August 6, 2019 / 7:58 AM / 19 days ago

UPDATE 1-Sirius Minerals suspends Polyhalite $500 mln bond offer

(Adds shares, context on bond issue)

Aug 6 (Reuters) - Sirius Minerals Plc said on Tuesday it had suspended a planned $500 million bond sale that is central to the funding of its Polyhalite mining project in the north-east of England, sending shares in the fertiliser maker down more than 30%.

The $500 million bond is part of second stage financing for the North Yorkshire-based project, which includes a $2.5 billion credit facility, a $425 million equity raise and a $507 million convertible bond issue.

Polyhalite can be used as a fertiliser, but it is a largely untested product and Fitch Ratings last month signalled it expected to assign the bond issue a ‘B’ rating, citing a number of risks around the project.

“I imagine it was pulled as even before the recent volatility (on global financial markets) they were going to need to pay around 13%,” said one London based high-yield buyside analyst.

“I imagine that it would be quite a bit higher today. It’s an amazingly ambitious project. More project finance than typical high-yield.”

Sirius Minerals said on Tuesday that it intended to revisit the market if conditions improved later this quarter.

Analysts at Liberum said in a note to clients, maintaining their “buy” rating on the stock, that they expected the company to try again at the beginning of September.

“Progress will continue at site,” the brokerage said. “Cash reserves have been guided to the end of September, although there is likely to scope to extend slightly longer if financing discussions push up against that deadline.”

Sirius shares were down 34.2% at 9.63 pence in early trading. (Reporting by Justin George Varghese in Bengaluru and Virginia Furness in London; editing by Gopakumar Warrier and Patrick Graham)

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