22nd Oct 2018 13:28
LONDON (Alliance News) - Shares in Guinea-focused iron and nickel explorer Bellzone Mining PLC fell sharply Monday after its investors again rejected its request to enable it to issue new shares raising the prospect of insolvency for the firm.
Of the 54% of total voting rights cast on Monday, 96% of valid votes were against the two repeated resolutions.
No further comment on the vote and its implications was made by Bellzone on Monday.
Shares in Bellzone were 14% lower at 0.27 pence on Monday.
In early October, Bellzone called the second vote for Monday after investors rejected its request to be allowed to allot 1.50 billion new shares in the firm.
At the time, Bellzone explained that without the ability to issue new shares the firm was entirely reliant in its majority shareholder Hudson Global Group Ltd.
At the end of April, Hudson - a subsidiary of China Sonangol International Ltd - was the largest shareholder with a 57% stake in Bellzone. Hudson alongside its sister firm CS International Ltd also have three loans extended to Bellzone.
"In order for the company to continue normal operations beyond mid-November 2018, as matters stand, Hudson would need to permit further drawdowns under its loan facility to the company," Bellzone explained at the time. "No assurance from Hudson of its continued financial support has been received."
Bellzone did emphasise, however, that it had received offers to explore other third-party financing. In order to accept any new equity financing, however, and receive current creditor approval for third party-debt financing the firm would need to receive shareholder approval for shares issues.
"Should the company successfully address these issues, the directors believe Bellzone is in a position to begin monetising its main assets", the firm explained. Without this, however, the likelehood of securing further unsecured debt financing was "very low" as all of its assets are pledged to Hudson and CS International.
"Without an urgent shareholder mandate to engage in equity financing," Bellzone continued, "the company may have no choice but to invoke an insolvency procedure, which will be detrimental to all shareholders."
"In calling the vote re-run in order to "allow shareholders to re-consider their positions," Bellzone emphasised that "neither resolution can be passed without Hudson either voting in favour or abstaining".