Lynas Corp. (LYC), which spent about A$1 billion ($930 million) on a rare earths processing plant in Malaysia, plans to defer some debt repayments and sell as much as A$40 million in shares after prices slumped.
The producer of elements used in cruise missiles to iPads will seek to sell A$30 million of shares to existing holders and A$10 million in an institutional placement, Sydney-based Lynas said today in a statement. It will also delay repayments on $215 million of outstanding loans to Tokyo-based Sojitz Corp. (2768) to June 2016.
“It’s almost a stay of execution,” UBS AG analyst Jo Battershill said by phone. “If there’s any price weakness, a slowdown in the Chinese economy, or a slowdown in demand for rare earths, than how long does it buy them? It’s hard to know.”
Lynas, the worst performer this year among a Bloomberg Index of 11 rare earths producers and explorers, said in March it would need more funds after its loss widened and with a $35 million repayment then scheduled by Sept. 30. It previously had renegotiated the terms of its loan facility with Sojitz to defer dates by which it was required to meet production targets.
The producer said completion of the equity raising would cause some adjustments to the conversion price of its $225 million of 2.75 percent convertible bonds due in 2016. Any adjustment will be known following the completion of the share sales, it said in the statement.
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