Nyrstar Slumps in Brussels After Selling Stock at Half Price

Nyrstar NV, the world’s largest refined-zinc producer, fell in Brussels after planning to repay debt by raising 251.6 million euros ($325 million) from a share sale to existing investors at about half the market price.

The shares fell 7.7 percent to 2.678 euros, the biggest decline since May 19, at the close in Brussels. The shares lost 17 percent in the last three days since the company sold 350 million euros of bonds at a yield of about 9 percent Sept. 9.

Existing investors will be able to buy one new share for every one they hold at 1.48 euros apiece, Nyrstar said in a statement today. The subscription period starts tomorrow and ends Sept. 23.

Nyrstar, after completing a strategic review of its smelting operations, needs to invest 250 million euros in about 25 projects, Chief Executive Officer Roland Junck said in July. It’s also seeking to refinance 225 million euros of debt maturing next year.

“Assuming the on-going capital increase to be successful, we are adjusting our target price from 3.40 euros to 2.55 euros,” Bernard Hanssens, an analyst at Banque Degroof SA in Brussels, said today in a note to investors.

The discount compares with the average 27 percent to 28 percent offered on the Brussels Stock Exchange, he said.

“The first step of refinancing process of the group is achieved at rather expensive conditions,” Hanssens said in a separate note yesterday.

Nyrstar will use the proceeds to repurchase some of its 2015 and 2016 retail bonds, fund the smelting investment, develop the Port Pirie plant in Australia and reduce debt, it said in today’s statement.

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