REG-Petra Diamonds: Restructuring: Signing of Lock-Up Agreement

Petra DiamondsAnnouncement

17/11/2020 18:25

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR IMMEDIATE RELEASE

 17 November 2020   LSE: PDL 

Petra Diamonds Limited

("Petra", "PDL" or the "Company" or, in conjunction with its subsidiaries, the
"Group")

Signing of Lock-Up Agreement by Key Financial Stakeholders in Support of
Restructuring

Introduction

The Company is pleased to announce that it has today executed a lock-up
agreement (the "Lock- Up Agreement") with an ad-hoc group (the "AHG") of
holders of the US$650 million 7.25% senior secured second lien notes issued by
the Group (ISINs USG7028AAB91 and US71642QAB32; CUSIPs: G7028AAB9 and
71642QAB3) (the "Notes"), the providers of the Group’s first lien bank debt
facilities (the “South African Lender Group”) and its black economic
empowerment partners (the "BEE Partners"). This Lock-Up Agreement formalises
the agreement reached in principle regarding a long-term solution for the
recapitalisation of the Group (the "Restructuring") previously announced by
the Company on 20 October 2020.

The execution of the Lock-Up Agreement marks a positive step forward in the
implementation of the Restructuring. Pursuant to the terms of the Lock-Up
Agreement, the parties have undertaken to take all actions reasonably
necessary in order to implement the Restructuring and to not delay or prevent
the implementation of the Restructuring. Further details relating to the terms
of the Lock-Up Agreement are set out below.

Notwithstanding the execution of the Lock-Up Agreement, the implementation of
the Restructuring remains subject to the agreement of customary implementation
documentation and the satisfaction of relevant conditions precedent. Such
conditions precedent include (but are not limited to) approval of the
Company's shareholders (the "Shareholders") at a special general meeting (the
"SGM") and approval of the Scheme (as defined below) by the Noteholders and
the sanctioning of the same by the court. Further details regarding these
conditions are set out below.

Agreement in principle

As announced by the Company on 20 October 2020, the key features of the
Restructuring are as follows:

1. partial reinstatement of the Notes debt and the contribution by holders of
the existing Notes of US$30.0 million in new money, each to take the form of
new senior secured second lien notes ("New Notes"). It is expected that the
New Notes will amount to approximately US$337.0 million (including the new
money and fees paid as part of the transaction in New Notes);

2. conversion of the remainder of the Notes debt into equity, which will
result in the holders of the  Notes  (the "Noteholders")  holding  91%
 of  the  enlarged  share  capital  of  PDL;

3. restructuring of the first lien facilities provided by the South African
Lender Group; and

4. new governance arrangements and cashflow controls.

Lock-up Agreement

Terms of the Restructuring

The terms of the Restructuring as announced on 20 October 2020 remain
substantially the same, save for the following substantive differences:
* Noteholder(s) projected, at the date 14 days following entry into the
Lock-Up Agreement, to hold at least 5% of the ordinary shares in the Company
as at the Restructuring effective date (“Qualifying Noteholders”) will be
entitled to rights enabling them to nominate an individual to be appointed as
a non-independent, non-executive director of the Company (“Nomination
Rights”) in accordance with the following: * Nomination Rights will be
allocated to the four largest Qualifying Noteholders provided that * if any
such Qualifying Noteholder elects not to exercise its Nomination Right, such
Nomination Right may be exercised by the fifth largest Qualifying Noteholder,
failing which by the next largest Qualifying Noteholder, and so on until each
Qualifying Noteholder has had the opportunity to exercise such Nomination
Right, and failing which each Qualifying Noteholder (in descending order from
largest to smallest) shall be entitled to exercise the relevant Nomination
Right following the same sequence as set out in this paragraph (save only that
no one Qualifying Noteholder shall be entitled to more than two Nomination
Rights);
* a Nomination Right will be forfeited if any such Qualifying Noteholder does
not hold 5% of the Ordinary Shares at or following the Restructuring effective
date;
* each Qualifying Noteholder will also be entitled to appoint an observer to
the Board (such person shall not have voting rights at Board meetings) as
indicated in our previous announcement.


* In the event that the Shareholder Resolution is not passed and the
Restructuring cannot occur (as detailed further below), the Company shall be
permitted to amend the indenture governing the Notes to (i) facilitate the
Group to raise additional debt funding of up to an aggregate amount of US$45.0
million which would rank behind the existing South African Lender Group first
lien debt and ahead of the second lien Notes (the "1.5 Lien Financing"); and
(ii) reduce the relevant consent threshold under the Notes indenture from
90.0% of Noteholders to a majority in aggregate principal amount of the Notes
to allow Noteholders to instruct the trustee under the Notes indenture to
consent to any changes required under the relevant intercreditor agreement to
introduce the 1.5 Lien Financing.
A reorganisation of the arrangements with the Group's BEE Partners (with their
agreement) is a condition precedent to the Restructuring. Accordingly, Petra,
the AHG and the South African Lender Group will now continue their good faith
negotiations with the BEE Partners in respect of such reorganisation.

The Noteholders who have executed the Lock-Up Agreement (the "Participating
Noteholders") hold, in aggregate, 61.2% of the Notes (by value) (the
"Locked-Up Notes"). Noteholders who wish to become Participating Noteholders
and who have not yet entered into the Lock-Up Agreement may do so by executing
a deed of accession.

It is contemplated that the Restructuring will be implemented by way of an
English law scheme of arrangement pursuant to Part 26 of the Companies Act
2006 (the "Scheme"), in conjunction with the issue of new ordinary shares in
PDL to be issued to scheme creditors (being the Noteholders)   (the "PDL
Share Issue"). The amendments to the Group's first lien facilities which have
been negotiated and agreed with the South African Lender Group are conditional
upon the successful implementation of the Restructuring.

The Company intends to launch the proposed Scheme and to send the practice
statement letter (which sets out the key aspects of the Scheme and the broader
Restructuring) to Noteholders on or around the date of this announcement.
Noteholders will be given the opportunity to vote on the Scheme at a meeting
convened by the court to approve the Scheme (the "Scheme Meeting"), which is
currently scheduled for 8 January 2021. The court will then decide whether to
sanction the Scheme at a sanction hearing, which is currently anticipated to
take place on 12 January 2021.

The implementation of the Scheme is conditional on the PDL Share Issue, which
in turn is conditional on the approval of the Shareholders at the SGM. It is
currently anticipated that the SGM will take place on or around 13 January
2021. The Company intends to publish a combined prospectus and circular by the
end of December, which will include a notice of the SGM that is sent to
Shareholders.

In the event that the Shareholders do not pass a resolution to be proposed at
the SGM (the "Shareholder Resolution"), the Restructuring cannot occur. The
1.5 Lien Financing is only expected to be required in such circumstances. If
the Restructuring does not occur, it is possible that the South African Lender
Group and/or the Noteholders would terminate the present forbearance
arrangements that they have agreed with the Group. In the event of such a
termination, the South African Lender Group would, subject to the terms of its
intercreditor arrangements, be entitled to enforce its security. In those
circumstances, it is likely that the South African Lender Group, the
Noteholders or other creditors of the Group would take enforcement action
against the Group or cause such action to be taken.

Further information regarding the Restructuring, the Scheme Meeting and the
SGM will be provided in due course.

Overview of terms of Lock-Up Agreement

As noted above, pursuant to the terms of the Lock-Up Agreement, the parties
have given certain undertakings, including:
* to take all actions reasonably necessary in order to support, facilitate,
implement, consummate or otherwise give effect to the Restructuring (on the
terms outlined above);
* not to delay, impede or prevent the implementation of the Restructuring;
* in the case of the Participating Noteholders and the South African Lender
Group, not to take enforcement action against the Group; and
* in the case of the Participating Noteholders only, to attend the Scheme
Meeting in person or by proxy and vote in favour of the Scheme.
In addition, the Participating Noteholders and the South African Lender Group
have agreed to certain "lock-up" provisions, which restrict them from
transferring:
* in the case of the Participating Noteholders, any interests in the Notes;
and
* in the case of the South African Lender Group, any interests in all monies,
debts, liabilities due, owing or incurred in connection with any of the first
lien facilities,
in each case, unless the relevant transferee agrees to be bound by the terms
of the Lock-Up Agreement.

Certain generally customary termination events apply to the Lock-Up Agreement
(some of which are automatic and some of which are voluntary and exercisable
by different parties), including but not limited to, automatic termination on
the earlier of the Restructuring effective date and the date falling five
months (unless otherwise agreed in accordance with the Lock-Up Agreement)
after 17 November 2020 (being 17 April 2021); material non-compliance with the
terms of the Lock-Up Agreement by certain parties; and the failure to satisfy
certain conditions of (and to) the Restructuring by the agreed specified
dates.

Lucid Issuer Services Limited (the "Information Agent") has confirmed to each
of the parties that the conditions precedent to the Lock-Up Agreement
(relating to, in particular, the amount of Locked-Up Notes and the payment of
fees due to the advisers of the AHG and the South African Lender Group) have
been satisfied. Accordingly, the Lock-Up Agreement shall bind all parties
thereto from 17 November 2020 until terminated.

Fees

The Participating Noteholders who remain party to the Lock-Up Agreement (and
who are not in breach of the Lock-Up Agreement) as at the effective date of
the Restructuring will be entitled to a fee of 1% of the aggregate principal
amount of the Participating Noteholder's Locked-Up Notes, to be paid as an
allocation of additional New Notes on completion of the Restructuring (the
"Early Bird Fee"). Noteholders who are not yet party to the Lock-Up Agreement,
but who accede to the Lock- Up Agreement by 1 December 2020, will also be
entitled to the Early Bird Fee. Payment of the Early Bird Fees will be
facilitated by the Information Agent as part of the funds flow of any
Restructuring.

Next Steps

The Information Agent has been engaged by Petra to act as information and
tabulation agent for the Lock-Up Agreement.

Noteholders that have not yet signed the Lock-Up Agreement and wish to support
the Restructuring will, in their capacity as a Noteholder, need to complete
and execute an accession deed to the Lock- Up Agreement and provide evidence
of their beneficial holdings to the Information Agent.

Noteholders should contact the Information Agent at +44 20 7704 0880 or
petradiamonds@lucid- is.com to access further information relating to the
Restructuring and for details of how to accede to the Lock-Up Agreement.

Noteholders will not be eligible for the Early Bird Fee after 1 December 2020.

The Group is targeting the completion of the Restructuring in the coming
months and will continue working with the AHG, the South African Lender Group
and other financial stakeholders to finalise and implement the Restructuring.
Closing of the Restructuring will be subject to a number of conditions,
approvals and other matters which are required in the near-term, including the
negotiation and agreement of full form documentation to reflect the agreement
in principle. Further announcements will be made in due course.

There can be no guarantee that the Restructuring as contemplated by the
Lock-Up Agreement will be implemented on the terms set out above, and any
recapitalisation of the Group may be on significantly different terms to the
ones set forth in this announcement or not be consummated at all. Furthermore,
the completion of the Restructuring may take significantly longer than the
Group currently anticipates.

Annual Report

The Company has also published its annual report for the financial year ended
30 June 2020 today. A copy of the annual report is available on the Company's
website at https://www.petradiamonds.com/investors/results-reports/.

The information communicated in this announcement is inside information for
the purposes of Article 7 of Regulation 596/2014. Upon the publication of this
announcement via a Regulatory Information Service, this inside information
will be considered to be in the public domain. The person responsible for
arranging for the release of this announcement on behalf of the Company is
Jacques Breytenbach, Finance Director.

~ Ends ~

For further information, please contact:

Petra Diamonds,
London                                        
Telephone: +44 20 7494 8203

Cathy Malins                              
investorrelations@petradiamonds.com Des Kilalea

Marianna Bowes

Rothschild & Co

Giles
Douglas                                                   
giles.douglas@rothschildandco.com

Glen
Cronin                                                      
glen.cronin@rothschildandco.com

Mahir
Quraishi                                                 
mahir.quraishi@rothschildandco.com

Lucid Issuer Services
Limited                                
Telephone: +44 20 7704 0880

Sunjeeve
Patel                                                                
petradiamonds@lucid-is.com David Shilson

About Petra Diamonds Limited

Petra Diamonds is a leading independent diamond mining group and a consistent
supplier of gem quality rough diamonds to the international market. The
Company has a diversified portfolio incorporating interests in three
underground producing mines in South Africa (Finsch, Cullinan and
Koffiefontein) and one open pit mine in Tanzania (Williamson).

Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
of ca. 243 million carats, which supports the potential for long-life
operations.

Petra conducts all operations according to the highest ethical standards and
will only operate in countries which are members of the Kimberley Process. The
Company aims to generate tangible value for each of its stakeholders, thereby
contributing to the socio-economic development of its host countries and
supporting long-term sustainable operations to the benefit of its employees,
partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL' and is a constituent of the FTSE4Good Index.
The Company’s US$650 million loan notes due in 2022, currently subject to
restructuring, are listed on the Global Exchange market of the Irish Stock
Exchange. For more information, visit www.petradiamonds.com.

Important Notice

This announcement contains statements about Petra that are or may be forward
looking statements. All statements other than statements of historical facts
included in this announcement may be forward looking statements. Without
limitation, any statements preceded or followed by or that

include the words "targets", "goals", "should", "would", "could", "continue",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "hopes", "projects" or words or terms of similar
substance or the negative thereof, are forward looking statements.

Such forward looking statements involve risks and uncertainties that could
significantly affect expected results and are based on certain key
assumptions. Many factors could cause actual results to differ materially from
those projected or implied in any forward looking statements. Due to such
uncertainties and risks, readers are cautioned not to place undue reliance on
such forward looking statements, which speak only as of the date hereof. Petra
disclaims any obligation to update any forward looking or other statements
contained herein, except as required by applicable law or regulation.

The securities referred to in this announcement have not been and will not be
registered under the

U.S. Securities Act of 1933, as amended, and may not be offered or sold in the
United States, except pursuant to an applicable exemption from, or in a
transaction not subject to, the registration requirements of the United States
and in compliance with any applicable securities laws of any state or other
jurisdiction of the United States.

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority, is acting
exclusively for Petra and no one else in connection with the contents of this
announcement and will not be responsible to anyone other than Petra for
providing the protections offered to clients of Rothschild & Co nor for
providing advice in relation to the subject matter of this announcement or any
other matters referred to in this announcement.



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