27/08/2013 - 14:23

Galaxy restructures debts, focuses on Jiangsu

27/08/2013 - 14:23

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Galaxy restructures debts, focuses on Jiangsu
Galaxy's interim managing director Anthony Tse.

Galaxy Resources has restructured its debts and will now turn its focus to its operations after announcing its long-running capital raising has secured $17.2 million to date.

Today's update follows an agreement with its convertible bondholders to restructure $61.5 million in bonds that were previously due to be redeemed in November.

The restructuring means Galaxy no longer has to make a large cash payout in November, by providing bondholders with a 2 per cent increase in the coupon rate to 10 per cent.

Galaxy said it had also paid down or rescheduled near-term payments due under its $113 million in loans with China Construction Bank, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank.

The company said it also had identified $17.6 million in cost savings measures in FY2013, and expected to target a further $7 million in the next 12 months.

The proceeds from Galaxy's entitlement offer remain well short of the $47 million target.

The funds raised will go towards repaying debts to Chinese lenders, and also to continued works at the Jiangsu lithium processing plant in China and the Sal de Vida lithium, brine and potash project in Argentina.

The rights issue was initially launched in May and was extended twice, first in June, then later in July, after which Galaxy was forced to launch a shortfall placement.

Patersons Securities was lead manager to the raising.

Interim managing director Anthony Tse said the company’s balance sheet would be strengthened by the funds, which would allow Galaxy to pursue a range of strategic initiatives.

“We believe that the successful raising, together with ongoing balance sheet initiatives, will allow the company to focus on its operations and production ramp up,” Mr Tse said in a statement.

“Moreover, we remain firmly committed to our strategy of becoming a significant global lithium producer.”

Galaxy’s stock was savaged by investors on its return to trade on the ASX today, closing down nearly 60 per cent at 9.4 cents. 

 

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