Liontown equity raise underwritten for $375m at $1.80 a share

afr.com:

UBS and Bell Potter have underwritten Liontown Resources’ equity raising for $375 million at $1.80 a share, or a 35.5 per cent discount to the last close.

Liontown Resources boss Tony Ottaviano. Trevor Collens

It is understood the brokers had enough institutional demand to comfortably cover the $375 million. Gina Rinehart’s commitment wasn’t clear yet, but it wouldn’t be surprising to see her take up her pro rata allocation to avoid dilution.

UBS is due to shut books for Asia Pacific investors at 9pm Sydney time, followed by 11pm for the rest of the world.

The pricing has tumbled a lot lower than the $2.20 to $2.60 at which UBS and Bell Potter began soliciting bids for the $400 million bookbuild on Thursday evening, as revealed by Street Talk. The $1.80 a share is roughly an 18 per cent premium to Liontown’s undisturbed share price, and is being sold as an attractive entry point given it’s a 24 per cent discount to the $2.39 average broker net asset value.

As reported by Street Talk, fund managers were being told Liontown had found backers for $760 million in debt. The equity raise should give the company enough of a liquidity buffer, while fully funding Kathleen Valley.

Real-money funds questioned the $2.60 a share that Liontown was hopeful of fetching when it first set out, seeing as its M&A control premium had vanished while Kathleen Valley’s costs had risen by 6 per cent since January.