...this thread had warned readers that what we can expect is more CR in the lithium industry. After ALB's large raise, now we have Lithium Americas (LAC) doing a $275mil capital raise (CR) at $5 at a steep -20+% discount to its last closing price of $6.63.
...futures show LAC is dropping -23% to $5.09!
...this discounted CR could also await LTR, simply because given lithium's current industry consolidation which can be protracted, banks are not likely to provide a commercial loan large enough for its needs and may also want to see shareholders have skin-in-the game to share the risk, plus would likely be accompanied by debt covenant ratios that LTR would need to abide by, failing which the loans could be pulled.
...if you ask me, a company that takes a bank loan rather than CR stands a greater risk of being pushed into administration if the company fails to generate enough cashflows and not meet debt covenant requirements. While a discounted CR may be painful for shareholders, it is a safer pain route to take because it offers the company the chance to buy time without being pushed to the wall by risk conservative bankers.
Lithium Americas Prices US$275 Million Underwritten Public Offering
VANCOUVER, British Columbia, April 18, 2024 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company” announced the pricing of its previously announced underwritten public offering (the “Offering” of 55,000,000 of its common shares (the “Common Shares” at a price to the public of $5.00 per Common Share (the “Issue Price” for aggregate gross proceeds to the Company of $275,000,000.
The Offering is being conducted through a syndicate of underwriters led by Evercore ISI, Goldman Sachs & Co. LLC and BMO Capital Markets (together, the “Lead Underwriters”, as the co-lead book-running managers, J.P. Morgan as joint book-running manager, and Canaccord Genuity, Cormark Securities Inc., Scotiabank, Stifel Canada, Eight Capital and Tuohy Brothers as co-managers (together with the Lead Underwriters, collectively, the “Underwriters”.
The Company has granted the Underwriters an option to purchase up to 8,250,000 additional Common Shares (the “Over-Allotment Option” at the Issue Price, exercisable, in whole or in part, for up to 30 days after the closing of the Offering.
The Company intends to use the net proceeds of the Offering for advancing the construction and development of its Thacker Pass lithium project in Humboldt County, Nevada (“Thacker Pass”, as further described in the Prospectus Supplements.
In March 2024, the Company achieved a significant milestone for Thacker Pass by receiving a conditional commitment (the “Conditional Commitment” from the U.S. Department of Energy under the Advanced Technology Vehicles Manufacturing Loan Program (the “ATVM Loan Program” for a $1.97 billion loan in aggregate principal to fund eligible construction costs of the processing facilities at Thacker Pass, targeting to produce an initial 40,000 tonnes per year of battery grade lithium carbonate (“Phase 1”, plus interest to be accrued during construction, which is estimated to be $290 million over a three-year period, together totaling a $2.26 billion loan (the “Loan”. As of December 31, 2023, after accounting for funding from the Loan and the pending $330 million second tranche investment (the “Tranche 2 Investment” from General Motors Holdings LLC (“GM”, the Company estimates approximately $436 million remains to be committed to Phase 1 capital costs from the Company's existing cash and cash equivalents and incremental funding. The Company’s approximately $196 million of cash and cash equivalents, as of December 31, 2023, when combined with the net proceeds of the Offering of approximately $263 million (before giving effect to any exercise of the Over-Allotment Option), along with and after accounting for the funding from the Loan and the GM Tranche 2 Investment, are expected to result in the estimated remaining capital expenditures of approximately $2.736 billion for construction of Phase 1 as well as the Company’s 2024 operating budget being substantially fully funded. Incremental funding requirements will be funded through the exercise of the Over-Allotment Option (if exercised) or other financing alternatives.
Closing is expected to occur on April 22, 2024, and is subject to customary closing conditions, including receipt of required approvals of the Toronto Stock Exchange and the New York Stock Exchange.
announced the pricing of its previously announced underwritten public offering (the “Offering”
