Mountain Province Diamonds Inc T.MPVD

Fitch

[Macloud1]

Fitch Downgrades Mountain Province's IDR to 'CC'

Tue 23 Aug, 2022 - 2:38 PM ET

 

 

 

Fitch Ratings - New York - 23 Aug 2022: Fitch Ratings has downgraded Mountain Province Diamonds Inc.'s Issuer Default Rating (IDR) to 'CC' from 'CCC'. Fitch has also downgraded the senior secured notes to 'CC'/'RR4' from 'CCC'/'RR4'.

 

The downgrade reflects the increasing uncertainty MPVD will be able to obtain financing to address the notes due December 2022 and Fitch's view that the company may need to pursue a destressed debt exchange in the next four months in order to avoid bankruptcy.

 

Currently, MPVD's ability to secure additional financing to refinance the notes remains highly uncertain, although Fitch views this as partially offset by a supportive majority shareholder, Mr. Dermot Desmond.

 

KEY RATING DRIVERS

 

 

Restructuring Likely Required: A default in the next four months is a real possibility if MPVD is unable to refinance the notes due December 2022. Fitch believes there is heightening uncertainty MPVD will be able to refinance the notes given the notes are maturing in the next four months with no solution yet in place, in addition to recent defaults in the sector which may result in lender fatigue for MPVD. Fitch believes MPVD may need to pursue a destressed debt exchange if alternative financing is unavailable or at acceptable terms.

 

Near-Term Maturities Pressure Liquidity: As of June 30, 2022, MPVD had cash and cash equivalents of CAD29 million (before repayment of CAD12.873 million of junior revolving credit facility obligations due December 2027). Given MPVD's relatively small size, any shortfall in business performance could exhaust minimal liquidity. The operation of single mine heightens the risk of operational disruptions. Fitch views MPVD's weak liquidity as partially offset by a supportive majority shareholder.

 

Fitch believes Mr. Desmond will likely continue to be supportive and work with MPVD to find a solution for the upcoming notes maturity. However, Fitch expects liquidity to be relatively minimal and a suspension of mining activity, a period of low prices or business underperformance could quickly erode liquidity.

 

[Diamondboy123]

McLeod I took your advice earlier on to buy.  I did.  Hard and heavy. Made some some dough along the way. Bought more thereafter ntw your newfound foul perspective on this equity.  I am an honest man. Your present perspective is bang on. This equity will fail.  The Irish will lose their entire equity share in the hundreds of millions of dollars and the mine will be run into the

[explman]

In effect what this may mean is the re-financing of the debt likely just got more expensive. What that may mean is that more debt may likely need to be converted to equity as part of the re-financing. What that may mean is that equity holders may be further hosed. But there is a natural tension as DD holds significant interest in both the debt and the equity. Will be interesting to watch how this

[Macloud1]

Well at least you got out with some money . I like many long term holders made losses. I can only thank Patrick Evans for having sold us a pipe dream. He is a good saleman though. You should be looking at Uranium stocks as I have during the last 1 and 1/2 years after my exit from MPVD. They might still prevail ,but it is too risky for my blood. good luck. 

[Diamondboy123]

Actually my father in law recommended cameco.   The Japanese and Germans are going all in apparently.  

[Macloud1]

not apparently it is happening. Egypt also jumped into the fray . China is biulding 50 new nuclear rectors in the next ten years. Uranium will be selling over 100 per pound in the very near future. The bull run is just starting. Follow John Quake twitter and  Deek quick on Utube.