The renounceable rights issue will offer 0.97 shares for each share held, with new stock offered at 16.5c each.

The price represents a 3.5% premium to yesterday’s close and a 9.7% discount to the one month weighted average.

The rights issue opens on December 30 and closes January 19 and is fully underwritten by a special purpose vehicle established by Centerbridge.

Following shareholder approval at an extraordinary general meeting yesterday, Boart also completed a $US21 million ($A25 million) follow-on placement to Centerbridge, following a $5.6 million placement made in October.

Boart said proceeds from the capital raising efforts would reduce its net debt and provide greater liquidity as it manages a “challenging” operating environment.

The new funds are part of a broader recapitalisation with Centerbridge, which involves debt and equity components that could see the US firm take up to a 41% stake in the driller.

The plan will help the struggling driller avoid a default on its loans next year, following new forecasts last week predicting a drop in full year earnings from $34-48 million to about $30 million.

Net debt at the end of September levelled at $550 million.

Along with the rights issue, Boart will also undertake a share buyback capped at $A24.5 million.

The buyback gives eligible shareholders a chance to exit some or all of their investment if they wish. It closes on January 19.

Boart said if it received acceptances in excess of $24.5 million the offer would be scaled back on a pro rata basis.