TerraCom secures new finance facility amid improving coal sales
TerraCom’s new debt facility provides for up to US$215 million in funding and will offer savings of around 4% per annum compared to the previous facility.
Coal producer TerraCom (ASX: TER) has launched a refinancing initiative amid improving sales with the company on target to deliver 675,000 tonnes of thermal coal in the June quarter from Blair Athol.
The company’s bond holders have unanimously approved an extension of the Euroclear Bond maturity date from 30 June 2021 to the 13 August 2021.
TerraCom says the six-week extension will enable its new debt facility sufficient time to be completed.
The new facility provides for up to US$215 million (A$286 million) in funding, with fixed interest up to 9% per annum over seven years.
TerraCom noted the new facility will offer savings of around 4% per annum.
“The company wishes to formally acknowledge the incoming debt funder for their time and effort to brief the current bond holders on the status of the refinance program which was instrumental in obtaining the extension of time,” TerraCom executive chairman Craig Ransley said.
“The continued support from the company’s current bondholders has been well received and we look forward to working with both our current bondholders and incoming debt funder throughout the course of the next four-to-six weeks to finalise the refinance program,” he added.
Coal production and sales
During the June quarter, TerraCom said its Blair Athol coal mine has continued to “deliver superior operational results” under its owner operator model.
About 675,000t of coal is expected to be sold in this period from Blair Athol, with the product attracting US$90.5 per tonne (A$120.3/t) under the most recent fixed priced sale.
With TerraCom’s reduced cost base of A$60/t of coal produced, the latest sale price represents a margin over A$50/t.
Meanwhile, at the company’s South African operations, sales have continued at pre-Covid levels, with the May 2021 delivered domestic tonnes of 465,000t above the year-to-date monthly average of 448,000t.
Despite COVID-19 challenges, TerraCom expects to sell about 9.3Mt of coal for the 2021 financial year from its various operations in Australia and South Africa.