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LONDON, May 24 (Reuters) – Mining firm Petra Diamonds said it aims to raise $178 million to help cut its debt burden, and warned it could run low on working capital and breach its debt covenants if shareholders do not back the proposed rights issue.

Petra, which last month finalised an agreement with its lenders for a waiver of its December 2017 debt covenant and a resetting of debt agreements for this year, said it would offer new shares at 40 pence.

That marks a 35.6 percent discount to the theoretical ex-rights price of 62.15 pence calculated in reference to the closing price of its shares on Wednesday.

Shares in the London-listed company tumbled as much as 19 percent after the company's statement.

"If the resolutions to be proposed at the special general meeting are not passed, the rights issue will not take place and the company will not receive the net proceeds from the rights issue of approximately US$170 million," Petra said in a statement announcing the new share issue.

"In such circumstances, the company is of the opinion that the working capital available to the group will not be sufficient during the working capital period based on the reasonable worst case scenario."

Investors will vote on the rights issue in a special general meeting set for June 13.

Petra has been hit by production delays, strikes, a confiscated consignment of diamonds and a strong South African rand and has sought waivers from its lenders three times.

There were also no refunds on value-added-tax (VAT) from the Tanzanian government.

Petra said it would use up to $120 million from the cash call to pay down debt and the balance would buffer its working capital against the strength in...

Investors take heed: while many economists -- and the Federal Reserve itself -- see the U.S. interest-rate hiking cycle at only about half-done, it may instead be closer to the end.

That’s the implication from a study by quantitative analysts at Societe Generale SA. Their findings suggest there may be only three hikes to go before the Fed comes to a halt, at 2.5 percent for the upper bound of the policy target. The calculation is based on the so-called shadow rate, which aims to incorporate the effect of the Fed’s past quantitative easing, and suggests that tightening is further along than nominal interest rates suggest.

“Our analysis shows that we might be at the late stage in the ongoing rate cycle,” the strategists led by Andrew Lapthorne wrote in a note Tuesday. “Typically a rate-cycle peak is followed by recession, with an average about six months in between,” and it calls for a “major repositioning in investment portfolios,” they wrote.

Source: SocGen

The most recent Fed “dot-plot” projections suggest the central bank will still be raising rates in 2020, in order to cool an overheating economy and avoid a recession. Fed officials signaled this week^[1] they’re ready to increase the benchmark again at their June meeting, though sent no clear message on the number of moves thereafter in 2018.

The shadow rate, which is an estimate of the implicit underlying rate in a situation where the Fed was also pursuing quantitative easing and forward guidance, hit its bottom in May 2014, at about minus 3 percent. As the Fed ended QE, it steadily climbed starting in late 2014, reaching zero by December 2015.

Add the Fed’s nominal rate hikes so far -- about...

Identifying runaway debt as a problem is the first step in dealing with it. Then there is the dissonance between the politicians who at once decry the federal budget deficit, then vote for bills that cut taxes and raise spending yet again.

It won’t take much more than the passage of time for the US dollar to be unseated as the de facto global currency. The IMF projects that the US is the only developed country in the world^[1] that will increase its debt to GDP ratio over the next five years.

That countries like China and Russia continue to stockpile gold and launch currency initiatives designed to provide alternatives for world investors will only hasten the USD’s decline.

The US dollar is becoming less appealing for investors as American debt continues to soar and the greenback is printed to cover it, investor Jim Rogers said at the St. Petersburg International Economic Forum (SPIEF).

The American currency will lose the status of main reserve currency much sooner than 2030, Rogers said at the Valdai Club’s discussion session, held as part of SPIEF.

“Dollar is going to be higher than now because the turmoil is coming. Then, it is going to be overpriced and people will look around and say, ‘America’s got the largest debt in the history of the world. It’s printing money as fast as it can,’” the investor said.

ORIGINAL SOURCE: US has largest debt in world history, dollar to lose status as No.1 currency – Jim Rogers^[2] at RT on 5/24/18...

References

1. ^{^} the US is the only developed country in the world (www.theatlas.com)
2. ^{^} US has

LONDON, May 24 (Reuters) – Mining firm Petra Diamonds said it aims to raise $178 million to help cut its debt burden, and warned it could run low on working capital and breach its debt covenants if shareholders do not back the proposed rights issue.

Petra, which last month finalised an agreement with its lenders for a waiver of its December 2017 debt covenant and a resetting of debt agreements for this year, said it would offer new shares at 40 pence.

That marks a 35.6 percent discount to the theoretical ex-rights price of 62.15 pence calculated in reference to the closing price of its shares on Wednesday.

Shares in the London-listed company tumbled as much as 19 percent after the company's statement.

"If the resolutions to be proposed at the special general meeting are not passed, the rights issue will not take place and the company will not receive the net proceeds from the rights issue of approximately US$170 million," Petra said in a statement announcing the new share issue.

"In such circumstances, the company is of the opinion that the working capital available to the group will not be sufficient during the working capital period based on the reasonable worst case scenario."

Investors will vote on the rights issue in a special general meeting set for June 13.

Petra has been hit by production delays, strikes, a confiscated consignment of diamonds and a strong South African rand and has sought waivers from its lenders three times.

There were also no refunds on value-added-tax (VAT) from the Tanzanian government.

Petra said it would use up to $120 million from the cash call to pay down debt and the balance would buffer its working capital against the strength in...