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Legacy Iron Ore, the Australian arm of state-owned NMDC, has cancelled its rights issue citing 'weak market' conditions.
Legacy Iron had earlier announced that it intends to raise AUD 25 million by way of 3 for 4 non-renounceable entitlement offer that closed yesterday.
"Due to recent share market volatility, Legacy Iron wishes to advise that the Board has resolved to cancel the Entitlement Offer and corresponding replacement prospectus lodged with ASIC (Australian Securities and Investments Commission) and ASX on 18 July 2013 (Prospectus), effective immediately."
"The Board will continue to review and assess funding options available to the Company in order to meet its future capital requirements, including development of the potentially world-class Mount Bevan iron ore joint venture project," Legacy said in filing with ASX (Australian Securities Exchange).
A senior official of NMDC told PTI that as the current market price is lower than the offer price they wanted to wait for some time before they hit the market once again.
The Legacy Iron's Offer Price was fixed at 5.7 cents per new share. Whereas the share price dropped since then and currently trading at 5.4 cents by touching 5.0 cents apiece at one point of time.
"As an interim funding measure, as a major shareholder NMDC which holds nearly 50% stake has agreed to provide facility for a bank loan of AUD 3 million. This should sustain them for at least three months," the NMDC official said.
Legacy Iron once again will approach ASIC with fresh offer document and the price will be fixed on the market conditions then, the official added.
Legacy shareholders eligible to participate under the Entitlement Offer who have applied for New Shares will be refunded their application monies in full, as soon as is practicable, the filing further said.
N K Nanda, Chairman Legacy said despite the volatility in the share market, the board of Legacy Iron recognises the support by its NMDC in continuing to give support in helping to secure loan facilities.
The loan will allow the Australian company to pursue an exploration and development program across its broader asset portfolio including iron ore, coal and other assets and evaluate options to acquire additional value-accretive assets.
