Atrum Coal's A$5.80M Entitlement Offer: Funding Litigation and Operations
ATRUM COAL LIMITED (ATU) Share Update November 2024 Tuesday 12th
Atrum Coal Announces A$5.80M Entitlement Offer Amid Litigation Efforts
Atrum Coal Limited (ASX: ATU) has announced a fully underwritten entitlement offer to raise approximately A$5.80 million. The funds will be used to support ongoing litigation against the Government of Alberta and cover operational expenses.
Instant Summary:
- Fully underwritten non-renounceable 1-for-1.83 entitlement offer.
- Offer price set at A$0.004 per share, a 20% discount to TERP.
- Proceeds to fund litigation against Alberta's government and operational costs.
- Major shareholder committed to full entitlement and sub-underwriting.
- Top-Up facility available for eligible retail shareholders.
Entitlement Offer Details
Atrum Coal Limited has launched a non-renounceable entitlement offer, allowing eligible shareholders to purchase 1 new share for every 1.83 shares they currently hold at A$0.004 per share. This represents a 20% discount to the theoretical ex-rights price (TERP) and the last closing price of A$0.005.
The offer aims to raise approximately A$5.80 million before costs. The funds will primarily support Atrum's litigation efforts against the Government of Alberta, where the company is seeking compensation for alleged expropriation of coal leases. The litigation is ongoing in the Court of King's Bench of Alberta, with a trial scheduled for April 2025.
Use of Funds
The proceeds from the entitlement offer will be used to cover litigation costs, corporate expenses, project maintenance, and working capital needs. Atrum's major shareholder, Warburton Group Pty Ltd, has committed to taking up its full entitlement and providing sub-underwriting support, demonstrating confidence in the company's legal strategy.
Participation and Conditions
The entitlement offer is open to shareholders with registered addresses in Australia or New Zealand as of the record date, 18 November 2024. Eligible shareholders can also apply for additional shares through a top-up facility, although allocations are not guaranteed.
New shares issued under this offer will not be tradeable on the ASX due to the suspension of Atrum's shares since March 2023. The company has not indicated when trading might resume.
The entitlement offer reflects Atrum's strategic focus on securing funds for its legal battle, which could potentially yield significant compensation if successful. However, the suspension of trading on the ASX and the uncertainty surrounding the litigation outcome pose risks. The offer's discount might attract existing shareholders, but the inability to trade new shares could deter some investors.
Investor Reaction:
Analysts are likely to view the entitlement offer as a necessary step for Atrum to pursue its legal claims. The commitment by the major shareholder may be seen as a positive sign of confidence. However, the ongoing suspension of trading and the speculative nature of the litigation could lead to cautious investor sentiment.
Conclusion:
Investors should carefully consider the risks and potential rewards associated with Atrum's entitlement offer. The outcome of the litigation and the company's ability to resume trading will be key factors influencing future stock performance. Shareholders are encouraged to review the prospectus and assess their investment strategies accordingly.