KEY POINTS:
Pike River Coal has reduced the price of the shares being offered in a $60 million rights issue, following sharp falls in the sharemarket during the past week.
The company said today the shares would now be offered at 90c each rather than the $1 announced last week. The number of shares in the offer has been increased from 60 million to 66.67 million.
The move was aimed at preventing termination clauses in the rights issue underwriting agreement being invoked, as well as making the offer more attractive.
Had the NZSX-50 index declined by 10 per cent during the offer period it would have given the underwriter the ability, if it chose, to terminate the underwriting agreement, Pike River said.
During the past week the index had been down 8 per cent, although it had partially recovered since.
"Pike River has significant capital purchases currently in progress or about to be incurred.
"Given the importance of certainty in the funding required, Pike River's directors considered the possibility of this termination event being triggered as having significantly increased and took the step of reducing the offer price to 90c," the company said.
The underwriting agreement would now be measured starting from the close of business yesterday.
Managing director Gordon Ward said that in order to reset the clock a price adjustment was needed, and the company also wanted to ensure the offer was attractive.
"Market events over the past week have to be recognised and the reduced offer price, combined with an increasing expectation of a significant jump in hard coking coal prices this year, should make the offer significantly more attractive to shareholders with the re-pricing providing an incentive for shareholders to exercise their rights."
Last week Pike River said that as well as raising $60m from the rights issue it was to issue $40m in convertible bonds to investment firm Liberty Harbor.
The package will replace an existing mandate with Westpac and add $35m to cover tunnelling, contingency and transport contract costs.
Pike River shares traded up to $1.14 in early January, then dropped as low as 90c on Tuesday. By early afternoon today they were at 95c, down 3c on the day.
- NZPA
