Terracom commits to $63 million company restructure

Funds raised from the entitlement offer and convertible bond will be used to reduce debt and fund the refinancing of the company's balance sheet.

Terracom has operating coal mines in Queensland and Mongolia

Terracom Ltd (ASX:TER) is launching a fully underwritten, pro-rata non-renounceable entitlement offer at 58 cents per share to raise about $35 million.

Eligible shareholders will be entitled to apply for three shares for every 20 shares held on the record date - May 15, 2019.

The company has also entered into a US$20 million convertible bond with shareholder OCP Asia.

Petra Capital Pty Ltd is acting as lead manager, bookrunner and underwriter to the entitlement offer, which is fully underwritten by existing shareholders Bonython Coal No 1 Pty Ltd, Noble Resources International and Mistlake Pty Ltd (sub underwriters).

The funds will help with expansion and business development opportunities

Terracom chairman Wal King said: “The funds raised will significantly reduce the company’s cost of debt and provide vital leverage in the final negotiation of refinancing existing debt.

“It will also provide the company with expansion and business development opportunities with its new restructured balance sheet as well as providing the opportunity for the board to deliver on its short-term goal of paying a maiden dividend to shareholders.”

US$20 million convertible bond

The convertible bond has an exercise price of 69.6 cents for a term of 3 years and a coupon of 9.95% per annum.

Following the completion of the entitlement offer and upon the conversion of the convertible bond, the cash interest costs of the company will reduce by about $8 million per annum.

Quick facts: TerraCom

Price: 0.235 AUD

Market: ASX
Market Cap: $117.9 m

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