Ashanti seeks refinancing approval

Ashanti Goldfields, the African gold mining company, has contacted its two biggest shareholders to approve the terms of a deal aimed at refinancing $219m (?151m) in convertible bonds.

The company has already reached conditional agreement with creditors to extend the maturity of the bonds by five years, in a bid to repair its balance sheet.

On Wednesday it sent letters to the government of Ghana and to Lonmin, the platinum-focused miner, seeking approval of the terms of the agreement reached with creditors. The Ghana government has a 19 per cent stake and Lonmin 32 per cent.

Ashanti, once one of the world's largest gold miners, was pushed to the brink of default in 1999 when the gold price moved against its bets in the futures market. That prompted a wave of calls on its hedge book.

Ashanti's cash position is not strong enough to withstand the level of cash redemptions that would be likely if its share price does not recover by 2003 - when the bonds currently are set to mature.

The company said on Wednesday that the talks with some holders of its 2003 guaranteed exchangeable notes were "progressing well", adding that any restructuring of the debt would depend on reaching agreement with Ashanti shareholders and would be subject to a number of conditions.

The main condition is understood to be that the Ghana government relinquishes its additional "golden share" in Ashanti, a holding that has allowed it to block corporate decisions.

Ashanti argues that the removal of the golden share will free the company to take part in industry consolidation, and that the blocking share held by the government is a deterrent to potential buyers of the company.

The government has yet to say whether it will consider dropping its golden share. Although the recently elected administration of President John Kufour is widely seen as more favourable to the private sector than that of its predecessor headed by Flight Lieutenant Jerry Rawlings, in private, officials say the government should maintain its holding for reasons of national pride.

The company also has to submit a refinancing plan to its banks and hedging counter-parties by the end of this month. An Ashanti official said the company's cash position was "very healthy".

He said the company was likely to announce full-year results at the end of February or beginning of March.