19/09/2013 - 15:11

Galaxy free to focus on debt reduction after raising funds

19/09/2013 - 15:11

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Galaxy Resources says it is poised to pursue its debt reduction strategies after securing an additional $20.3 million through a shortfall placement, taking its total capital raising up to $37.5 million.

Galaxy free to focus on debt reduction after raising funds
Galaxy's Jiangsu lithium processing plant in China.

Galaxy Resources says it is poised to pursue its debt reduction strategies after securing an additional $20.3 million through a shortfall placement, taking its total capital raising up to $37.5 million.

Galaxy initially launched the capital raising in May, seeking up to $47 million to pay down debts.

The company's plan to issue more than 584 million new shares at 8 cents each was at a deep discount to its last closing share price prior to the raising of 23 cents, which occurred on April 24 ahead of the stock going into suspension.

The lithium miner reached the minimum subscription caveat of $12 million in July and subsequently launched a shortfall placement, which was well supported by its major shareholder, international financing group Deutsche Bank.

Chairman Craig Readhead also committed to subscribe for $365,000 in shares.

Galaxy said the remaining $9.2 million block of the shortfall placement would be set aside, amid continuing negotiations with investment institutions interested in taking a substantial stake in the company.

The lithium miner said today that a site visit by institutional and sophisticated investors at the company's Jiangsu lithium processing facility in China had been key to filling the shortfall placement.

Galaxy originally said it planned to retire $16.7 million in bank debts if it reached the maximum $46.7 million mark for the capital raising.

The company did not disclose today how much debt it planned to pay down, but said the raising placed it in a significantly stronger financial position.

"Importantly, as well as the receipt of additional capital we have been successful in negotiating significant improvements in the structure of both the Chinese bank debt and convertible bonds," Galaxy managing director Anthony Tse said.

"This is an area we are continuing to work upon, and will make further progressive improvements as we pursue debt reduction initiatives."

At the close of trade today, Galaxy's stock was down 13.75 per cent, trading at 6.9 cents.

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