Resolute Mining Limited (ASX:RSG) (LON:RSG) will raise up to A$196 million to repay all amounts outstanding under a US$130 million Toro Gold bridge facility before the due date for repayment of January 31, 2020.
The company has agreed with Taurus Funds Management Pty Limited to repay the bridge facility.
This action will strengthen Resolute’s balance sheet, reduce interest costs and debt fees, and support refinancing of existing senior debt facilities, which is expected to be completed this quarter.
Equity raise components
The equity raising will comprise a tranche one fully underwritten institutional placement to raise A$146 million and a tranche two A$25 million placement to Resolute’s directors and largest shareholder, ICM Limited Group.
The final component will be a share purchase plan (SPP) to raise up to A$25 million.
Resolute’s managing director and CEO John Welborn said: “The ability to entirely repay the Toro Gold acquisition facility will save Resolute extension fees and interest payments.
“More importantly, today’s equity raising will support and enable the complete refinancing of our debt facilities during the current quarter.”
Simplified capital structure
He said: “Completion of the equity placement, and the refinancing of our senior syndicated loan facilities, will enable the company to simplify its capital structure and facilitate the retirement of debt facilities provided by Taurus.
“The SPP provides our eligible shareholders along with the institutional shareholders who are participating in the placement, the opportunity to increase their shareholding in Resolute on attractive terms at a pivotal point in the company’s life cycle.
“Strong production guidance, a significant reduction in capital expenditure, operating assets which are now generating positive cashflows, and a stronger balance sheet with a greatly reduced debt burden, provides Resolute shareholders the opportunity for a positive re-rate.”
Bridge facility repayment
Proceeds from the equity raising are intended to be used, subject to consent from Resolute’s bankers, to fully repay the US$130 million Toro Gold bridge facility which was provided by Taurus.
This facility attracts an interest rate of 9% per annum and is due for repayment on January 31, 2020.
The first tranche institutional placement will result in the issue of around 132.7 million new ordinary shares in Resolute at A$1.10 per share.
Under the tranche two placement, which is subject to shareholder approval at an Extraordinary General Meeting on February 27, 2020, the company proposes to issue about 22.7 million new ordinary shares at the same issue price.
Directors to participate
Resolute’s directors have agreed to participate in this equity raising for up to A$500,000 in total.
Issuing tranche two placement shares to ICM Limited will enable ICM to maintain its approximate pro-rata shareholding in the company.
The issue price of A$1.10 per share represents a:
- 6.4% discount to the closing price on Monday, January 20, 2020, of Resolute shares of A$1.175; and
- 7.0% discount to Resolute’s 5-day trading Volume Weighted Average Price (VWAP) of A$1.183.
In trading halt
The company has been granted a trading halt by the ASX which is expected to be lifted upon announcement of the completion of the institutional placement, which is expected on Thursday, January 23, 2020.
In London, an application will be made for admission of all shares issued as part of the equity raising to the Official List of the FCA, standard segment, and to trading on the London Stock Exchange’s Main Market for Listed Securities in due course.
To enable all existing eligible shareholders to participate in the equity raising, the company is offering an SPP at the same offer price to raise up to A$25 million.
The application for new shares under the SPP will be capped at the statutory maximum allowed of A$30,000 per eligible shareholder.
This offer period will open on Monday, February 3, 2020, and close at 2:00pm (AWST) on Friday, February 21, 2020, subject to Resolute’s discretion to amend these dates.