Alumina Ltd plans to raise up to $910 million through a pro rata entitlement offer to fund expansion plans for its joint venture projects in Brazil to meet growing global demand.
Alumina Ltd plans to raise up to $910 million through a pro rata entitlement offer to fund expansion plans for its joint venture projects in Brazil to meet growing global demand.
The company said it will offer the shares at a discounted $3 each. Compared ot today’s closing price of $4.35.
Goldman Sachs JBWere Pty Ltd, Macquarie Capital Advisers Limited and UBS AG, Australia Branch have been appointed as joint lead managers and underwriters to the offer.
The raising will be conducted in two tranches; one to institutional investors to raise about $592 million and the other to retail investors which is expected to raise about $318 million.
Eligible shareholders, as of Friday, August 29, will have the chance to buy five new ordinary shares for every 19 existing ordinary shares.
“The proceeds will be used to fund Alumina’s share of the additional investment in AWAC’s projects in Brazil … and to strengthen the balance sheet so that we are capitalised for the needs of the business including for increased working capital,” chief executive John Bevan said.
AWAC, Alcoa World Alumina and Chemicals, is a joint venture with Alcoa Ltd which holds a 60 per cent interest.
Alumina has previously said AWAC will increase production capacity at its Alumar refinery joint venture from 2.1 million tonnes per annum to 3.5mtpa.
The estimated cost of this has increase from $US1.3 billion to $US1.62 billion.
Meanwhile the cost of developing the Juruti bauxite mine in Brazil has increased from $US1.2 billion to $US2 billion.
First shipment of bauxite from Juruti is expected in the third quarter of 2009.
The higher cost is a result of a delay in the construction schedule due to unseasonal wet weather, the appreciation of the Brazilian Real and increased infrastructure costs.
Below is today’s announcement:
Alumina Limited (“Alumina”) today announced that it will raise up to approximately $910 million through a fully underwritten accelerated, pro rata entitlement offer (“Entitlement Offer”) at an Offer Price of $3.00 per share. The Entitlement Offer will strengthen Alumina’s financial structure at a time that it is investing in major growth projects to capture the strong global demand for alumina.
Alumina Limited’s CEO, John Bevan commented “We are investing in additional capacity at a time of unprecedented global demand for alumina and aluminium. Investing in high quality, long life assets is increasingly important to meet the continued growth in demand from our customers and enhance our competitive position. The AWAC joint venture controls some of the world’s finest bauxite and alumina assets and has a proven history of strong cash flow distribution.”
“The proceeds will be used to fund Alumina’s share of the additional investment in AWAC’s projects in Brazil as announced on 21 July 2008 and to strengthen the balance sheet so that we are capitalised for the needs of the business including for increased working capital.”
The Entitlement Offer will also replace funds that would otherwise have been raised by underwriting the Dividend Reinvestment Plan (DRP) for the 2008 interim dividend. Alumina does not intend to underwrite the DRP for the 2008 final dividend.
The Alumina Board has determined that an Entitlement Offer is an appropriate way for Alumina to raise the required capital. Importantly, the structure of the Entitlement Offer means Eligible shareholders have the opportunity to maintain an undiluted interest in Alumina.
Accelerated Pro Rata Entitlement Offer Eligible shareholders will be offered the opportunity to acquire new Alumina shares at $3.00 each on the basis of 5 new ordinary shares for every 19 existing ordinary shares. The offer price of $3.00 per share represents a 29.1% discount to the dividend adjusted closing price of Alumina shares on ASX of $4.23 on 25 August 2008 and a 24.5% discount to the Theoretical Ex-Entitlement Price.
Alumina will raise approximately $910 million through the fully underwritten Entitlement Offer, which will be conducted in two tranches:
o An Institutional Entitlement Offer, through which Alumina expects to raiseapproximately $592 million; and
o A Retail Entitlement Offer, through which Alumina expects to raise approximately $318million.
The new shares issued under the Entitlement Offer will rank equally from allotment in all respects with existing Alumina shares, but will not be entitled to the 12c per share 2008 interim dividend to be paid on 14 October 2008.
Goldman Sachs JBWere Pty Ltd, Macquarie Capital Advisers Limited and UBS AG, Australia Branch have been appointed as Joint Lead Managers and Underwriters to the Entitlement Offer.
Both the Institutional and Retail Entitlement Offers are fully underwritten at the Offer Price of $3.00 per share by the Joint Lead Managers.
The Record Date for the Entitlement Offer will be 7.00pm (AEST) on Friday, 29 August 2008.
The Institutional Entitlement Offer will be conducted during the period 25 August to 27 August 2008, with the Retail Entitlement Offer to follow. To conduct the Institutional Entitlement Offer, Alumina has requested that ASX place Alumina shares in a trading halt until the recommencement of trading on Monday, 1 September 2008. New Alumina ordinary shares not taken up by eligible shareholders (and those which would otherwise have been offered to ineligible shareholders) will be placed into an institutional or retail bookbuild, as applicable.
Any premium above the offer price achieved in these bookbuilds will be remitted to relevant shareholders on a pro rata basis. The entitlements will not be tradeable on the ASX or otherwise transferable.
