Pike River's $45m issue finds backers

Pike River Coal said its $41 million rights issue is fully underwritten and AMP Capital Investors is buying a further $4 million of shares on the same terms.

The owner of a coal mine 50km northeast of Greymouth is raising money after a rock fall in a ventilation shaft last month delayed its production schedule.

The renounceable rights issue is for one share at 70c with a bonus option for every five Pike River shares held. The bonus options have a two-year term and can be exercised at $1.25 each.

Including the $4 million placement on the same terms as the rights issue to AMP Capital Investors, the company will raise $45 million.

Pike River also said it reached agreement with convertible bondholder Liberty Harbor to extend the date by which production must average in excess of 66,667 tonnes per month from July 1 to November 30. The US$27.5 million ($52.4 million) of convertible bonds held by Liberty have a remaining term of about two years and are convertible to new ordinary shares.

Pike River has agreed to a revised interest rate and has obtained a right, in certain circumstances, to repay the convertible bonds in full before their financial maturity in 2011.

The renounceable rights issue is expected to open on March 31 and close on April 17.

The offer is being underwritten by McDouall Stuart Corporate Finance and major shareholder New Zealand Oil & Gas.

The rights issue is being seen as a test of the share market's support for equity raisings and comes as Nuplex also seeks funds from the market.

Commenting on the repair work in the mine, Pike River said 1500 tonnes of concrete has been flown in by helicopter and piped down the shaft to fill a cavity at the top of the rock fall.

An angled shaft constructed from the tunnel to intersect the main shaft at about 50 metres above its base will re-establish ventilation to the mine.

- NZPA