The Resolute Mining Limited (ASX: RSG) share price won’t be going anywhere today.
This morning the gold miner requested a trading halt whilst it undertakes an equity raising.
Why is Resolute raising funds?
According to the release, Resolute has agreed with Taurus Funds Management to repay all amounts outstanding under its US$130 million Toro Gold acquisition finance facility.
The repayment will be funded by an equity raising to raise up to approximately A$196 million.
This comprises a fully underwritten institutional placement to raise A$146 million, an additional A$25 million placement to Resolute’s directors and largest shareholder, ICM Limited, and a share purchase plan to raise up to A$25 million.
Resolute is aiming to raise the funds at a price of $1.10 per share. Which is a 6.4% discount to its last close price of A$1.175.
Resolute’s managing director and CEO, John Welborn, advised: “The ability to entirely repay the Toro Gold acquisition facility will save Resolute extension fees and interest payments. More importantly, today’s equity raising will support and enable the complete refinancing of our debt facilities during the current quarter.”
“Completion of the equity placement, and the refinancing of our senior syndicated loan facilities, will enable the Company to simplify its capital structure and facilitate the retirement of debt facilities provided by Taurus,” he added.
Share purchase plan.
The release explains that Resolute will offer all eligible existing shareholders (those who were on its share register at 4.00pm (AWST) on January 20 and live in Australia or New Zealand) the opportunity to apply for new shares through its share purchase plan without brokerage fees.
The application for new shares under the share purchase plan will be capped at A$30,000 per eligible shareholder. It will open on February 2 and also be conducted at $1.10 per share.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.