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AUST BUSINESS TODAY: 'Lynas thrown a debt lifeline':
RARE EARTHS: Japan Inc and US bondholders have again come to the rescue of rare earths producer Lynas, agreeing to a restructuring of its $US428 million ($556m) debt load to keep open a critical non-Chinese supply channel to the electronics and car industries.

Lynas said that lower interests rates would deliver savings of about $70m over the remaining four-year term of facilities it holds with a Japanese consortium, including the organisation charged with procuring the nation’s raw material needs, and the US bondholders.

But the debt-restructuring that allows the loss-maker to continue as a going concern comes at the cost of heavy dilution to shareholders — bondholders are to receive a swag of warrants, as well as having their existing conversion rate struck at a much lower level. Shareholders get to vote on the new deal — it follows a similar one last year — at the annual meeting on November 30.

Shares in Lynas, founded by former chairman Nick Curtis, rose by 1.3c or 24 per cent to 6.6c. “The effect of these amendments to the financing terms is to provide Lynas with significant savings on its financing costs and allow it to continue as a going concern,’’ the company said.

It added that while prices for rare earths remained low — the only producer in the US went bankrupt and closed its operations — demand for its main product (used in magnets for electric motors) was strong and was forecast to grow. “Therefore there is potential that market prices for these products will increase, which should translate to improved financial returns for the Lynas business,’’ the company said.
BARRY FITZGERALD