Sirius Minerals plc (LON:SXX) announced a fourth-quarter trading update on Tuesday. In the update, Sirius Minerals has agreed to revise the terms of a potential $3 billion funding round for its flagship fertilizer projects in Yorkshire, United Kingdom.
The company said it has been communicating with prospective lenders throughout the process, revising certain aspects of the proposed $3 billion “stage 2” senior debt financing. This is in order to modify the credit risk allocation amongst the company’s prospective lenders.
The original financing structure planned to equally divide the financing between one commercial bank tranche, and one IPA (Infrastructure and Projects Authority) guaranteed tranche. The latter is a scheme from the British government that aims to support infrastructure projects. The new structure will divide the financing in three ways – the first will be an uncovered debt capital markets tranche, the second a commercial bank tranche, and the third will be the IPA guaranteed bond tranche.
What the new financing structure essentially indicates is that the UK government will play a smaller role in financing the project.
On the 31st December 2018, Sirius Minerals’ cash balance was £290 million.
£230 million of which is unrestricted, providing sufficient liquidity to fund project progress.
Managing Director and CEO of Sirius Minerals, Chris Fraser, commented on the trading update:
“2018 was a year of significant progress for the Company. Completion of procurement to support the stage 2 financing and the signing of an additional 4.8 Mtpa of take-or-pay supply agreements, have been substantial achievements. Considerable progress has been made across all our construction sites and development activities are advancing at pace. More than 800 people are now employed on the Project, demonstrating the transformational potential for jobs and growth in the local area.
“Executing our stage 2 financing plan remains our priority. We continue to make progress towards obtaining stage 2 financing commitments and are working constructively with all relevant parties to achieve this. The process with the lenders is continuing this quarter as we work through the due diligence reports with the lending group and progress discussions on the revised debt structure.”
In September, Sirius Minerals agreed a potash supply deal with Cibra. Recently, it showed off its mineral transport tunnel at its £4 billion Woodsmith fertiliser project.
At 09:33 GMT Tuesday, shares in Sirius Minerals plc (LON:SXX) were trading at -2.55%.