UPDATE 1-SouthGobi, facing default, raises $9 mln through placement
Dec 1 (Reuters) - SouthGobi Resources Ltd , a Canadian coal miner with operations in Mongolia, said it had raised about $9 million through a private placement of shares.
The company, hurt by weak coal prices, warned in March that a delay in securing additional financing could result in a default of $250 million debentures held by China Investment Corp (CIC).
The proceeds from the private placement of about 24.4 million shares will be used to pay the November 2014 installment of the cash interest due on the CIC convertible debenture, the company said.
SouthGobi said on Nov. 20 it would delay the CIC interest payment, which is due on Nov. 19, until Dec. 1 as it continued to seek additional funding.
The company had originally issued CIC $500 million in convertible debentures in 2009. A year later the Chinese firm converted half of that into equity.
CIC has a 19 percent stake in SouthGobi, which is controlled by Turquoise Hill Resources Ltd, the co-owner of Mongolia's huge Oyu Tolgoi copper and gold mine.
The placing price of 42 Canadian cents represented a discount of nearly 24 percent to SouthGobi shares' closing price of 55 Canadian cents on Friday.
SouthGobi, which is seeking additional funding for its operations, has $4.1 million in cash, excluding proceeds from the private placement. (Reporting by Ashutosh Pandey in Bengaluru; Editing by Ted Kerr and Saumyadeb Chakrabarty)
© Thomson Reuters 2016 All rights reserved.