16th Jun 2016 10:53
LONDON (Alliance News) - Vast Resources PLC, an AIM-listed gold, copper and phosphate development and production company, on Thursday called a meeting to ask shareholders to allow it to issue more shares, with part of the money raised from doing so to pay money due to Darwin Capital.
The remaining money raised by issuing shares to Crede Capital will be used to provide Vast with working capital. The company has projects in Romania, Zimbabwe and Zambia.
On January 4, Vast entered an agreement under which Crede agreed to subscribe for new shares and warrants to raise up to GBP5.0 million. The subscription price was to be the closing bid price on the trading day prior to the date of subscription.
That was followed up on January 6 with an announcement that several of Vast's managers had agreed to invest about GBP500,000 to subscribe for shares at the same price, together with warrants to subscribe for shares, exercisable at 1.04 pence.
Shares in Vast were down 23% at 0.150p on Thursday. The stock is down 82% so far this year, from 1.03p on January 5.
The subscription agreement provides for an investment of up to GBP5.0 million in Vast by issuing shares to Crede in four separate chunks of GBP1.25 million each, across 90-day intervals.
Vast issued the first tranche of shares and warrants within its authority to do so on January 4. The second tranche of shares and warrants were not issued because doing so would have given Crede 25% or more of the equity in Vast, which would be in breach of maximum provisions.
Due to a fall in its share price, Vast said its existing authority may not be enough to allow it to issue third tranche shares and warrants to Crede. Under its subscription agreement, Vast is obliged to seek further authority to do so.
On May 16, Vast entered a senior loan note instrument with Darwin Capital. Under that deal, Darwin agreed to lend GBP650,000 to Vast. Darwin also agreed that on any date between June 16 and August 16, Vast "may request and Darwin Capital shall have the right to make an additional loan" to Vast of up to GBP350,000, to be repaid on October 10, provided only with Darwin's consent.
Vast has covenanted to pay 50% of the GBP650,000 loan note plus interest on July 10. In the event Vast does not pay that money to Darwin on July 10, Darwin will at any time from July 10 to January 10, 2017 be entitled to convert the outstanding and unpaid total principal amount of the entire loan notes and accrued interest into shares.
Vast also wants approval to issue shares to Darwin. If the resolutions required to issue shares to Darwin are not passed, Vast won't be able to issue shares in the event it is unable to pay the money due on July 10.
In the event the resolutions aren't passed, Vast said it will be required to "promptly" deposit the second half of the loan due for repayment in October 2016 into an escrow account. That would will reduce Vast's available working capital, the company said.
By Samuel Agini; [email protected]; @samuelagini
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