Mongolian Mining, the nation’s largest miner of coking coal sold primarily to China, moved a step closer to undertaking its proposed rights issue after the plan was endorsed by an independent financial adviser ahead of a stockholders meeting later this month.
The Ulaanbaatar-based company expected to raise fresh funds of up to HK$1.567 billion from the proposed issue of as much as 5.597 billion rights shares.
Qualified shareholders will receive three rights shares for every two shares they hold at a subscription price of HK$0.28 a share, payable in full upon acceptance.
“Taking into account the loss-making history and the increasing gearing level [of Mongolian Mining], we consider that an equity call can strengthen [its] financial position by reducing its gearing and finance cost so as to enhance the group’s liquidity,” said Somerley Capital, the independent financial adviser. Its recommendation was included in Mongolian Mining’s filing with the Hong Kong stock exchange on Friday.
“The rights issue is also a way to allow all qualifying shareholders to have an equal opportunity to participate and enable them to maintain their proportionate interests in the company should they wish to do so,” Somerley said.
BNP Paribas and JP Morgan were appointed as joint underwriters of the rights issue.