Paladin Energy Ltd. (PDN) fell the most in 13 years in Sydney after its failure to sell part of the Langer Heinrich mine in Namibia prompted the uranium producer to sell shares at a 30 percent discount to its previous closing price.
Paladin tumbled as much as 30 percent to 70.5 cents in Sydney, the most since April 2000, while Australia’s S&P/ASX 200 Index declined as much as 0.3 percent. The Perth-based company traded at 71.5 cents as of 11:32 a.m. local time.
The uranium producer is selling shares to raise about A$88 million ($78 million) to bolster funding, Paladin said Aug. 2. Paladin said it was unlikely to get a price it wanted for the mine stake because of the slumping price of uranium, which dropped to $34.50 last month, the lowest since November 2005.
“While the raising alleviates immediate balance sheet concerns, the issue appears to have only been pushed out,” JPMorgan Chase & Co. said in an Aug. 2 report. “Unless Paladin can significantly turn around its cash flow, it appears unlikely the company will have enough cash to be able to repay its debt, particularly at current low spot uranium prices.”
Paladin planned to use the proceeds to reduce debt and strengthen its balance sheet. Paladin had $650 million to $700 million in debt at the end of June, JPMorgan said. The company’s cash position dropped to $78.1 million at June 30, down from $112.9 million at the end of the previous quarter.
Paladin priced the share sale to institutions at 70 cents a share, 30 percent lower than the company’s closing price of A$1 on July 31, before the stock was halted, it said.
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