LYNAS Corporation has improved core capabilities and grown strategic customer relationships providing a firm platform for future growth. These improvements have been recognized by the company’s two key debt providers who have agreed to make changes to their debt agreements.
Lynas and its debt providers have worked collaboratively to amend financing agreements. This provides the company with a secure and simple solution to support growth.
After site visits and management discussions to assess the company’s performance and operations, JARE and the convertible bondholders led by Mount Kellett, have each reached an informed view to further support Lynas, with amendments to the financing agreements. Both recognize the importance of retaining sufficient cash buffer in the business as Lynas continues to increase production volumes.
JARE will delay amortization payments due on March 31, 2015 and June 30, 2015 and extend the due date for those payments to June 30, 2016.
In addition, JARE and the convertible bondholders led by Mount Kellett have agreed that Lynas will deposit the interest payments due to each debt provider in 2015 into specific bank accounts. Lynas will have the option, at the lenders’ discretion, to apply for a cash withdrawal of monies in those accounts, if required for the business in the coming 12-month period.
The delay in amortization payments has the benefit of providing Lynas with a simple and certain solution for preserving cash as the company continues its progress to becoming a sustainable and profitable operating business in a difficult economic environment. This proactive support from its debt providers is welcomed by Lynas.
Regarding the Lynas Advanced Materials Plant (LAMP) in Malaysia the company has focused on achieving regulatory endorsement for continuing operation as well as on improving production stability and output rates. Lynas is also continuing to establish a strong portfolio of strategic customers aligned to the company’s offering, with particular emphasis on growing sales in the Japanese market.
A full operating stage licence for the LAMP was granted on September 2, 2014 providing Malaysian regulatory endorsement of operational standards and the basis for continued operations.
Production output has continued to increase with the cracking and leaching units operating at above design rates and at design utilization. The solvent extraction (SX) and product finishing (PF) units operated at design rates but below design utilization leading to variability in output volumes.
Commissioning of SX phase 2 assets began in December and this should enable greater output stability.