Champion Iron has successfully completed a $US100 million ($143 million) private placement with Canadian pension fund La Caisse de dépôt et placement du Québec (La Caisse). This strategic financial move is designed to bolster Champion Iron’s cash tender offer for Norway-based iron ore concentrate producer, Rana Gruber. Champion Iron is an Australian mining company focused on exploring and developing iron ore properties. Rana Gruber is a Norway-based company focused on the production of iron ore concentrate.
The company issued 26.8 million subscription receipts at a price of $US3.7319 per share. This issuance implies approximately a 5 per cent dilution on a non-diluted basis once the receipts are converted. Following the completion of the placement, and factoring in its existing holdings, La Caisse is set to own approximately 8.5 per cent of Champion Iron.
The proceeds from the private placement will be held securely in escrow. These funds are earmarked for release once the minimum acceptance condition for the Rana Gruber offer is fulfilled and all other customary conditions are met. In the event that the Rana Gruber offer does not proceed as planned, the funds will be returned to La Caisse, along with accrued interest.
As part of the agreement, La Caisse will also receive a customary capital commitment fee. Additionally, they are entitled to dividend equivalent payments for the period spanning between the closing of the private placement and the ultimate conversion of the subscription receipts.
