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New Century Resources (ASX:NCZ) - Managing Director, Patrick Walta (left) - The Market Herald
Managing Director, Patrick Walta (left)
Source: North Queensland Register
  • New Century Resources (NCZ) has completed an entitlement offer, raising the full $14.4 million target
  • Shares were priced at 15.5 cents under the one-for-12 non-renounceable offer — a nine per cent discount to the five-day volume-weighted average price
  • Only around 85 per cent of shares on offer were taken up, raising around $12.2 million, and NCZ rejected $18 million in oversubscription applications
  • Instead, most of the remaining $2.2 million in shares was allotted to hedge fund Luminus Management under a priority shortfall allocation
  • Coupled with a recent institutional placement, NCZ has raised around $35 million and increased its institutional shareholding to over 40 per cent
  • New Century will use the cash to retire some debt, saving around $1.3 million in interest and allowing a cashflow buffer for additional exploration
  • New Century Resources is up 2.27 per cent and trading at 22.5 cents

New Century Resources (NCZ) has completed an entitlement offer, raising the full $14.4 million target.

The raise

Shares were priced at 15.5 cents under the one-for-12 pro rata non-renounceable entitlement offer — a nine per cent discount to the five-day volume-weighted average price on October 28.

Only around 85 per cent of shares on offer were taken up, raising around $12.2 million. Remarkably, shareholders applied for a further $18 million worth of oversubscription shares, but NCZ dead-batted the additional applications.

Instead, the $2.2 million shortfall was allocated mostly to major shareholder, hedge fund Luminus Management, under a priority shortfall allocation.

A small remaining portion of $135,000 was taken up by the underwriters of the offer.

With the allocation to Luminus and a recent institutional placement to two existing investors and U.S. hedge fund Luxor Capital, the overall institutional ownership of New Century is now above 40 per cent.

The spend

The combined funds from the placement and entitlement offer total around $35 million.

New Century will use the cash to retire some debt, saving around $1.3 million in interest.

The company will pay down a good portion of its US$70.9 million (around A$96.2 million) debt facility with Varde Partners, of which around US$48.4 million (approximately A$65.7 million) remains to be paid.

New Century believes knocking down its debt will provide a liquidity buffer which will help properly manage irregular shipping and invoicing cycles, while also allowing for additional exploration spending in the near term.

New Century Resources is up 2.27 per cent and trading at 22.5 cents at 2:46 pm AEDT.


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