Jervois Global Extends Covenant Waiver and Interest Deferral on ICO Bonds
JRV (JRV) Share Update July 2024 Monday 22nd
Jervois Global Announces Extension of Covenant Waiver and Interest Deferral
Jervois Global Limited (ASX: JRV) has announced an extension of the financial covenant waiver and a deferral of the interest payment on its Idaho Cobalt Operations (ICO) senior secured bonds.
Instant Summary:
- Extension of financial covenant waiver to 20 August 2024.
- Deferral of interest payment on ICO Bonds to 20 August 2024.
- Waiver and Deferral approved by majority bondholder.
- No changes to ICO Bonds' terms, including coupon, security, or guarantee arrangements.
Extension and Deferral Details
Jervois Global Limited has successfully negotiated an extension of the financial covenant waiver and a deferral of the interest payment on its ICO senior secured bonds. The waiver, originally granted until 20 July 2024, has been extended to 20 August 2024. Additionally, the interest payment due on 20 July 2024 has been deferred to 20 August 2024.
The ICO Bonds, issued by a Jervois United States subsidiary and guaranteed by Jervois, were secured in 2021. The majority bondholder, holding more than two-thirds of the principal amount of the ICO Bonds, has agreed to support both the waiver extension and the interest deferral. This support was crucial as the waiver and deferral required approval from at least two-thirds of the bondholders.
Implications for Jervois
Until the waiver and deferral are fully implemented, the majority bondholder has agreed to forbear remedies associated with financial covenant compliance. This provides Jervois with some breathing room as it continues to work on potential transactions to strengthen its balance sheet in collaboration with its major lenders.
Other than the waiver and deferral, Jervois has acknowledged a specific event of default related to the termination of a side letter agreement with the bondholder. However, no other changes have been proposed to the terms of the ICO Bonds, including the coupon rate, security, or guarantee arrangements. The ICO Bonds will continue to be subject to no principal repayment until the end of their existing five-year term in July 2026.
Forward-Looking Statements
Jervois has issued a cautionary note regarding forward-looking statements, highlighting that these statements are based on assumptions and estimates that are subject to significant risks and uncertainties. The company does not intend to update these statements unless required by law.
The extension of the financial covenant waiver and the deferral of the interest payment provide Jervois with additional time to stabilize its financial position. This move is likely to be viewed positively by investors as it shows the company's proactive approach to managing its obligations. However, the acknowledgment of an event of default may raise some concerns.
Investor Reaction:
Investors and analysts have generally reacted positively to the news, appreciating the additional time granted to Jervois to address its financial challenges. Some analysts have pointed out that the support from the majority bondholder is a strong vote of confidence in the company's future prospects.
Conclusion:
Investors should keep an eye on Jervois' upcoming financial maneuvers and any further announcements related to its balance sheet strengthening efforts. The company's ability to navigate its financial obligations will be crucial in maintaining investor confidence.