4th Mar 2016 11:11
LONDON (Alliance News) - Both UMC Energy Corp and Edge Resources Inc announced plans Friday to delist from London's AIM market, both citing difficult market conditions in the resources sector.
Edge Resources said its nominated adviser, Sanlam Securities UK Ltd, has opted to cease its nominated adviser and small cap broking business. This means the company will no longer have a nomad, as required by AIM rules, from March 14. Allenby Capital Ltd recently acquired the corporate finance function of Sanlam.
Edge said that after receiving Sanlam's notice, it undertook a review to assess the viability of maintaining its listing on AIM and Canada's TSX Venture exchange in Toronto. It has decided that in light of the cost and regulatory burdens imposed by having two quotations, it will not seek to appoint a new nomad, and thus trading of its shares would be cancelled within a month of Sanlam's departure.
It will put this proposal to shareholders at a general meeting April 11.
"While it is an unfortunate decision that we've been forced to take, delisting from AIM is a necessary step to help ensure the company stays viable in this extremely challenging oil and gas market. This market has forced many difficult decisions on management teams across the globe and it is my hope that our many supportive UK shareholders see this for what it is - a necessary step to help maintain the value of their investment, not abandon it," said Edge Chief Executive Officer Brad Nichol in a statement.
Shares in Edge Resources were down 54% at 0.205 pence Friday morning.
UMC Energy also highlighted the general difficult market conditions within the resources sector as its reason for proposing a delisting, saying the costs associated with maintaining its AIM listing exceed the benefits of the listing, and can no longer be justified.
The company said that it has been in discussions with its 41.34% shareholder, Natasa Mining Ltd, and that it has been dependent on loan funds from Natasa to meet its working capital requirements for "many years now".
Whilst UMC has attempted to raise additional funds, it has been unsuccessful, and these endeavours have been made more difficult by the fall in oil price. Natasa has indicated that whilst it was prepared to continue to fund the personnel and general office costs of UMCC, it was not prepared to "continue indefinitely to fund the costs incurred by the company by virtue of its shares being admitted to trading on AIM."
UMC said it has given particular consideration to the low liquidity in its shares on AIM. Natasa intends to remain a shareholder, and plans to vote in favour of the delisting. This will be put to shareholders at a general meeting, to be convened shortly.
UMC noted that, should the delisting not be passed at this meeting, Natasa is likely to demand repayment of its outstanding loan, which stood at USD17.3 million as of the end of February.
Shares in UMC were down 73% at 0.0750 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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