Pike River Coal has launched its $50 million capital raising plan – raising $10 million through a placement and the remainder in a rights issue.The money will be used to fund the ramping up of the company's hydro-mining operations, while also buildi
Pike River Coal has launched its $50 million capital raising plan – raising $10 million through a placement and the remainder in a rights issue.
The money will be used to fund the ramping up of the company’s hydro-mining operations, while also building up a cash buffer of $18 million.
The mining company first revealed its intention to go to shareholders for an injection of capital in October, when it revealed it needed to raise $20 million to cover operational outgoings in the first half of 2010.
By time it unveiled a $14.1 million interim loss in February, Pike River revealed it needed to raise $50 million, with the support of majority shareholder New Zealand Oil and Gas (NZOG).
While there was initially some uncertainty over whether it would be a placement or rights issue, the company’s indication that it would look at both options was fulfilled with today’s announcement, which should see 45 million new shares generated, bringing the total to 411 million.
The underwritten $40 million renounceable pro rata rights issue will see two new shares offered for every 19 held at a price of $0.88 a share, an 18.5% discount on the share price at the close of trading yesterday (NZX:PRC). Shares are now in a trading halt.
The placement will be made to the company’s institutional investors and two major shareholders at the same price, with NZOG and Indian shareholder Gujarat NRE participating at their current shareholding level.
UBS and McDouall Stuart Securities will serve as joint lead managers and will underwrite the rights issue with MZOG and Gujarat.
Pike River also has a binding agreement with NZOG to subscribe to a new bond to refinance the existing US$28.6 million bond facility, with NZOG also granted a two-year option to purchase Pike River coking coal over the lifetime of the mine at annually negotiated market prices.
This bond agreement –– announced in February –- is conditional on a successful equity raising and also needs shareholder approval from NZOG, with shareholders due to vote on that and the underwriting of the rights issue early next month.
Rights trading on the NZX will commence next Friday and run through to May 17, while trading on the ASX will start this Thursday and last until May 12.
The offer is due to close on May 19, with the new shares allotted two days later.
