production targets.
The interest rate of the Mt Kellett-led group’s interest coupon will remain at 2.75% per annum.
The Mt Kellett group will also be granted 174.4 million warrants with a strike price of 3.8c, which if exercised would provide up to $6.6 million additional cash.
Lynas chief executive Amanda Lacaze said the restructure was a significant move in ensuring the future of the company was strong.
“This announcement marks the end of speculation and uncertainty for all stakeholders,” she said.
“Lynas now has a strong, sustainable financial platform that compliments its significantly improved and continuously improving business performance.”
Lynas operates the Lynas Advanced Material Plant in Malaysia, which processes ore from the Mt Weld project in Western Australia.
The company recorded its first cashflow positive quarter in June after incurring losses of $142.2 million for the second half of last year and $26.7 million in the March quarter.
Lynas had battled instability in its processing and ramp-up but said production was now at target rates and expected to be above 3000 tonnes or rare earth oxides in the current quarter.
The company has also doubled sales revenue and implemented cost reductions of $40 million per annum over the past 14 months.
