UPDATE 1-RONA to raise C$150 mln in bought deal

* To raise C$150 mln through equity issue

* Syndicate of underwriters led by Scotia Capital

* Proceeds to be used to cut debt, fund capital projects

May 12 (Reuters) - Canada's RONA Corp (RON.TO) said it would raise C$150 million ($129 million) by way of a bought-deal financing to reduce debt and fund capital projects.

The home-improvement retailer said a syndicate of underwriters led by Scotia Capital Inc agreed to buy 11.63 million common shares of the company at a price of C$12.90 a share.

The underwriters have an option to purchase up to an additional 1.74 million shares to cover over-allotments. If the option is exercised in full, the gross proceeds will be C$172.53 million.

RONA shares, which have gained about 14 percent this month, closed Tuesday at C$13.60 on the Toronto Stock Exchange. ($1=1.163 Canadian Dollar) (Reporting by Krishna Chaithanya in Bangalore; Editing by Anil D'Silva) ((krishna.chaithanya@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:krishna.chaithanya.reuters.com@reuters.net))