Galaxy restructures its bonds
PERTH (miningweekly.com) – Lithium miner Galaxy Resources on Friday moved to alleviate shareholder concern around the November redemption of a A$61.5-million bond.
The miner said in a statement that it had reached an agreement with the bondholder to restructure the convertible bonds.
Under the agreement, Galaxy has the ability to pre-pay principle and accrued interest outstanding to the bondholders in cash, and issue pro-rata shares and 1.5 options for each share on the same basis as the current entitlement offer, in whole or in part, at any time until the November 19 deadline.
This repayment ability replaced the bondholder’s existing put option right, which would otherwise require Galaxy to redeem all or some bonds by November 19.
As the repayment deadline nears, the bondholder would now have the option of either continuing to hold the bonds until the maturity date of November 2015, with a 2% increase in the coupon rate from 8% to 10%, or to convert the remaining bonds into shares.
“We are very pleased to have reached an agreement with our major bondholders and are grateful for their ongoing support,” said Galaxy’s interim MD Anthony Tse.
“The agreement with our bondholders alleviates the cash needs for the original redemption due November 2013, which the company understands has been a primary concern of investors to date, and represents a big step in restructuring our balance sheet.”
Tse noted that Galaxy had also undertaken that, should the funds raised under the entitlement offer exceed expectations, the company would make a payment of between A$5.12-million and A$10.25-million to the bondholders, depending on the funds settled.
If A$10.25-million is paid to the bondholders, there would be a conversion of the funds into Galaxy equity, which would reduce the company’s liability in regards to the outstanding convertible bonds by A$20.5-million to A$41-million.
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