28th Mar 2014 08:47
LONDON (Alliance News) - Strategic Natural Resources PLC Friday said that despite the announcement of two legal battles being taken out against the company, talks with a potential strategic investor to help with its recapitalisation struggles are ongoing.
The natural resources development company's shares are rebounding Friday morning after a disastrous day of trading Thursday which saw its shares fall 54%, as the company was made aware that it may have to fight two litigation battles in the UK and South Africa.
Strategic Natural Resources shares were up 33% to 4.00 pence, putting it top of the AIM risers in early trading Friday.
The company said earlier in March that it was evaluating a revised financing proposal involving the unnamed investor, and it is seeking proper evidence of funding from the investor which should allow of certain funds over the course of this month.
Strategic Natural said at the time that it was receiving pressure from its subsidiary Elitheni Coal Ltd and was in discussions with its lender Land Consultants Ltd, concerning the possible deferral of the repayment of its loans for a further six months and the possible conversion of interest due to Land Consultants into ordinary shares in Strategic Natural.
The company said on Friday that there is no guarantee the financing deal will go ahead and that if it falls through, then it will have to take steps to protect the interests of the company's creditors.
Strategic Natural secured a deal in January to extend its short-term loan facility with Land Consultants to June 30, in return for security over materially all of the assets of its subsidiary Acharnian Mining Ltd and an agreement to pay an extra GBP100,000 upon the repayment of the facility.
However, on Thursday the company was made aware that lawyers representing London Commodity Brokers were asking for the company to be wound up, claiming USD1.15 in contractual arrangements, and that Elitheni had received a court order in South Africa.
Strategic Natural said the contractual arrangements are alleged to have been put in place in the Trasteel off-take agreement announced in April 2011. The company said it disputes the claims and has been in discussions with the London Commodity Brokers concerning the amount due and settlement terms.
In April 2011, Strategic Natural Resources signed an exclusive coal off-take agreement with Trasteel International SA, a steel supplier and commodity trader, for all the beneficiated coal to be mined from Strategic Natural's Elitheni coal mine in the Eastern Cape of South Africa up to an initial 2.0 million tonnes.
At that time, Strategic Natural had said the finalisation of the contract was the result of "many discussions with various parties introduced to SNR by their appointed coal brokers, London Commodity Brokers."
Furthermore, on Thursday the company said its subsidiary Elitheni on Wednesday received notice of a court order made on Tuesday by the High Court of South Africa.
Strategic Natural said that while it is urgently seeking legal advice in order to clarify the position, it believes that the order effectively freezes the company's entire interest in Elitheni and confirms the jurisdiction of the Republic of South Africa to any further claims by the applicant Thelo Rolling Stock Leasing Ltd against Strategic Natural Resources or Elitheni.
Earlier in March, the company said it was receiving pressure from Elitheni to complete certain recapitalisation plans for the company after Thelo Rolling Stock Leasing Ltd commenced legal proceedings to repossess containers that Elitheni currently rents from Thelo, due to failure to make payments.
The company said that Elitheni is currently discussing the court order with its legal advisers in order to clarify the consequences of the court order and is in discussions with Thelo regarding the necessary repayments.
By Tom McIvor; [email protected]; @TomMcIvor1
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