De Beers is tapping into the funds of their 3 largest shareholders, the Oppenheimer family, Anglo-American, and the government of Botswana, in order to pay down upcoming debt. De Beers will raise $1B in order to help pay a $1.5B debt facility due this coming march. The 3 shareholders will contribute 40%, 45%, and 15% respectively.
This $1B in principal collection follows $500M that was collected from the same 3 shareholders earlier this year. Beyond a $1.5B obligation this upcoming March, De Beers will face a $1.7B debt facility due in 2012.
Lynette Gould, a De Beer’s spokesperson commented that this raise in capital will “lower De Beers’ level of external debt, improve the company’s capital structure, and place it in a position to take advantage of any new opportunities that might arise, as the diamond market moved out of recession and into recovery mode” (Source: Mining Weekly).
De Beers has certainly felt the impacts of the recession with a 99% drop in profits over the past year from $316M to $3M. Production has already been cut in South Africa, Botswana, and Canada.