ERA shares soar on resumption of Rio Tinto-led capital raise
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The news: Energy Resources of Australia (ERA) shares rocketed on the ASX after the uranium producer announced the resumption of its $880 million capital raise, first announced in August, before being stalled by Takeovers Panel proceedings.
The numbers: ERA shares were up 11.1% to 1 cent by 10:50am AEDT, while majority shareholder Rio Tinto — which released its third-quarter production results this morning — fell 1.3% to $120.43.
ERA said it has confirmed an updated timetable for the entitlement offer with the ASX. It has set the offer's ex-date at 18 October and record date at 21 October, with the offer scheduled to open on 23 October and close on 13 November.
In August, ERA said that without a capital raise it would likely breach its minimum cash reserve of around $50 million in the fourth quarter. The company said its current cash position is around $77 million, down from $86 million on 25 September, and likely to reduce to $50 million in the second half of November.
The entitlement offer will be made at an offer price of 0.2 cents per share, with Rio Tinto committed to a total of $760 million.
The context: On Tuesday, the Australian government's Takeovers Panel declined to make a declaration of unacceptable circumstances in relation to the proposed entitlement offer.
It followed an application by ERA shareholders Zentree Investments and Packer & Co in September, which sought interim orders from the Takeovers Panel to delay the capital raise.
The shareholders claimed the offer would see Rio's shareholding increase above the compulsory acquisition threshold of 90%, without an applicable exemption under Chapter 6 of the Corporations Act.
The source: ASX announcement
