Lithium producer Galaxy Resources (GXY) will resume trading today after a four-month hiatus when the stock was suspended to facilitate a major recapitalisation of the company through a one-for-one entitlement offer.
Management announced that it has successfully tapped shareholders for $17.2 million, which is 43% above the minimum amount it was hoping to raise.
More importantly, the China-focused miner has reached an agreement with its convertible bondholders to roll over $61.5 million in bonds that were due for repayment on November 19.
Galaxy’s bond obligations had been a sticking point with shareholders and the new agreement allows bondholders to hold on to the instruments for another two years with a 2% increase in the coupon rate to 10% or to convert the bonds into shares and receive 1.5 options per share on the same terms as the entitlement offer.
Management will use the proceeds from the capital raising to pay down some of its Chinese debt, fund working capital for its plant in Jiangsu, China and progress the development of its lithium brine and potash project in Argentina.
The Jiangsu plant will be a key focus as management is promising that the plant will reach cash flow breakeven this year.
If things work out according to plan, Galaxy will be the biggest lithium producer in the Southern Hemisphere.
The shares last traded at 15.5 cents on April 24.
Galaxy is part of the Uncapped 100.