Galaxy Update - GALAXY FINALISES CAPITAL RAISING OF A$91.5 MILLION
Creat Resources Holdings Limited ("CRHL") (AIM: CRHL) announces that the following announcement was today made by Galaxy Resources limited ("Galaxy"), in which CRHL has a 19.99% shareholding.
"Emerging lithium producer, Galaxy Resources Limited (ASX:GXY) (Galaxy or the Company) is pleased to announce it has finalised a capital raising of A$91.5 million to several investors, including the private investment company of the founder and major shareholder of Geely Automobile Holdings Co. Limited (Geely) and Fengli Group (Hong Kong) Co. Limited (Fengli). The capital raising consists of up to A$61.5 million in unlisted convertible bonds and a A$30 million equity placement. Both the convertible bond and equity documentation have been finalised and executed by all parties.
Galaxy has elected to increase the amount issued to investors from its initial $30 million target following strong interest and to meet its funding requirements for the ramp up of production at Mt Cattlin, the continuing construction of Jiangsu and to provide additional working capital.
Galaxy Resources Managing Director, Mr Iggy Tan, said that both the convertible bond issue and equity placement will strengthen the Company's capital base as it enters the final stages of development of its projects and moves closer to generating revenue through the first shipment of spodumene concentrate from Mt Cattlin, which is planned for the end of Q4 2010. The raising will also provide the Company with funds for the potential acquisition of additional lithium-related projects.
'In an excellent endorsement for Galaxy's business model and projects, it is very pleasing to see two high quality, strategic investors support the Company on attractive terms.' Mr Tan said.
These terms include a conversion price on the convertible bonds of $1.56, representing a premium of 33.8% over the 20 day VWAP of Galaxy shares prior to the pricing date of 28 September 2010, and an equity raising price of $1.39, equivalent to the 5 day VWAP of Galaxy shares prior to the pricing date of 21 October 2010.
The capital raising will be done in two tranches. The first tranche will be for convertible bonds to the value of A$32m. The second tranche will be for convertible bonds to the value of A$29.5m and shares to the value of A$30m. Both tranches of the convertible bond issue are subject to the final approval of Galaxy's senior lenders, RZB and CDB. Tranche 2 (both convertible bonds and equity placement) is subject to the approval of Galaxy's shareholders in an extraordinary general meeting.
Galaxy intends to use the proceeds of the capital raising to fund the completion of construction and ramp-up of its Mt Cattlin and Jiangsu projects, as well as for working capital and the potential acquisition of other lithium-related projects. Part of the capital raised will replace the US$50 million that has been deposited in cash reserve account for servicing future interest and principal repayments under the terms of Galaxy's project loan facility with CDB and RZB.
Mr Tan said that the Company looked forward to welcome two attractive strategic investors that will support the Company's plans to establish a vertically integrated lithium resource, chemical and battery manufacturing company. "
CRHL's Chief Operating Officer Rex Chow said: "As Galaxy's major shareholder, Creat Resources Holdings Limited is delighted by the success of this additional capital raising and intends to vote in favour of the transaction when the matter is put to shareholders. We are particularly pleased that the capital injection brings in two major shareholders from the car manufacturing and logistics sectors who are particularly well positioned to have a detailed understanding of Galaxy's strategy and objectives
GXY Price at posting:
7.8¢ Sentiment: None Disclosure: Not Held
