Shares in troubled rare metals group Lynas Corp dived on Monday on news of another full year loss and a deeply discounted share issue, this time to raise as much as $83 million via a placement and rights issue.
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The shares are to be issued at 8¢ a share, a steep 30 per cent discount to its last traded price of 11.5¢.
Trading in the shares was suspended late last week, as the group sought to complete the latest fund-raising from the sharemarket.
With the resumption in sharemarket trading, Lynas shares plunged by nearly 25 per cent to close at 8.6¢.
Lynas chairman Nicholas Curtis said the company expected some market reaction to the announcement but was not concerned about the slide because shares remained trading above the 8¢ issue price.
"We understand that we have asked shareholders to put their hands in their pockets once again but we believe it is in the best interests of the company," Mr Curtis said.
Lynas, which has a mine in Western Australia and a processing plant in Malaysia, aims to raise $12 million via a placement of shares with institutional investors and the balance of $71 million via a rights issue at five-for-14, with the issue underwritten by Patersons Securities.
Those who participate in the issue will also receive options exercisable at 9¢ before September 2015.
Lynas also said it has renegotiated the repayment schedule on a $US225 million loan from Japanese lenders, with the September 30 repayment delayed a fortnight, which will allow Lynas to use funds from the placement to meet that payment.
"The costs of funds is very low and is appropriate for the company as it stands," Mr Curtis said. "This is a strong recapitalisation of the company, supported by our shareholders."
Investors also reacted to the company's full year results which revealed a full-year loss of $365.8 million for the year to June 30, compared to $107.4 million in the previous corresponding period.
Revenue rose from $950,000 to $64.6 million year-on-year, representing Lynas's first year of full production.
"This recapitalisation of Lynas is supported by substantial financial investors, some of whom specialise in investments in the energy and industrial sectors," Mr Curtis said in a statement.
"Together with the amended debt amortisation schedule, the new capital provides a more secure financial base for the company."
