FREEHILLS has advised rare earths explorer Lynas Corporation on its newly unveiled plan for a heavily discounted $450 million capital raising, which comes soon after its failed investment deal with a Chinese company.
Mallesons Stephen Jaques has advised the underwriter, JP Morgan, on the deal.
The funds raised by Lynas will be used for the first phase of the company's Mount Weld project in Western Australia, and its associated processing facility in Malaysia.
The capital raising will be undertaken at 45 cents per new Lynas share, and will include an $88 million unconditional placement to existing institutional investors.
The raising will include a one-for-one, non-renoucneable pro-rata entitlement offer to existing shareholders to raise about $295 million. It will also include an underwritten conditional placement to raise $67 million.
The raising comes after Chinese company China Nonferrous Metal Mining (Group) Co Ltd (CNMC) last week terminated its proposed $505 million investment in Lynas. The plan was cancelled after the Australian Foreign Investment Review Board said CNMC could not take a stake in the company of more than 50 per cent.
Mallesons partner John Sullivan, who worked jointly with partner Shannon Finch on the deal, said the capital raising is an illustration of the flexibility offered by the Australian capital raising regime, "which allows entitlement offers without a prospectus".
"The regime allowed Lynas to address its funding swiftly following the termination of its deal [with the Chinese company]," Sullivan said.
The Freehills team is led by partners Tony Sparks and Philippa Stone, and lawyers Ivan Yu, Sally Choi, Steve Drummond and Peter Ward.
Sparks said: "This deal required the Lynas, Freehills and J.P.Morgan teams to work incredibly hard on a challenging timetable. It also required ASIC to provide individual relief on a very short timeframe and under a policy that ASIC has only recently adopted."
Like this story? Read more: