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How Did Foraco (FRACF) Stock Gain 32%?

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After seeing a rise of 17.28%, leading global provider of mineral drilling services, Foraco International SA (OTCPk: FRACF) closed its last session at $1.4249, bringing its market capitalization to $128.17M.

Foraco stock traded 840 shares, below its average daily volume of 5.73K with 89.95M shares outstanding. An upcoming refinancing proposal has contributed to the increase in the FRACF stock.

The proposed refinancing was for what?

Foraco is a leading drilling services company that provides a range of turnkey solutions for engineering, mining, and energy projects. Integrity, innovation, and involvement are at the core of the company, so FRACF is now the 3rd largest global drilling company with operations in 22 countries across five continents.

A binding term sheet to reorganize Foraco’s existing indebtedness has been signed this month.

  • In effecting an early redemption of Foraco’s existing bonds, the Financial Reorganization will significantly improve the FRACF’s debt profile.
  • A new bonds facility was entered into by FRACF and Marathon Asset Management LP (“Marathon”).
  • Upon completion of the Financial Reorganization, net debt is expected to decrease by approximately US $49.4 million.
  • As part of the Term Sheet, Marathon and FRACF agreed to establish US $100 million senior secured debt.
  • FRACF will close the Senior Bonds Facility on or around June 30, 2021.
  • A maturity date of December 15, 2025, has been set for the Senior Bonds Facility.
  • As part of the Term Loan, the first 5 million dollars will be repaid on the first anniversary of the Closing Date, 10 million dollars on the second, third, and fourth anniversaries, and the remaining amount on the maturity date.

Foraco’s refinancing plan: how will it work?

FRACF may choose to repay accrued interest every three months or every six months. Foraco (FRACF) and certain of its subsidiaries will grant security interests in certain of their material assets in connection with the Senior Bonds Facility.

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