12th Jan 2015 16:44
LONDON (Alliance News) - Beacon Hill Resources PLC Monday said it is no longer able to trade after failing to secure funding to keep the company going and has been placed into administration.
Administration has been looming for the company since December, when shareholders voted against a series of proposed fundraising options and the restructuring of the company's debt.
In December, Beacon Hill had proposed raising up to GBP1.5 million via a conditional subscription and said it had received commitments to convert or postpone the maturity of USD13.2 million in convertible loan notes which were due, a move aimed at significantly de-risking its balance sheet.
Shareholders rejected both propositions, meaning that the subscription and the conversion of the convertible loan notes would not proceed. At the meeting, 69% of shareholders voted in favour of the restructuring and funding resolutions, but the company needed a minimum of 75% approval for the resolutions to pass, it said.
"Due to the lack of sufficient shareholder support for the restructuring and funding resolutions proposed at the general meeting held on December 17, 2014, the board and potential interested third parties were of the opinion that any alternative funding strategy proposed to the company's shareholders would in all likelihood similarly fail to secure the requisite 75% threshold to enable its implementation," said Chairman Justin Farr-Jones.
The company was forced to engage with its senior debt provider, Vitol Coal SA, who are the holders of the outstanding convertible loan notes, as well as other key stakeholders to establish whether any alternative sources of potential funding were available, but the company was unsuccessful and unable to secure any additional funding.
"The company has been unable to secure any viable alternative funding for the company, and it is now in default in respect of interest payments due to certain holders of the group's outstanding convertible loan notes," Beacon Hill said Monday. "The board has decided that the company is no longer able to trade such that it must now place Beacon Hill Resources PLC and its wholly owned subsidiary, BHR Mining Ltd, into administration."
Baker Tilly Restructuring and Recovery LLP has been appointed as the administrator with immediate effect.
The senior debt facility with Vitol is held over the Minas Moatize mine in Mozambique which is held by the company's wholly owned subsidiary, Minas Moatize Ltda. The subsidiary has not been placed into administration, and Beacon Hill said it is continuing to work with Vitol and the administrators to maintain the mine and to allow the company to source potential buyers for the project.
"Minas Moatize remains an excellent project with significant milestones achieved since the company assumed management control of the mine in May 2010. We sincerely hope that a suitable acquirer will be found to enable this attractive asset to recommence economic mining operations over the longer term," added Farr-Jones.
The company's nominated adviser, Strand Hanson Ltd, has resigned following the news and if a new adviser is not appointed within one month, Beacon Hill shares will be cancelled from trading on AIM. The company has said it is unlikely that the administrators will appoint a new adviser.
"Regrettably, in light of, inter alia, the company's significant liabilities and prevailing adverse global coal market conditions, the board does not currently anticipate that the company's shareholders will receive any proceeds in relation to their ordinary shares from the administration process," said Beacon Hill.
By Joshua Warner; [email protected]; @JoshAlliance
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