Hyderabad, Jun 23: Legacy Iron Ore Limited, the Australian arm of state-owned National Mineral Development Corporation (NMDC), plans to raise AUD 25 million by way of rights issue.
NMDC is likely to spend AUD 12.5 million to acquire rights equivalent to its 49.6 per cent stake in Legacy Iron Ore, a senior official of the Ministry of Steel said.
The explorer recently informed the Australian Securities Exchange that the company plans to issue a '3 for 4 pro-rata non-renounceable entitlement offer' to its shareholders.
Non-renounceable entitlement offer is one issued by a company to its shareholders to purchase more shares of the corporation (usually at a discount). Unlike a renounceable right, a non-renounceable right is not transferable, and therefore can not be bought or sold.
"NMDC holds 49.6 per cent state in Legacy Iron and is the largest shareholder in Legacy. It is logical that it participates in the rights issue," the official told PTI.
When contacted, a senior NMDC official said the decision was yet to be taken by the Board of Directors, scheduled to meet on July 3.
However, the Ministry of Steel official said that the approval of the board is just for formality and the PSU will concentrate on other formalities such as getting approvals from the ministry and bodies such as Reserve Bank of India.
"Proceeds from the Entitlement Offer will be applied towards further exploration and development work across Legacy Iron's iron ore and coal exploration permits and other assets".
"In addition, Legacy Iron continues to evaluate value-accretive opportunities in the current market. Legacy Iron and its joint venture partner Hawthorn Resources are engaged in discussions regarding the development of the Mt Bevan Project," Legacy said in its communication to ASX.