Alumina Limited has announced plans to raise around $1 billion in new shares to help reduce its debt levels.
The world’s largest supplier of alumina to the aluminium industry, Alumina holds 40% of the Alcoa World Alumina and Chemicals (AWAC) joint venture, with US aluminium giant Alcoa holding 60%.
“The equity raising will strengthen our balance sheet and effectively remove 2010 debt refinancing risk,” Alumina Limited chief executive John Bevan said.
The equity raising offer will be done through a 7-for-10 rights issue at $1 per share, including institutional and retail offers, which represents a 33% price reduction from the company’s closing price of $1.49 per share on Wednesday April 29.
In addition, Alumina has rolled over $100 of debt due to mature in 2010, to 2012.
According to Bevan, the debt rollover and rights issue does not represent a weakness of AWAC assets.
“We have great confidence in the resilience of the AWAC assets,” he said.
“But we can’t predict when debt and commodity markets will improve and it is prudent to act now to secure funding to support the value of Alumina’s assets for out shareholders.”
Alcoa this week announced that AWAC’s 55% owned Portland aluminium smelter in Australia would cut production by further 38,000 tonnes due to falling metals prices.
This reduction came after a 15,000 tonne cut last December, reducing total annual output to 305,000 tonnes, down 15%.