Nearly half of the group's shareholders have pledged support of the offer, which will involve the issue of 20 million new ordinary shares at 5 000 cents per share.
Omnia last traded at 6 300c/share and is unchanged on the market following the announcement.
The full value of the project is R1.4bn. Omnia will fund the remainder using internal reserves as well as a R250m loan from the Industrial Development Corporation.
"They currently use all the nitric acid that they produce, plus they buy from competitors and imports supplies," said Alistair Lea of Coronation Fund Managers, which will support the rights offer.
"It's critical that they build this extra capacity and we have faith that management can execute this to add value to shareholders," he said.
The plant will produce nitric acid and ammonium nitrate, which are used in the manufacture of explosives and fertilizer.
"This investment is a vote of confidence in the local economy," said Omnia MD Rod Humphris in a conference call earlier on Thursday.
"The growth in both agricultural and mining markets is set to continue."
Humphris said the company is investing in the facility because similar plants were last built in the early 1980s and have now become outdated.
Construction on the plant will start at mid-year and is expected to be completed in 2012. Humphris said he expects the plant to operate at 63% capacity on day one of operations.
The plant will have the ability to produce 1 000 cubic tonnes of chemicals per day. This equates to 140% of the existing plant’s capacity, which will remain in operation.
- Fin24.com