Australia's leading independent law firm, Corrs Chambers Westgarth, has advised ASX-listed Dacian Gold (Dacian) on its recent $98 million capital raising. The transaction allows Dacian to de-leverage its balance sheet and re-position the company as it pursues a simplified open pit mine plan prioritising low-risk, high-margin gold production.
Conducted via a placement to institutional and sophisticated investors and an accelerated pro rata non-renounceable entitlement offer, this capital raising sees Dacian become one of the first ASX-listed mining companies to take advantage of the temporary class waiver provided by ASX which allows companies to place up to 25% (lifted from 15%) of their existing capital without seeking prior shareholder approval.
Lead Partner, Russell Philip, said: "We worked closely with Dacian to deliver on its recapitalisation proposal, seeking to structure a transaction that was best suited to the current challenging environment. Specifically, Dacian needed a transaction structure that would provide as much funding certainty as possible despite the current market volatility, while also providing its existing shareholders with an opportunity to participate at the same price as that offered to institutional investors. This was done against a backdrop of seeking to re-position the company following recent revisions to its resource estimate and production guidance.
"We advised Dacian on an accelerated fundraising structure which allowed it to raise a large proportion of the funding within a condensed timeframe and ultimately minimise the period Dacian was exposed to market uncertainty. The transaction was complicated due to the need to issue a prospectus in connection with the capital raising as a result of trading in Dacian shares being in suspension."
Successful completion of the capital raising will enable Dacian to de-leverage its balance sheet and provide the necessary working capital to pursue a simplified, open pit operating plan. The combination of a de-leveraged balance sheet and a rejuvenated corporate strategy is expected to reduce both operational and financial risk and positions the company to deliver on its revised three year production outlook.
The placement and institutional component of the entitlement offer have successfully completed raising approximately $70 million, with the retail entitlement offer to raise a further $28 million (the retail component is due to close on 1 May 2020).
Corrs has recently advised on a number of capital raisings, highlighting the appetite for well-priced offerings for ASX-listed companies in search of liquidity, including:
- Southern Cross Media Group Limited (ASX: SXL) on its fully underwritten circa $170 million capital raising; and
- Shopping Centres Australasia Property Group RE Limited (ASX: SCP) in relation to its fully underwritten $250 million institutional placement and its non-underwritten $50 million unit purchase plan.