Lynas slumps on $83m raising
UPDATE 2.40pm: Shares in troubled Lynas Corporation have slumped to a fresh five-year low after the loss-making rare earths company announced an $83 million capital raising to keep it afloat.
The raising aims to bolster the company's balance sheet as it battles a low price for rare earths and high costs at its Malaysian processing plant.
It will comprise a $71 million, underwritten, five-for-14 rights issue and a $12 million placement, both priced at eight cents, well below its last traded price of 11.5 cents.
The raising follows the company’s announcement last week that it had renegotiated a $US225 million ($243 million) loan with Japanese backers.
Under the loan restructure with two Japanese firms, Lynas will make a series of repayments, with the final $105 million due in June 2016.
“In conjunction with the recently announced changes to the senior secured debt amortisation timetable, the new equity will strengthen the company’s balance sheet and provide Lynas with sufficient liquidity as it transitions from its start up project phase to full business operations,” Lynas said in a statement.
Investors taking part in the raising will also receive one option for every two new shares for which they subscribe. The options will be exercisable at nine cents at any time up to September 15, 2015.
Lynas chairman Nicholas Curtis said the recapitalisation of Lynas was supported by substantial financial investors, some of whom specialised in investments in the energy and industrial sectors.
“Together with the amended debt amortisation schedule, the new capital provides a more secure financial base for the company,” he said.
Lynas also announced today a series of initiatives to cut costs, reduce expenditure and improve the quality and value of its production.
Lynas chief executive and managing director Amanda Lacaze preliminary indications were that the company’s September quarter results would continue the trend of quarter-on-quarter improvement from June 2013.
“I am particularly pleased to report that we have achieved significant operational improvements at LAMP and our monthly production run rate is our highest yet,” she said.
The prices of rare earth metals have dropped just as Lynas has ramped up production at its new Malaysian refinery.
Lynas shares slumped 2.9 cents, or 25.22 per cent, to close at 8.6 cents after emerging from a trading halt, representing a fresh five-year low for the stock.
