28th Jun 2016 13:57
LONDON (Alliance News) - North River Resources PLC on Tuesday said it has raised USD5.6 million through the issue of new loan notes to Greenstone Resources LP, and set out financing proposals to provide the funding to progress the Namib project in Namibia.
The USD5.6 raised through the issue of loan notes will be used to repay loan notes issued to Greenstone in 2015, and for working capital for its short-term work programme.
The financing proposals are to issue new shares in order to be able to redeem its loan notes in full, subject to shareholder approval. North River proposes to redeem 30% of the loan notes, through conversion of loan notes into new Greenstone shares, and 70% from the cash proceeds of an open offer and placing of shares with existing and new shareholders.
On completion of these financing proposals, North River will have net additional working capital of USD2.5 million, it said.
The proposed issue price for the open and offer placing would be equivalent to 0.095 pence. As this is below the nominal value of its shares, being 0.2 pence, North River plans to re-organise its share capital to allow the financing proposal to proceed. This is subject to shareholder approval.
Shares in North River Resources were down 19% at 0.0813 pence Tuesday.
North River will seek shareholder approval for a sub-division, re-designation and consolidation of each of its existing shares. It proposes each share be subdivided as one ordinary share of 0.0008 pence, and 249 deferred shares of 0.0008 pence.
The company has sought a waver to Rule 9 of UK takeover code if the proposals are approved, under which Greenstone would normally have to make a mandatory bid for the company.
North River said that, without the funding proposals it would need to commence "drastic measures to reduce spending and more than likely enter into an insolvency process, which would almost certainly lead to the loss of control over the company's principal asset, being the Namib Project."
The general meeting will take place July 18.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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