Sirius Minerals’ (LON:SXX) share price has fallen deep into the red this Tuesday as the company pulled a previously proposed $500 million bond sale to finance a fertiliser mine in North Yorkshire. The company blamed poor market conditions for the move.
As of 10:40 BST, Sirius Minerals’ share price had given up 51.12 percent to 4.89p. The group’s shares have given up more than 83 percent of their value over the past year.
Sirius pulls bond sale
Sirius Minerals announced in a statement this morning that it did not believe that its previously proposed $500 million senior secured notes offering can be issued in the current market conditions. The company further said that the scope of construction activities on its North Yorkshire Polyhalite Project will now be adjusted while a strategic review is undertaken over a period of up to six months.
“Due to the ongoing poor bond market conditions for an issuer like Sirius we have not been able to deliver our stage 2 financing plan,” Chris Fraser, Managing Director and CEO of Sirius, commented in the statement. “As a result, we have taken the decision to reduce the rate of development across the Project in order to preserve funding.”
Analysts weigh in
City A.M. reported that Richard Knights, an analyst at Liberum, had placed his 40p target for the Sirius Minerals share price under review this morning.
“It’s unclear whether the lack of appetite for its bonds was a function of project specific risks, market conditions or a combination of both, but as a result a capital markets led financing solution seems unlikely, leaving the only feasible financing options being via government guaranteed bonds or a strategic investor with a balance sheet,” he pointed out, as quoted by the newswire.
The BBC meanwhile quoted Russ Mould, from investment platform AJ Bell, as commenting that today’s announcement was “terrible news for a very large number of retail investors who had put their faith in the company”.