Lithium developer Liontown Resources (ASX: LTR) Ltd has unveiled plans to secure A$760 million in additional debt and issue up to A$420 million in new shares, following the withdrawal of a A$6.6 billion takeover offer by US battery chemical giant Albemarle Corporation (NYSE: ALB), the Australian Financial Review reported.
The moves aim to plug a $450 million funding gap for the completion of the company’s flagship Kathleen Valley Lithium Project in Western Australia’s northern Goldfields, estimated to cost $951 for initial production.
Shares will be issued at $1.80 each, a sharp discount of more than 35% from the $2.79 price on October 13 and 40% below the $3 per share at which Albemarle had proposed its takeover.
Rinehart endorsement awaited
Albemarle withdrew its offer on Monday, citing “growing complexities” in finalizing the deal.
The complexities are widely believed to concern the purchase of a 19.9% stake in Liontown by Gina Rinehart, Australia’s richest person, and her expressed interest in influencing Kathleen Valley’s future.
It remains unclear if Rinehart will exercise her rights to buy the discounted shares.
Liontown chairman Tim Goyder has committed to a personal $10.8 million investment, pending shareholder approval.
Banks and credit agencies to provide loans
The majority of new shares, $365 million worth, will target institutional investors, with retail shareholders given an opportunity in a subsequent $45 million offering.
Australia’s major banks, Commonwealth, Westpac, National Australia Bank, and Australia and New Zealand Banking Group (ASX: ANZ), will provide up to $560 million in loans to Liontown, while a further $200 million will come from export credit agencies such as the federal government’s Export Finance Australia and Clean Energy Finance Corporation.
The new loans will be used to refinance an existing $300 million debt facility with Ford, of which $247.3 million had been used as of August 31.
Liontown shares slumped on resuming trade today and are nearly 33% lower at $1.87 in late morning trading.
