ASX-listed coal producer Coronado Global Resources Inc. launched a A$250 million fully underwritten equity raising to improve its financial flexibility amid the COVID-19 crisis.

The company will use the proceeds to repay drawn balances from its syndicated facilities agreement, which comprises a multicurrency revolving credit facility totaling US$550 million and a multicurrency revolving bank guarantee facility of US$130 million. Coronado expects the offering to leave it well positioned for any future recovery in metallurgical coal prices, it said Aug. 18.

Coronado also secured a seven-month extension until Sept. 30, 2021, to waive compliance with certain financial covenants under the facilities agreement, which will mature in February 2023. The waiver extension is subject to Coronado raising at least US$120 million by Aug. 31.

The financing will consist of a A$145 million placement to institutional investors and a 2-for-11 entitlement offer to raise A$105 million. Both will be priced at 60 Australian cents per new Chess Depositary Interest, a 27.3% discount to the company's Aug. 11 closing price on the ASX and a 20.8% discount to its theoretical ex-rights price.

On completion, Coronado's pro forma total liquidity is expected to increase to US$325 million while its pro forma net leverage is expected to decline to 0.9x.

Coronado Group LLC, owned by funds managed by the Energy and Minerals Group, Coronado's 80% security holder, supports the transaction and will facilitate the entry of new security holders to the register. The group will not participate in the offer, given its preference to increase Coronado's liquidity and facilitate its access to relevant ASX indices.

Following the offer, Coronado's free float is seen rising to 44% from 20%, setting the company up for potential index inclusion in the near future.

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