2nd Dec 2015 10:16
LONDON (Alliance News) - African Potash Ltd on Wednesday said that Katrina Clayton, whose husband is the exploration company's chief executive, has made available a loan of GBP750,000 to bridge its working capital requirements for the next three months.
The exploration company warned that it will require further funding if it is unable to generate enough cash from its trading operations once the three months are up.
"This bridge funding enables us to continue to make progress in the transformation of our business and illustrates the faith and commitment of senior management and their families to this project, as we remain focused on the roll-out of our integrated fertiliser operations across Africa," Executive Chairman Chris Cleverly said in a statement.
"With funding in place to cover our short term requirements we look forward to finalising our trade finance facility, which we continue to negotiate in order to secure up to USD50.0 million of funding to support the trading strategy," Cleverly added.
A fee of GBP60,000 is due on the funding deal with Neil Clayton's wife, meaning that African Potash can draw GBP690,000 on the loan.
An interest rate of 1.5% per months will be charged over the nine-month term of the loan, which is due to be repaid on the earlier of September 1, 2016, on completion of an equity financing which raises more than GBP1.5 million and completion of any non-trade finance debt financing.
There will be financial repercussions if African Potash misses any interest payments. The penalty for missing a payment is a 1.0% charge per week which would apply to any unpaid interest amount and accrue daily.
Should African Potash default on repaying the bridge loan, including a failure to make interest payments, Katrina Clayton may require the company to conduct a discounted share placing to make the payments or "elect to convert all sums then due into new ordinary shares".
Shares in African Potash were down 10% at 1.71 pence on Wednesday.
By Samuel Agini; [email protected]; @samuelagini
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