AFPs would have to come with US $ 177 million in the capital increase of SQM

SQM shares reacted to the downside after the company’s proposal to carry out a capital increase of US $ 1.1 billion was known on Wednesday.

The series B papers of the non-metallic mining company fell 4.21% on the Santiago Stock Exchange, losing US $ 465 million in market capitalization.

The company’s board of directors, which unanimously approved the proposal, called an extraordinary shareholders’ meeting for January 22, 2021 to discuss a capital increase.

The operation will involve the issuance of up to 22,442,580 series B shares, and must be subscribed and paid within the term agreed by the meeting, which may not exceed 3 years. To carry it out, it is required that the partners of series A approve the operation, which will be entirely destined to series B. The shares that are issued will only be offered preferentially and under equal conditions to all shareholders of said series.

From a brokerage they point out that this implies that the majority shareholders, such as Julio Ponce through Norte Grande, and China’s Tianqi, which are mostly in series A, would not participate in the process. Thus, the company is strengthened and they do not lose their position of control, this because series A elects 7 of the 8 directors of the company.

From another intermediary, however, they comment that this is not free, because even if they maintain control they are diluted in the capital, which will imply fewer dividends to be received in future years.

Norte Grande (NG), through various downstream companies, has 50.32% of series A, while China’s Tianqi has 43.8%.

However, NG’s subsidiary, Pampa Calichera, has 3.15% of series B, so it would have to put US $ 34.7 million for capitalization.

However, in the universe of series B shareholders, the group that would probably have to attend with more resources are the AFPs.

As of November, according to data from the Superintendency of Pensions, the administrators had 16.05% of said series, so the resources to be injected reach US $ 176.6 million.

In this series, according to data from the Commission for the Financial Market as of September, the brokers of EuroAmerica (2.86%), Santander (2.79%), Itaú (2.84%), Banco de Chile on behalf of foreigners (2.33%), Banchile (1.37%), and LarrainVial (0.71%)

With less than 1% of the company, there are also investment funds from Ameris, Econsult, Falcom, LarrainVial, Fynsa, Moneda, in addition to the endowment of the Chilean Chamber of Construction, and the Van Buren, and Sara Raier de Rassmuss foundations, among others.

The US $ 1,100 million of capital increase, if the operation is approved, will be used to finance part of the investment plan of US $ 1.9 billion for the years 2021-2024.

This implies the expansion of lithium carbonate in Chile, a capacity that will go from 70,000 metric tons per year to 180,000 metric tons.

Added to this are the lithium hydroxide production expansions, from 13,500 metric tons to 30,000 metric tons in Chile, and the Mount Holland project in Australia, which will be reviewed by the board in 2021.