Syrah Resources has launched a A$70 million equity raising and secured a two-year forbearance on its US Department of Energy loan, bolstering its cash position and operational flexibility amid ongoing challenges.
- A$70 million fully underwritten equity raising via placement and entitlement offer
- Two-year forbearance agreement with US Department of Energy deferring US$16 million in loan payments
- Extension of US International Development Finance Corporation loan waiver with further disbursements planned
- AustralianSuper commits to full entitlement and sub-underwrites up to A$30 million
- Proceeds to fund Vidalia operating costs, DOE loan reserves, and general corporate expenses
Equity Raising to Strengthen Financial Position
Syrah Resources Limited (ASX, SYR) has announced a significant capital raising initiative, aiming to secure approximately A$70 million through a fully underwritten institutional placement and a pro rata accelerated non-renounceable entitlement offer. This move is designed to increase Syrah's pro-forma cash balance to around US$87 million, providing a vital liquidity buffer to support ongoing operations and strategic initiatives.
The equity raising is priced at A$0.26 per share, representing a notable discount to recent trading prices, reflecting the company's need to swiftly shore up its balance sheet. AustralianSuper, Syrah's largest shareholder holding about 32.5%, has committed to fully participate in the entitlement offer and to sub-underwrite up to A$30 million, signaling strong insider confidence in the company's prospects.
US Government Loan Forbearance and Waivers
In parallel with the equity raising, Syrah has secured a two-year forbearance agreement with the US Department of Energy (DOE) concerning certain events of default on its DOE loan. This agreement defers US$16 million in principal and interest payments until the loan's maturity in April 2032, easing immediate financial pressures. The forbearance includes a modest fee and a slight increase in the loan's fixed interest rate, but crucially preserves Syrah's operational flexibility.
Additionally, the US International Development Finance Corporation (DFC) has extended a waiver on its loan events of default, enabling further disbursements to fund the Balama Graphite Operation in Mozambique. Syrah plans to draw down US$6.5 million in August and US$4.5 million in October 2025, subject to loan restructuring and conditions. These funds are earmarked for working capital, sustaining capital, and development projects, underpinning the company's operational continuity.
Operational and Strategic Implications
The combined effect of the equity raising and loan arrangements provides Syrah with a runway to optimise its commercial positioning, particularly at its Vidalia Active Anode Material Facility in the United States and the Balama Graphite Operation. CEO Shaun Verner emphasized that these financial measures preserve optionality in Balama's operating mode and support progress towards product qualification and commercial sales at Vidalia.
While the capital raising and loan forbearance offer immediate relief, they also reflect ongoing challenges in the graphite and battery materials sector, including market volatility and operational complexities. The discounted equity raise price and reliance on government-backed loans underscore the need for careful execution of Syrah's growth strategy.
Next Steps and Market Outlook
Syrah's retail entitlement offer opens in early August, with institutional components already underway. The company's ability to fully subscribe to the offer and meet loan covenants will be closely watched by investors. Meanwhile, the planned loan restructuring with DFC later this year introduces some uncertainty around future funding availability.
Overall, Syrah's latest financial maneuvers aim to stabilize its balance sheet and provide the breathing room necessary to navigate a complex market environment. The coming months will be critical in determining whether these measures translate into sustainable cash flow and operational success.
Bottom Line?
Syrah’s capital raise and loan forbearance buy crucial time, but execution risks remain as it seeks to turn around operations.
Questions in the middle?
- Will Syrah achieve full subscription in the retail entitlement offer amid market uncertainties?
- How will the planned DFC loan restructuring impact Syrah’s future funding and cost of capital?
- Can Syrah successfully optimize commercial sales at Vidalia to generate sustainable cash flow?