1st Sep 2016 09:07
LONDON (Alliance News) - African Potash Ltd on Thursday said it plans to raise GBP500,000 through a share subscription and has amended the term of its existing unsecured bridge loan.
African Potash will raise the GBP500,000 through the issue of 235.3 million new shares at a price of 0.2125 pence, and in addition, an over-allotment option has been granted in respect of 70.6 million shares at the same price, exercisable before end of business on November 24.
Shares in African Potash were down 23% at 0.250 pence Thursday.
African Potash plans to use the proceeds for working capital, and to support and develop its fertiliser trading business.
It has also agreed to issue up to 17.9 million shares to African Management Services Ltd to settle a historic liability related to administrative and support services provided to African Potash.
Elsewhere, the company amended the terms of its bridge loan, which would otherwise have been repayable in full Thursday.
Under the amendments, the loan is now repayable on September 1, 2017, or when the company raises more than GBP1.5 million after the subscription, or upon the completion of any non-trade finance debt financing, depending on which of the three scenarios occurs earlier.
Additionally, the lender has a right to convert into shares either the entire amount of the loan outstanding, or any amount of the loan in multiples of USD50,000, at any time.
African Potash acknowledged it may not have the sufficient share authority to comply with this obligation on conversion, and as a result it will put resolutions to shareholders at its next general meeting.
"It is hoped that the funds raised at this time and the accommodation provided by the amendment to the existing bridge loan will provide the company with a solid platform from which to further grow our ambitious fertiliser trading programme. Shareholders will be aware, from our recent announcements, of the traction which we are gaining in the market and we are confident that this funding will assist in revenue generation. We are progressing with these initiatives and have others in the pipeline and will update the market accordingly as we progress," said Executive Chairman Chris Cleverly in a statement.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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