Coal miner TerraCom Resources has rolled out a $63 million restructuring plan that will support its growth ambitions.
TerraCom is launching a fully underwritten offer that will firstly fetch around $35 million.
The company has furthered its restructuring effort by agreeing to a $US20 million ($28 million) convertible bond with shareholder and investment manager OCP Asia.
Both efforts will see TerraCom’s interest costs eventually reduced by around $16 million every year.
TerraCom’s existing shareholders (and sub-underwrites) Bonython Coal No 1, Noble Resources International and Mistlake have backed the entitlement offer.
“The funds raised will significantly reduce the company’s cost of debt and provide vital leverage in the final negotiation of refinancing existing debt,” TerraCom chairman Wal King said.
“It will provide the company with expansion and business development opportunities with its new restructured balance sheet … as well as providing the opportunity for the board in due course to deliver on its short-term goal of paying a maiden dividend to shareholders.”
TerraCom’s $35 million entitlement offer was launched at $0.58 a share, which is a 10 per cent discount to its 30-day average price. The convertible bond, meanwhile, has an exercise price of $0.696 and a coupon of 9.95 per cent for a three-year period.
The company recently upgraded the marketable reserves at Blair Athol in the Bowen Basin of Queensland, giving a boost to the mine life by three years.
Blair Athol is set to produce three million tonnes of coal a year over an eight-year mine life. The mine was formerly managed by Rio Tinto and was purchased by TerraCom for just $1.