After a $6.6 billion takeover bid from US lithium giant Albemarle was scuppered by mining magnate Gina Rinehart, Liontown Resources (ASX:LTR) has come out the other side with fresh capital it says will carry it “to first production and beyond”.
About 203 million new shares will be issued to new and existing investors at $1.80 each for $365 million.
Another 6 million shares will be issued under a separate placement to Chairman Tim Goyder for an additional $10.8 million, subject to shareholder approval at Liontown’s AGM on 30 November.
The proceeds — totalling $375.8 million — will be used for debt refinancing, construction and ramp-up of the Kathleen Valley Lithium Project, and as a “prudent liquidity buffer to maintain a robust balance sheet”.
Perhaps as a result of the takeover battle, which made headlines around the world, Liontown said it had received “strong demand” from both domestic and offshore institutions.
“The completion of the institutional placement completes the funding package to take Kathleen Valley through to first production and beyond,” Managing Director and CEO Tony Ottaviano says.
“The completion of the institutional placement completes the funding package to take Kathleen Valley through to first production and beyond“
“Notwithstanding the current challenging market conditions, the placement was met with strong demand and we have achieved our goal of strengthening our share register with the addition of high-quality domestic and international institutional shareholders.”
Both the institutional placement and the conditional one to Goyder are part of a broader funding package announced on Thursday, 19 October, which includes a $760 million debt facility with a syndicate of banks and government credit agencies.
It also features a $45 million share purchase plan for existing shareholders in Australia and New Zealand. Eligible investors are invited to purchase up to $30,000 worth of shares at $1.80 apiece, or at a 2% discount to the 5-day volume-weighted average price on the closing date of the plan — whichever is lower.
Albemarle submitted its bid for Liontown on 4 September, which sought a takeover price of $3 per share. It was a revised offer, after others going back as far as 20 October 2022 — which valued Liontown at $2.20, $2.35 on 3 March, and $2.50 on 27 March — were rejected.
It was shortly thereafter that Rinehart launched her own pursuit. Over the following months, she and her privately held Hancock Prospecting forked out roughly $1.3 billion to acquire a 19.9% stake in Liontown — broadly considered enough to block Albemarle’s offer.
Earlier this week, Albemarle bowed out of the pursuit, citing “growing complexities associated with the transaction”.
“Our engagement with the Liontown team has been meaningful and productive,” Albemarle CEO Kent Masters said.
“We appreciate the level of cooperation we have received, and we thank the entire team for their efforts. That said, moving forward with the acquisition, at this time, is not in Albemarle’s best interests.”
The Kathleen Valley Project, which boasts a resource measuring 156 million tonnes at 1.4% lithium oxide, is scheduled to begin spodumene production by mid-2024. In an announcement at the end of September, Liontown said construction and mining contracts amounted to $951 million — a 6% increase from a $895 million estimate in January 2023.
Shares in Liontown, which hit a high of $3.20 during the Albemarle-Rinehart clash, were down 31% to $1.92 at 11:55am AEDT.
