Poor uranium market conditions push Paladin Energy into restructuring

Shares in Paladin Energy (ASX:PDN) nosedived Tuesday after the embattled uranium miner announced a complex refinancing to restructure its borrowings as it failed to sell off 24% of its flagship Langer Heinrich mine.

The stock dropped 17% to 7.9¢ and are now a long way from their level of more than $1.50 in early 2012.

The main purpose of the restructure proposal is to address the upcoming maturity of Paladin’s outstanding US$212 million convertible bonds due 30 April 2017, the firm said.

Paladin failed to sell a 24% stake in its Langer Heinrich mine in Namibia to China National Nuclear Corporation (CNNC), which was expected to fetch $175 million.

The sale of Paladin’s stake in Langer Heinrich mine in Namibia to China National Nuclear Corporation (CNNC) would have given the struggling miner $175 million to meet the debt repayment.

“In the absence of the Langer Heinrich stake sale, I’m very happy that our bondholders are supporting the company with a viable restructure that preserves long-term value for all stakeholders,” Paladin Energy’s chief executive Alex Molyneux said.

Under the terms of its proposed restructuring, the maturity date of all outstanding convertible bonds, collectively worth $362 million, will be pushed out to 2022 and 2024. Also, $145 million worth of new Paladin shares, priced at five cents will be issued to bondholders and any accrued unpaid interest will be exchanged into new secured bonds and new convertible bonds on a 75/25 basis.

Paladin would also have to conduct a minimum $75 million equity raising.

The deal assumes that the company will retain its 75% stake in Langer Heinrich mine.

As most uranium miners, Paladin has faced increased pressure from decade-low uranium prices. Its proposed balance sheet restructuring, in fact, comes on the same day that Kazakhstan, the world's top uranium producer, decided to axe its output for the year by 10% citing to poor market conditions triggered mostly by a global oversupply of yellowcake.