PolyMet Mining plans to raise $265 million in a stock offering to existing shareholders, a move mainly intended to pay off debt to the company's longtime backer, mining and commodities giant Glencore.

Depending on how the offering shakes out, Glencore may end up with majority ownership of PolyMet, which plans to develop Minnesota's first copper-nickel mine. Switzerland-based Glencore already owns 29% of PolyMet.

In March, the U.S. Army Corps of Engineers granted PolyMet the last major permit it needs to proceed with the controversial project on the eastern Iron Range. PolyMet still faces several legal challenges to the mine and processing plant, and it must raise money for the $1 billion project.

PolyMet on Tuesday filed a preliminary rights offering prospectus with securities regulators in the United States and Canada. The company is based in Toronto, but its CEO works out of St. Paul and its reason-to-be is the Minnesota mine.

Under the rights offering, PolyMet stockholders would receive the right to buy one common share for every share they own. Final pricing hasn't been determined, but the rights price will represent a 20% discount off the "volume weighted average price" for the five trading days before the final prospectus is filed.

Glencore has agreed to backstop PolyMet's rights offering. It will buy all of the shares that it is allotted, and then purchase any stock remaining if other shareholders don't exercise their rights. Glencore would get a $7.7 million "standby" fee for backstopping the offering after it is concluded.

The rights offering is subject to regulatory approval.

Glencore has been financing PolyMet since 2008, through equity and debt. At the end of 2018, PolyMet owed Glencore $178.4 million in secured, nonconvertible debt and another $57 million in secured debt convertible to equity, according to a filing with Canadian securities regulators.

If the latter debt is fully converted — along with about 14 million warrants to buy PolyMet shares — Glencore would own 40% of the company.

The rights offering would further boost Glencore's stake — if Glencore ends up buying a lot of shares beyond its own rights allotment.

The offering could result in Glencore "obtaining majority control of the company's issued and outstanding shares," PolyMet said in a March filing with Canadian securities regulators.

Glencore is one of the world's largest companies engaged in mining and the marketing of metals and agricultural commodities. It generated $3.4 billion in net profits last year.

Glencore is currently being investigated by two U.S. agencies — including the Justice Department — in connection with its operations in Nigeria, the Republic of the Congo and Venezuela. The other agency is the U.S. Commodity Futures Trading Commission.

PolyMet's shares closed Tuesday at 50 cents, down 1.2 cents. The stock has traded between 47 cents and a $1.25 over the past year.