PERTH (miningweekly.com) - Base metals miner New Century Resources has announced plans for a $25-million capital raise to retire over half of its existing net secured debt.
The ASX-listed company on Wednesday said that it would raise some $15-million through a share placement to two existing institutional shareholders and new investor, US hedge fund Luxor Capital.
A further $10-million will be raised in a non-renounceable entitlement offer to existing shareholders.
The share placement will consist of more than 133.6-million shares, issued at 15.5c each, with New Century having completed a subscription agreement with existing major shareholders and Luxor Capital. On the completion of the placement, Luxor’s stake in New Century would amount to 7.7% of the issued share capital.
In addition to the share placement, the company will also offer one new share for every 12 shares already held, at an issue price of 15.5c each, to raise a further $10-million under the entitlement offer.
The entitlement offer will be open to all eligible shareholders, and will open on November 6 and close on November 20.
New Century on Wednesday told shareholders that funds from the capital raise will be used to expedite the company’s debt repayment profile and improve the overall balance sheet, through the partial or complete retirement of Facility A, which currently has a balance of $25-million, pending the uptake level of the entitlement offer.
In retiring Facility A, the debt balance will reduce by 67% from its original level, with a manageable repayment profile for the remaining secured debt of $23.5-million over the next seven quarters of the life of Facility B.
The company noted that while operations delivered positive operational cashflow in the September quarter, with a strong exit rate and improving macroeconomic conditions, the heavy weighting of the secured debt repayment schedule to the near-term represented an "unsatisfactory risk" to maintaining a sufficient liquidity buffer to properly manage irregular shipping and invoicing cycles.
The retirement of the Facility A debt would alleviate significant business and financial risk, the company added, while also providing the opportunity for capital allocation towards exploration opportunities.