TerraCom Launches A$60M Renounceable Entitlement Offer to Strengthen Balance Sheet
TerraCom Limited has announced a partially underwritten renounceable entitlement offer aiming to raise approximately A$60 million to bolster its financial position amid ongoing coal price pressures. Key directors have committed to participate, while substantial shareholder Orbit Marketing stands ready to underwrite a significant portion of any shortfall.
- Partially underwritten 1.25-for-1 renounceable entitlement offer at A$0.06 per share
- Proceeds targeted to pay down creditors, strengthen balance sheet, and support working capital
- Key directors committed to fully or partially take up their entitlements
- Orbit Marketing Pte Ltd to sub-underwrite up to A$40 million of any shortfall
- Entitlements will be tradeable, offering flexibility to shareholders
Context and Purpose of the Offer
TerraCom Limited (ASX – TER), an Australian coal mining company with operations spanning Australia and South Africa, has announced a renounceable entitlement offer designed to raise up to A$60 million. This capital raising initiative comes at a time when the company faces sustained pressure on coal prices, necessitating a strategic move to shore up its liquidity and financial resilience.
The offer is structured as a 1.25-for-1 entitlement issue priced at A$0.06 per new share, allowing existing eligible shareholders to purchase additional shares proportionate to their current holdings. The proceeds will be primarily used to pay down regulatory, statutory, and operational creditors, strengthen the balance sheet, and provide working capital flexibility.
Director Participation and Underwriting Support
Notably, TerraCom’s Managing Director Danny McCarthy and Non-Executive Director Mark Ludski have committed to fully take up their entitlements, signaling confidence in the company’s strategic direction. Additionally, Non-Executive Chairman Mark Lochtenberg and Director Glen Lewis intend to partially participate, collectively representing a director commitment of approximately A$0.6 million.
The entitlement offer is partially underwritten by Gleneagle Securities, with a significant sub-underwriting commitment from substantial shareholder Orbit Marketing Pte Ltd. Orbit’s involvement could see its shareholding rise to a controlling interest of up to 55.31%, depending on the final subscription outcome and shortfall allocation. However, TerraCom notes that due to the offer’s structure and pricing, such an increase is not guaranteed.
Flexibility and Market Dynamics
As a renounceable entitlement offer, shareholders have the option to trade their entitlements on the ASX or transfer them privately, providing flexibility to realise value or increase holdings. This feature may attract new investors and help manage dilution effects for existing shareholders.
The offer opens on 5 January 2026 and closes on 19 January 2026, with key dates set for entitlement trading and new share issuance extending into late January. The company reserves the right to adjust these dates if necessary.
Strategic Implications
TerraCom’s move to raise capital through this entitlement offer reflects a proactive approach to navigating challenging market conditions. By addressing creditor obligations and reinforcing its balance sheet, the company aims to maintain operational stability and focus on its strategic priorities despite ongoing coal price volatility.
Investors will be watching closely to see the uptake of the offer, the extent of any shortfall, and how the potential shift in shareholding dynamics, particularly involving Orbit Marketing, might influence TerraCom’s governance and future direction.
Bottom Line?
TerraCom’s A$60 million entitlement offer marks a pivotal step in stabilising its finances amid coal market headwinds, with shareholder participation and underwriting outcomes set to shape its next chapter.
Questions in the middle?
- Will the entitlement offer fully subscribe, or will Orbit Marketing’s sub-underwriting significantly increase its stake?
- How will the market react to potential dilution and changes in TerraCom’s shareholding structure?
- What strategic initiatives will TerraCom prioritise once its balance sheet is strengthened?
