Boston, MA 05/13/2014 (wallstreetpr) – Turquoise Hill Resources Ltd (NYSE:TRQ) had been contemplating to offer rights up to around $2.4 billion. Unexplained delays at gold and copper mines of Rio Tinto in Mongolia had deterred the company from funding the next phase of the mine. Earlier, Rio controlled Turquoise Hill that in turn had a majority stake in Oyu Tolgoi. Robert Friedland, the renowned mining tycoon, had also expressed his desire to partake of the rights offering.
Details of the deal
Turquoise Hill Resources Ltd (NYSE:TRQ) was finally able to close the rights offering as per its plan in the first quarter of this financial year. It also successfully managed to raise gross proceeds of nearly $2.4 billion through the offering. The company plans to judiciously utilise the money raised herewith to set off the entire loan outstanding that was a part of the interim credit facility of $1.8 billion as well as the secured bridge facility amounting to $600 million that it enjoys with Rio Tinto. Funds that are left after settling off these two major expenses would be channelized towards funding the Oyu Tolgoi Project, corporate expenses, general administrative costs and working capital of the company.
Legal battle
Lieff Cabraser Heimann & Bernstein, LLP, has come forth with a class action lawsuit against Turquoise Hill Resources Ltd (NYSE:TRQ) at the behest of investors of the common stock of the company purchased in the period of May 2010 to November 2013. The legal suit has alleged that, during the said period, the company issued materially incorrect and misguiding statements about the prospects of its business and the financial and monetary performance of the company.
Not only this, Turquoise Hill Resources Ltd (NYSE:TRQ), as per the suit has over reported its revenue figures especially for SouthGobi resources Ltd. Owing to the false claims and misguiding statements made by the company to beguile its investors, the stated period witnessed its shares being traded at artificially hiked prices. This is tantamount to market manipulation by Turquoise Hill and has affected the trust and faith of investors in the company. This is seen as a serious offence by market regulators.
