CIL shareholders are referred to the Company’s announcement published on SENS on 30 November 2017 (the “November Announcement”) in respect of its reviewed provisional condensed consolidated results for the year ended 31 August 2017 (the “2017 Financial Year”). In this announcement, reference to the “Funders” means the banks providing funding to the Group who are parties to the Common Terms Agreement (“CTA”) which CIL entered into with them in or about May 2016, and persons holding notes issued by CIL in terms of its Domestic Medium Term Note Programme (“DMTNP”), represented by funds and asset managers who between them represent more than 90% of the notes by value.
In the November announcement, mention was made of a waiver and undertakings which had been obtained until 15 February 2018 (the “Existing Waiver”), to enable the Group to focus on satisfying the further requirements of its Funders. The Existing Waiver and undertakings applied to the 2017 Financial Year and the measurement period which ended on 31 August 2017.
CIL announced that it has reached an agreement with its Funders to extend the waiver (the “Extended Waiver”) until 28 February 2019 (the “Extended Waiver Period”), in respect of all Funders. The terms of the Extended Waiver are captured in a binding term sheet signed by all Funders.
In addition, Funders who are Noteholders have furnished irrevocable undertakings to amend (at a meeting of noteholders yet to be called), the terms of the outstanding notes which mature during the Extended Waiver Period, so as to extend their maturity dates to 1 March 2019.
The Extended Waiver Period runs from 1 September 2017 until 28 February 2019.
The Extended Waiver suspends all capital repayments under the CTA and the DMTNP (collectively, the “Financing Agreements”), until 28 February 2019 (the “Debt Standstill”). Interest thereunder remains payable, after which suspended capital payments totalling R204 million under the DMTNP fall due for payment on 1 March 2019 and remaining repayments will resume thereafter as scheduled. The Extended Waiver also includes a waiver of all defaults under the Financing Agreements arising from a breach of the financial covenants which have been waived. New financial covenants in respect of the Financing Agreements are to be negotiated and to become effective in respect of all measurement periods on or after 1 March 2019.
All existing facilities made available to the Group by the Funders will, despite any provisions to the contrary under the Financing Agreements, remain available on a committed basis up to and including, 28 February 2019.
The Extended Waiver, agreed with the Funders, is the result of the Funders taking comfort in CIL’s forecast cash flow generation over the short and medium term, coupled with numerous far-reaching initiatives being undertaken by CIL to address the challenges at Consolidated Power Projects Group (Pty) Ltd. (“Conco”).
With respect to the Extended Waiver, the Group has agreed to the following, the breach of any of which could trigger a default if not remedied –
- to maintain a minimum cash buffer, which includes available facilities, of at least R250 million as at 28 February 2018, increasing by R25 million per month for each month thereafter falling within the Extended Waiver Period;
- to measure separate revised EBITDA covenants for Conco on the one hand and the Group excluding Conco on the other hand, in the case of Conco, on a monthly basis and, in the case of the Group excluding Conco, at the end of each of CIL’s financial quarters, during the Extended Waiver Period;
- extensive reporting on covenants and the delivery of monthly management accounts and updated cash flow forecasts for the Group; and
- the delivery to the Funders of monthly progress reports, for the duration of the Extended Waiver Period, from the Group’s independent business review team.
Notwithstanding the Extended Waiver and the initiatives undertaken as mentioned above, CIL has commenced a process to review and evaluate its optimal long-term funding requirements and capital structure. FirstRand Bank, acting through its Rand Merchant Bank division, has been appointed to provide CIL with strategic advice in relation to the execution of this strategy. Strategic options available to CIL include the potential refinancing of existing facilities, the potential sale of non-core assets and/or the raising of additional capital, to the extent required. CIL will report back to its stakeholders on the outcome of this process by no later than 31 March 2018.
CIL views the Extended Waiver for the duration of the Extended Waiver Period as a favourable outcome for shareholders, given the extensive remedial actions that are being taken at Conco and the long- term outlook and prospects for the Group.
The directors and management of CIL wish to express their appreciation to the Funders for their continued support and their willingness to consider and explore solutions for the benefit of all stakeholders.