Almonty Industries raises $700M in oversubscribed convertible notes offering

Almonty Industries priced $700 million of convertible senior notes in an oversubscribed private placement, the tungsten producer said Thursday.

"The strong institutional demand reflects confidence in Almonty's position as a leading non-China tungsten supplier," Lewis Black, chairman, president and chief executive officer at Almonty, said in a statement.

The 2.25% notes mature July 1, 2031, with an initial conversion price of $27.40 per share, a 32.5% premium over the $20.68 closing price on June 4. Net proceeds are estimated at $675.9 million, of which about $83 million will fund capped call transactions to reduce dilution, $50 million will refinance existing debt and $543 million will go toward working capital and general corporate purposes. Initial purchasers have a 13-day option to buy up to an additional $100 million of notes.

The capital raise strengthens Almonty's balance sheet as it ramps production at its Sangdong mine in South Korea, one of the world's largest and highest-grade tungsten deposits. Tungsten demand is rising amid geopolitical tensions, with Western allies seeking to reduce reliance on Chinese supply for the strategic metal used in armor, munitions and electronics.

Almonty shares closed at $20.68 on Thursday, up 3.6% on the day, before sliding 14% to $17.72 in after-hours trading. The stock has more than doubled year to date, giving the company a market valuation that supports the 32.5% conversion premium.

The notes are being sold to qualified institutional buyers under Rule 144A. The capped call transactions, entered into with initial purchasers or their affiliates, carry a cap price of $41.36 per share, representing a 100% premium to the June 4 closing price. These transactions are designed to offset potential dilution upon conversion of the notes, though dilution would still occur if the stock price exceeds the cap price.

Almonty's Sangdong mine in South Korea is expected to become a major contributor to the global non-China tungsten supply chain upon reaching full capacity. The company also operates the Panasqueira mine in Portugal and has development projects in the U.S. and Spain. Tungsten prices have drawn support from export restrictions by China, which controls more than 80 percent of global supply, according to USGS data.

The offering is scheduled to settle on June 9, subject to customary closing conditions and regulatory approvals, including acceptance by the TSX.

This article is for informational purposes only and does not constitute investment advice.