Kenorland Minerals (KLD.V) has closed a C$5.2M capital raise with Sumitomo as its sole subscriber. The financing was priced at C$1.00 which represents a premium of in excess of 40% to the share price before the announcement. The financing does not include any warrants, this clearly is a good deal for Kenorland as it tops up its treasury with a reputable partner while it’s not being held hostage by the market which was likely betting on Kenorland going back to the markets.
The 5.21M shares that will be issued to Sumitomo represent just over 10% of Kenorland’s share capital, and the Japanese company will have participation rights in future financings to keep its position at the 10.1% it currently owns. Additionally, both companies signed an investor rights agreement which prohibits Sumitomo from making a buyout offer or do anything else to undermine the Kenorland management (although Sumitomo would obviously be free to negotiate a friendly deal with Kenorland should that ever come into play.
Disclosure: The author has a long position in Kenorland Minerals. Kenorland is a sponsor of the website. Please read our disclaimer.
