NEW YORK (TheStreet) -- Turquoise Hill Resources (TRQ) has lost a quarter of its value on Wednesday, after a rights issue as part of a $2.4 billion securities offering began trading on a when-issued basis. The when-issued sale allows trading of more than 1 million additional shares before they are formally issued on Dec. 6.
The rights offering has doubled the number of Turquoise Hill shares outstanding. According to the company's SEC filing, each shareholder is entitled to receive one right for each common share held.
The Vancouver-based miner said in a statement it plans to use capital raised to repay Rio Tinto (RIO) for the $600 million bridge facility owed, as well as amounts outstanding on its $1.8 billion interim funding facility. Remaining funds will be invested into its joint project with Rio, the Oyu Tolgoi mine in Mongolia. Financing of the mine had been delayed after negotiations with the Mongolian government made little progress.
By mid-afternoon, shares had dropped 24.6% to $3.30. Year to date, the miner has plummeted 56.6%. Meanwhile, Rio Tinto gained 2.2% to $53.55 on Wednesday.
TheStreet Ratings team rates Turquoise Hill Resources as a Sell with a ratings score of D. The team has this to say about their recommendation:
"We rate Turquoise Hill Resources (TRQ) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and generally disappointing historical performance in the stock itself."