4th Dec 2020 08:10
(Alliance News) - Global Resources Investment Trust PLC on Thursday said it plans to enter into a company voluntary arrangement in order to settle debts.
In June, the investment trust - whose main remaining asset is its 25% shareholding in Anglo-African Minerals as well as loans totalling USD2.1 million to its investee - raised GBP167,858 through the issue of 8.4 million shares at 2 pence each. This was after Australian-listed mining company TerraCom Ltd in February announced plans to acquire Anglo-African Minerals.
In October, TerraCom stated due diligence on the acquisition had been "significantly hampered" by travel restrictionsdue to the pandemic. At the time, the potential buyer assured the easing of restrictions would allow it to progress with the project.
However, on Thursday, Global Resources said: "While this is encouraging, at the time of writing it nevertheless remains unclear whether the proposed sale of Anglo-African Minerals to TerraCom will proceed and therefore when or whether the company will be able to realise its investment in Anglo-African Minerals or receive repayment of its loans to Anglo-African Minerals."
As a result, the trust stated that in order to avoid insolvency or going into administration, it will renegotiate the terms of the placing, with the placing price to be changed to 1.5p, raising GBP125,893. It also plans to issue GBP100,000 of convertible unsecured loan notes. The notes are convertible at 1.5p and repayable within 18 months.
It noted it also has debts of GBP828,928 due to creditors, a debt it does not have the funds to settle.
Global Resources stated the proceeds of the placing and the notes issue will be used to settle its creditors under the terms of the CVA. Once the CVA has been agreed, its creditors will initially be paid 20p for every GBP1 of debt, with the balance to be paid from the proceeds of the sale of Anglo-African Minerals or by repayment of loans granted by it to Anglo-African. It added its existing directors will resign and new ones will be hired. Additionally, its financial statements for 2019 and for its half year ended June 30 will be published.
Shareholders are invited to vote on the CVA at a general meeting scheduled for December 21. The CVA requires the approval of 50% of shareholders.
"In the absence of any other source of funding, the only alternative course of action would be to place the company into a formal insolvency process, probably administration. While this might result in a similar outcome for shareholders as a CVA in that an administrator would return surplus funds to the company in the same way as a CVA supervisor would, the company would very likely lose its public listing and the opportunity to create future value for shareholders would therefore be severely constrained," IT explained
Shares in Global Resources Investment are currently suspended due to the company's failure to publish its financial statements before the deadline.
By Ife Taiwo; [email protected]
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