PERTH (miningweekly.com) – Coal miner TerraCom on Friday unveiled a A$63-million capital restructure, consisting of a A$35-million capital raise and a $20-million convertible bond.
The ASX-listed company would raise some A$35-million through an entitlement offer, priced at 58c a share, under which eligible shareholders would be entitled to apply for three new shares for every 20 shares held.
The offer price represented a 10% discount to the 30-day volume weighted average price of TerraCom shares.
The entitlement offer is fully sub-underwritten by existing shareholders Bonython Coal No 1, Noble Resources International, and Mistlake.
Meanwhile, TerraCom has also entered into a $20-million convertible bond with shareholder OCP Asia, which has an exercise price of 69.6, a term of three years and a coupon of 9.95% a year.
The funds raised from the entitlement offer and the convertible bond will be used to reduce debt and to provide funding for TerraCom to refinance its balance sheet.
Following the completion of the entitlement offer, and on the conversion of the convertible bond, the cash interest costs of the company will be reduced by some A$8-million a year.
“The funds raised will significantly reduce the company’s cost of debt and provide vital leverage in the final negotiations of refinancing existing debt,” said TerraCom chairperson Wal King.
“It will provide the company with expansion and business development opportunities with its new restructured balance sheet, as well as providing the opportunity for the board in due course to deliver on its short term goal of paying a maiden dividend to shareholders.”