29/07/2013 - 12:52

Galaxy reaches minimum subscription caveat

29/07/2013 - 12:52

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Galaxy reaches minimum subscription caveat
Galaxy managing director Anthony Tse.

Galaxy Resources says it has reached the minimum subscription caveat of its $47 million million capital raising, which was first launched in May and since extended twice, two days ahead of the offer closing.

Galaxy announced today that its major stockholder, international financing group Deutsche Bank, would take up 7.8 per cent of the entitlement offer, which was first launched in May and priced at 8 cents per share, with three free attaching options also priced at 8 cents each for every two shares purchased.

The company's plan to issue more than 584 million new shares to raise up to $46.7 million is at a deep discount to its last closing share price of 23 cents, which occurred on April 24 ahead of the stock going into suspension.

Patersons Securities is acting as lead manager to the offer, which will close on July 31.

The rights offer has already been extended twice, first in June and later this month.

Galaxy also said today it had secured a $5 million short-term loan facility with a consortium of European institutional shareholders.

The facility will allow the consortium to convert the loan into Galaxy equity by taking up shares as part of a shortfall in its entitlement offer, pursuant to the company’s 15 per cent placement capacity under ASX rules.

The consortium also holds the option to acquire a further 25 million shares in the company at 8 cents per share.

Late last month, Galaxy announced managing director Iggy Tan would step down from the company, while a special management committee had been appointed to perform a review of the company’s operations.

Galaxy has been cutting costs across its operations for the past 12 months, including suspending works at the Mt Cattlin mine near Ravensthorpe.

The company’s issues began after a pipeline rupture at its Jiangsu lithium plant in China resulted in lost revenue, spiralling costs and a $65 million funding commitment withdrawal from the East China Mineral Exploration and Development Bureau.

Galaxy said earlier this month it has bank debts of $113 million.

Around $51 million of its bank debt is scheduled to be repaid within the next 12 months.

The company plans to retire $16.7 million of its bank debts if it hits the maximum $46.7 million of the capital raising.

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