Sharechat Logo

Otter rights unpopular - GPG picks up the tab

By Ben Dutton

Tuesday 31st October 2000

Text too small?
Sabatica Pty Ltd, a subsidiary of Guinness Peat Group, has been left with over $10 million of Otter Gold Mines shares after the mining company's rights issue proved unpopular with investors.

Sabatica was the underwriter of the Rights issue, in which Otter Gold gave shareholders the chance to subscribe for two fully paid ordinary shares for every five existing shares at the price of 39 cents per share.

The rights issue closed on 27th October, and only 5,575,749 shares were taken up, raising $2,174,542. Sabatica, which did stand to receive an underwriting fee of 4%, must now purchase the shortfall - a total of 26,045,851 shares.

When Otter Gold announced the rights issue beginning of September, it was trading at around 54 cents. The company viewed the 39 cents issue price as "an attractive discount to current market to encourage participation by security holders."

The rights issue was held to raise money for Otter Gold's exploration programme - and to help strengthen the company's capital base which was in need of replenishing following a wet season at their Tanami mine and production delays at the Martha and Beaconsfield mines.

Otter Gold will still get the money, and Guinness Peat Group spokesman Tony Gibbs said that his company was quite comfortable with shortfall. "As an underwriter, we were willing and we expected there to be a reasonable shortfall," he said.

GPG's share price was unmoved following the news, trading at around $1.51. Otter Gold was also stagnant, trading at 41 cents.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

GPG still wrangling UK pension liability, Coats 1H earnings more than doubles
Guinness Peat completes $1.4 billion in asset sales, turns focus to Coats
Guinness Peat exits last asset outside Coats, sells Tower stake for $118 mln
GPG focuses on cost cutting as restructuring plan is delayed by UK pensions regulator
GPG names new non-executive chairman of Coats
GPG says UK regulator extends investigation into its pension schemes
GPG pension headache puts brake on wind-down plan
GPG sells stake in ASX-listed Ridley Corp for A$54 mln in cash
GPG to reap 92 mln pounds from latest round of asset sales
GPG thrown curved ball as UK regulator looks at Coats pension plan