It is reported that shares in iron ore pellet producer Grange Resources Limited fell after it unveiled plans to raise USD 167 million in new equity in a deeply discounted offer to key stakeholders including a Chinese investor.

The capital raising comprises placements to major shareholders at a price of 29 cents per share to raise USD 29 million as compared to a share price close on Monday of 59 cents. The offer also includes an underwritten one for one non renounceable entitlement issue of about 495 million new shares to raise USD 124 million.

Grange also in a statement said that its debt liabilities would be almost halved after the raising. Grange had AUD 33.4 million cash and cash assets at the end of June, and aims to extended a March 2010 repayment date for a USD 40.8 million letter of credit facility arranged by major shareholder Shagang International Holdings Ltd.

Grange said cornerstone shareholders, which include significant operators in the Chinese iron ore and steel sectors, would participate in the placements. It added that "The offer, placements and restructure will enhance Grange's cash flow outlook significantly and strengthen the company's balance sheet."

Mr Russell Clark MD of Grange said that "We are well placed to benefit from the future iron ore price outlook. This year's benchmark settlements are the second highest on record, and we are already receiving numerous enquiries to purchase spot product at a significant premium to the current benchmark."

(Sourced from www.tradingroom.com.au)