UBS starts sounding for Liontown’s equity raising
Investment bank UBS began sounding fund managers for Liontown Resources’ emergency equity raising on Monday evening, after Albemarle yanked its $6.6 billion bid for the lithium explorer before market open.
Liontown Resources chairman Tim Goyder. Trevor Collens
Sources said Liontown was looking for at least $300 million from equity capital markets, and may go as high as $500 million. However, pricing and size were both yet to be finalised.
Its flagship Kathleen Valley project needs about $951 million in project capital costs for the first production, a 6 per cent increase from the company’s January estimate. In September, Liontown said it was well advanced in discussions with a lender syndicate, including commercial banks and government credit agencies, which would lend it at least $450 million.
It would be interesting to see where the pricing lands, now that Liontown has lost its red-hot M&A target status. Its shares were trading around the $1.50 a share mark at March end, when it disclosed it had received (and knocked) back three big-premium bids from Albemarle at $2.20, $2.35 and $2.50.
The NYSE-listed giant’s interest made sure Liontown shares have consistently traded above $2.50 for the past six months. They inched even higher in September, after Albemarle finally won a look at the books with a $3 a share scheme proposal and local billionaire Gina Rinehart began building a 19.99 per cent stake. Rinehart’s stake eventually proved fatal to Albemarle’s bid.
No doubt, fund managers would spend Monday evening wrapping their heads around Liontown’s fundamentals as well as future M&A prospects, before deciding whether they want to tip in.
Greenhills and law firm Allens have been advising Liontown. JPMorgan, Barrenjoey and
Read more on afr.com
