Winzer,
Looks like Ashanti will live for a long time.
Brian
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Monday November 1, 3:44 am Eastern Time
Ashanti wins three-year reprieve on hedge book
LONDON, Nov 1 (Reuters) - Troubled Ghanaian mining company Ashanti Goldfields Co Ltd , subject of a takeover bid by Lonmin Plc (quote from Yahoo! UK & Ireland: LMI.L), said on Monday it had a won a three-year reprieve from its gold hedging counterparties.
Under the deal with 15 banks, Ashanti has won exemption from the obligation to post collateral against margin calls on hedging contracts in exchange for issuing the counterparties with warrants which convert indirectly into Ashanti shares.
Ashanti, which was caught out by a sharp rise in gold prices which flipped its gold derivatives book from profit into loss, faces current margin limits totalling some $280 million.
But counterparties have agreed to exempt Africa's third biggest gold producer from posting any margin on its hedge contracts until December 31, 2002. Thereafter, for 2003, Ashanti's margin limits will be twice the current levels and for 2004 they will be 1-1/2 times the current limits.
In return, the counterparties will receive unlisted warrants to subscribe for notes which exchange into Ashanti shares at a price of $4.75 a share, the closing price of the stock in New York (NYSE:ASL - news) on Friday. If exercised in full, the warrants would give the counterparties a stake of around 15 percent.
Ashanti's case for a stay on margin calls has been helped by a decline in gold prices which has reduced the losses on its hedge book to a more manageable level. Gold was last trading around $294 an ounce, down from a peak of $330 last month.
Lonmin, which already owns 32 percent of Ashanti, is seeking full control of the company but itsbid is conditional resolving the hedging problem and on support from the Ghana government, which has a 20 percent stake and veto vote in the country's biggest company.
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