De Beers in the Hole?

There is a lot of uneasiness about the disclosure that De Beers received a pair of (interest-free) loans from its trio of owners (Anglo, Debswana, the Oppenheimer family) this year, totaling $800 million. It’s also suspending production at its mines in Botswana.

This Anglo-American presentation (PDF) lays out De Beers’ schedule for its bank debt (page 28):

- $0.5 billion (due April 2009)

- $1.5 billion (due March 2010)

- $2.3 billion (due 2012 and beyond)

One assumes the April payment has been covered. But how about next March’s $1.5 billion? Asked about this at the end of this teleconference, Anglo officials would say “as of today the three shareholders are confident that De Beers will not need any further cash injection.” 

De Beers is not alone  here; there are a lot of companies, large and small, that have found themselves suddenly cash-crunched in this environment. Still, with these two loans and those payments, De Beers now owes quite a bit, making it likely the company will be operating very conservatively even when the economy recovers.

It also raised eyebrows that, in a break from tradition, De Beers did not give a press conference with its financial results this year – though here is a pretty grim Gareth Penny addressing us all by video.