NexGen Energy (TSX: NXE) has bolstered its balance sheet by acquiring a substantial amount of uranium in exchange for the issuance of convertible debt to a Canadian hedge fund.
The transaction has seen the uranium developer acquire 2,702,410 pounds of U3O8 from MMCap International for a figure of US$250 million. The transaction works out to NexGen paying $92.51 per pound for the uranium, a figure which was based on the five day average price.
To pay for the physical uranium, the company has issued US$250 million in unsecured convertible debentures to MMCap, which can be converted to roughly 23 million shares of NexGen at US$10.73 per share. If converted, MMCap would hold a 4.3% stake in the issuer. A transaction fee of 909,090 shares have also been issued to MMCap as part of the arrangement, which translates to a value of US$8.0 million based on yesterdays close.
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The debt is for a five year term, and carries a 9.0% interest rate. Two thirds of interest is payable in cash, while one third is payable in common shares at the 20 day volume weighted average price of the issuer.
“At a time when available physical uranium is extremely tight and expected to continue to be scarce given the long-term supply deficit, this purchase represents a strong opportunity for the Company to bolster its marketing discussions and optimises the optionality of project financing structures under evaluation,” commented Leigh Curyer, CEO of NexGen.
Following the close of the transaction, Nexgen is expected to have roughly C$600 million in cash and US$250 million worth of uranium on its balance sheet.
NexGen Energy last traded at $12.00 on the TSX.
Information for this story was found via Sedar and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
