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Poseidon set for raising to help repay debt to Andrew Forrest.

http://www.smh.com.au/business/mining-and-resources/poseidon-set-for-raising-to-help-repay-debt-to-andrew-forrest-20140123-31a7e.html




Andrew Forrest’s Poseidon Nickel will attempt a capital raising in coming days, with the funds set to be used largely to repay a loan to the West Australian billionaire.

The stock went into a trading halt this morning and Poseidon hopes to raise the money over the next 72 hours.

Shares in Poseidon have surged by more than 50 per cent over the past eight trading days.

Much of that increase came shortly before the close of trading on Wednesday, which given today’s trading halt, was the last opportunity to buy the stock before the capital raising is attempted over the next few days.
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In a note to the ASX, Poseidon company secretary Ross Kestel said the trading halt was expected to run for two days.

If another announcement to the market was not made before 10am on Tuesday, the company would request a full suspension of its shares, he said.

Mr Forrest ranks as Poseidon’s biggest shareholder with a stake of just under 33 per cent.

The company has hopes of reviving the nickel deposit in Western Australia that sparked Australia’s original nickel boom in the 1960’s.

Poseidon has struggled for finance in recent times, and has not been able to repay an $8 million loan to Mr Forrest which fell due on October 1, 2013. It failed to raise debt on numerous trips to the US in 2013.

Mr Forrest agreed to extend the deadline for the loan by one year at a high interest rate of 13 per cent.

Poseidon revealed in its annual report last year that Mr Forrest had requested the loan be repaid through the “proceeds of an equity raising as soon as reasonably practical”.

Such an equity raising has not been attempted, until today.

Mr Forrest’s close ally Herb ‘Bud’ Scruggs was appointed chairman of Poseidon around the same time that Mr Forrest agreed to allow a one-year extension to the loan.

Mr Scruggs is an expert in US debt markets and has served on the board of Mr Forrest’s main company - Fortescue Metals Group - since helping fund its early days as a representative of Manhattan investment fund Leucadia National.

Poseidon said his experience in equity raising was his key strength.

“He has deep and current experience in the US capital markets which Poseidon views as a key component in the final funding into production of the Windarra Nickel Project,’’ the company said last year when he took up the position.

Two Poseidon board members - Chris Indermaur and Geoff Brayshaw - increased their holdings in the stock in the period prior to January 16, according to Bloomberg records.