De Beers shareholders agree $1 billion rights offer to cut debt

01 Dec 2009

De Beers, the world's largest diamond producer announced plans to raise up to $1billion through a rights issue from shareholders in order to cut its debt of $3.5 billion.

The owners of privately held De Beers, London-listed miner Anglo American, which owns a 45 per cent stake, Central Holdings, the Oppenheimer family's investment arm Central Holdings with a 40-per cent stake, and the government of Botswana, which has a 15 per cent stake, will subscribe to the rights offer proportionate to their shareholdings.

Anglo American's share in the rights issue will be $450 million, the Oppenheimer family $400 million and $150 million will be taken up by the government of Botswana.

The Johannesburg-based diamond miner shut many of its mines early this year in the wake of the global recession where even the rich reduced their spending on jewellery, that led to a decline in prices and 99 per cent fall in De Beers's first-half net profit in July to a mere to $3 million.

With a net debt of $3.5 billion, De Beers rejected refinancing its debt recently from a consortium of 20 lenders as the terms were not suitable to the company.

As the miner has to refinance $1.5 billion in debt due in March 2010 and $2 billion in 2012, shareholders have agreed in principle to the rights issue, the company said.