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NMDC Ltd has decided not to invest in the rights issue of its Australian subsidiary, Legacy Iron Ore Ltd.
Instead, it has promised to arrange loan facilities for Australian$3 million through lenders.
Had NMDC participated, it would have had to fork out A$1.25 million in its 49.6 per cent exploration subsidiary, a company source told Business Line .
At the current conversion rate ( A1$ = Rs 58), participation in the rights issue would have meant an approximate outgo of Rs 7.25 crore.
In a disclosure to the Australian Stock Exchange last week, the mineral resources exploration company said that NMDC had “agreed to provide support to enable Legacy Iron to arrange loan facilities with its bankers of up to $3 million”.
Legacy Iron’s board dropped the rights issue plan and opted for the borrowing plan after NMDC expressed its unwillingness to participate in the proposed issue.
The extended date of the issue expired on August 12.
Legacy Iron said that the Board had resolved to cancel the rights offer “due to the recent share market volatility”.
Proceeds from the rights offer were to be used for further exploration activities and development across Legacy Iron’s iron ore and coal exploration permits as well as other assets in Australia.
In June, Legacy Iron had lodged a rights issue prospectus with the Australian market regulator and the stock exchange for a maximum fund raising of around A$2.49 million.
This now stands withdrawn and the 3:4 rights issue has been cancelled.
During the quarter to June 30, the company mopped up A$29,989 through the issue of new options.
Legacy Iron has also decided to scrap an initial agreement to buy a controlling stake in another Australian exploration firm’s gold assets.
jayanta.mallick@thehindu.co.in
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