Lynas to raise $83m to pay debt

Rare earths producer Lynas Corporation has announced an $83 million capital raising to help replenish its crippled cash balance.

The raising will be split between a 5-for-14 renounceable entitlement offer to raise about $71 million, and an institutional placement of 150 million shares to attract new investors and raise about $12 million.

Both the entitlement offer and placement shares have been valued at 8 cents per share.

Lynas said the funds raised would strengthen its balance sheet and provide it with enough liquidity, as it moves to transition from its start up project phase to full business operations.

“This recapitalisation of Lynas is supported by substantial financial investors, some of whom specialise in investments in the energy and industrial sectors,” Lynas chairman Nicholas Curtis said.

Earlier in the month, global bank UBS said Lynas’ recent aggressive cost cutting had come too late.

It owed $US35 million for debt repayment (due this quarter), and recently reported it had a cash balance of $38.1 million.

UBS said without a debt-refinancing package, Lynas would run out of cash by the end of the year.

“Together with the amended debt amortisation schedule, the new capital provides a more secure financial base for the company,” Mr Curtis said.

Lynas shares closed 5.8 per cent lower at 8.1 cents per share.