Mineral sands miner KenmareResources Plc said July 22 that investors subscribed for newordinary shares worth just US$8.9 million out of a total US$122.7 millionavailable under an open offer that closed July 22, in a sign of restrainedinvestor support for the stock following its 90% collapse in value since 2012.
Kenmare received valid subscriptions for 2,920,837 sharesunder the open offer, totaling just 7.45% of the shares offered under the deal.
The London-traded stock fell 7.86% July 25, after investorsapproved the wider capitalrestructuring plan, which will allow Kenmare to raise US$275million via a series of placements and debt conversions at US$3.132 per newordinary share.
The funds will be used to cut debt by at least 74%, as wellas provide working capital for Kenmare's Moma mine in Mozambique.
"Lowergross debt and reduced interest rates will reduce annualised interest costs by[approximately] 84%, in comparison with 2015, while the enhanced cash positionprovides Kenmare with an excellent platform to deliver strong returns to itsshareholders," Managing Director Michael Carvill said.
Under the capital restructuring, Kenmare will raise US$100million in a cornerstone placement, US$145.7 million from a firm placement andUS$29.3 million from lenders, who agreed to swap some debts for equity. Thecompany's shares will also undergo a 1-for-200 consolidation.
The stock consolidation will take effect July 26, while theUS$275 million recapitalization will close July 28, according to the company.
The funds raised under the open offer are to be used to cutthe amount contributed by the lenders, Kenmare confirmed.