Liontown Shares Plunge After Funding Deal, Albemarle Exit

The company raised 365 million Australian dollars (US$231 million) from institutional investors at A$1.80 a share and will issue about 203 million new ordinary shares. The stock plunged 32% by late morning to A$1.8875 a share.

Trading in Liontown’s stock had been on hold all week after Albemarle scrapped a proposed US$4.16 billion takeover of Liontown late Sunday. Its shares closed last week at A$2.79.

The stock on Friday is at its lowest since March 27, the day before Albemarle’s takeover approach was made public.

In an interview late Thursday, Liontown Chief Executive Tony Ottaviano said pricing of the shares was affected by a number of factors, including Albemarle’s exit and broader market conditions.

Lithium prices have fallen sharply this year, following an eyewatering run-up a year earlier, as growth in supplies has outpaced demand. Lithium carbonate prices in China are now down around 75% from their peak.

“If you look at the backdrop in recent times with the softening of the lithium price and the movement of some of my competitors and what’s happened with their share price,” as well as recent weakness in stocks more broadly, “I think it’s a fantastic outcome,” Ottaviano said of the equity raising.

In abandoning its proposed takeover, Albemarle cited the difficulty of completing a deal after Australia’s richest person bought a large stake in the company. Australian billionaire Gina Rinehart’s Hancock Prospecting said Oct. 11 that it had acquired a 19.9% stake in Liontown and wants to have a prominent influence over the company’s future.

An acquisition premium that had been priced into Liontown’s stock is now likely moderating, said Ottaviano, who said arranging a funding package to complete the Kathleen Valley project had been “plan A” before Liontown opened its books to Albemarle. As well as the equity raising, the company has lined up A$760 million in debt, part of which will be used to refinance an existing loan.

“I’m happy that we’ve got the funding in place,” he said. “The share price will be what it will be.”

Write to Rhiannon Hoyle at [email protected]