Petra Diamonds (LON: PDL) faces a winding-up petition against a subsidiary over £5.65 million ($7.5 million) in unpaid UK corporation tax, adding another complication as the miner seeks to refinance its debt and address near-term liquidity needs.
The petition was filed against Petra Diamonds UK Treasury (PDUK Treasury), a wholly owned indirect subsidiary, over tax owed for the year ended June 30, 2025. It is scheduled for a High Court hearing on Oct. 14.
The tax liability arose from interest income accrued on a receivable from Ealing Management Services, another wholly owned indirect Petra subsidiary. PDUK Treasury has not received the accrued interest, the company said.
Petra said both subsidiaries are non-operating companies that do not own or run any of its mines, meaning the petition does not directly affect mining operations. However, the company is assessing potential implications for its financing arrangements and ongoing refinancing discussions.
Business review
The petition comes a day after Petra launched a strategic review that could result in asset sales as the Africa-focused diamond miner looks for ways to meet its short-term cash requirements. The review followed consultations with key stakeholders, including first- and second-lien creditors.
The process could bring Petra’s flagship Cullinan mine near Pretoria into play. Its other major South African operation, Finsch in the Northern Cape, is being closed after business rescue practitioners concluded there was no reasonable prospect of rescuing the operation.
The strategic review follows a deterioration in Petra’s balance sheet as prolonged weakness in the natural diamond market and a stronger South African rand weigh on the business. Net debt rose to $322 million at the end of June from $298 million three months earlier.
In July, Petra secured an additional $17,955 working-capital facility from a senior lender and deferred about $6 million in cash interest until January 2027. Its financing arrangements also required the company to begin refinancing discussions in September, with the goal of agreeing non-binding commercial terms by the end of October.
The tax petition now lands in the middle of those talks, leaving Petra to determine whether action against its treasury subsidiary has consequences for the broader financing structure even though its mines are not directly subject to the proceedings.
Source: https://www.mining.com/petra-diamonds-hit-with-7-5m-uk-tax-petition/
