24 Feb 2010

Pike River announces $94m capital-raising plan

4:47 pm on 24 February 2010

Pike River Coal has announced plans to raise $94 million in capital as it raises production.

The listed coal miner, which operates an underground mine near Greymouth, exported its first shipment of coal only last week - and has not reached full production.

It made a loss of $14 million in the six months to December - 47% more than the $9.5 million it lost in the same period the previous year.

It has announced plans to raise $92 million to repay a $US29 million debt facility with lender Liberty Harbor and fund the completion of its underground mine development.

As well as a share issue of $50 million, it's also reached a binding agreement with its main shareholder New Zealand Oil & Gas for a $42 million bond issue.

Pike River chief executive Gordon Ward says the arrangement with New Zealand Oil & Gas is better than the debt facility it has with Liberty Harbor, as the interest rate is slightly lower at 10% and the maturity date has been extended.

In return for the bond issue, New Zealand Oil & Gas will have a two-year option of buying coking coal at market rates.

New Zealand Oil & Gas is lending $15 million in interim funding until the proceeds of the rights issue are available.

Shares in Pike River fell 5 cents to 89 cents in Wednesday morning trading.