Liontown’s $1.18b rescue awaits Rinehart’s endorsement
Lithium developer Liontown Resources will take on $760 million of further debt and issue up to $420 million of new shares in a heavily discounted raising, under a plan to complete construction of its Kathleen Valley mine in Western Australia without the deep pockets of Albemarle.
Monday’s withdrawal of a $6.6 billion takeover offer from the US lithium giant forced Liontown to tap lenders and turn to shareholders, including billionaire Gina Rinehart, to solve a $450 million funding shortfall for Kathleen Valley.
Liontown boss Tony Ottaviano at the Financial Review Mining Summit in May, interviewed by Peter Ker. Trevor Collens
The funding package announced on Thursday evening will issue new shares at $1.80 each; more than 35 per cent below the $2.79 level at which Liontown shares last traded on October 13. The issue price is also 40 per cent below the $3-a-share level at which Albemarle pitched its takeover offer on September 4.
Albemarle abandoned the offer on Monday, citing “growing complexities” in completing the transaction.
Most observers interpreted Albemarle’s comment as a veiled reference to Mrs Rinehart’s purchase of a 19.9 per cent stake in Liontown and her publicly stated desire to influence the future development of Kathleen Valley, particularly with regard to downstream processing of its lithium.
Liontown did not reveal on Thursday whether Mrs Rinehart would take up her rights to buy shares at $1.80 each, but she is expected to do so, given she was willing to accumulate at close to $3 ahead of Albemarle folding.
Liontown said chairman Tim Goyder will stump up $10.8 million personally under a conditional placement that requires approval from shareholders.
The bulk of the new shares issued will go to
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