Beacon Hill Resources have released a restructuring update informing shareholders of the need to raise more capital to finance the operations on the Minas Moatize Coking Coal Mine situated in the Tete region of Mozambique.
The restructuring proposal includes raising US$20 million of debt financing from the DFI, and US14.5 million of equity through the release of shares to institutional investors. In order to protect smaller shareholders from a dilution of initial share value, a further US$5 million has been made available via an open offer, specifically for them to take advantage of the restructuring.
This open offer will become available in early 2015 and will be made available at the same price as the institutional fundraising. In addition, shareholders participating in the open offer will receive 1 loyalty warrant for every 3 shares subscribed in the open offer, recognising the support of existing private and/or smaller shareholders in the restructuring.
Justin Farr-Jones, Chairman of Beacon Hill, commented:
“The intended open offer is being structured to ensure that existing smaller shareholders are prioritised in order to maximise the opportunity for them to maintain a meaningful level of investment, mitigate dilution and participate at the same price as the envisaged US$14.5 million institutional fundraising in early 2015. In addition, the Board intends to include a loyalty warrant package in conjunction with the open offer to further recognise the support of the Company’s existing shareholders”.
The Beacon Hill Resources Independent Directors have stated clearly that if shareholders in the AGM planned for 17th December 2014 do not accept the proposed restructuring programme, it is:
“Highly likely that the company would be forced into administration”.
Vitol Coal S.A. has provided the senior debt to Beacon Hill Resource and an expected debt repayment of US4.1 million due at the end of January 2015 has been postponed for 2 months, allowing capital to be raised in the new share issue and the new debt facility of US20 million from the DFI, to fund the repayment.
The Chairman continued that the company’s aim was to:
“Recapitalise the group’s balance sheet, and maintain the Company’s status as a going concern, whilst we seek final credit approval and satisfaction of the remaining conditions precedent for the new debt facility from the DFI.
Once the US$14.5 million fundraising has been successfully completed and the new DFI debt facility secured, we will be well positioned to rapidly develop Minas Moatize into a profitable, Tier 1 cash cost coking coal producer.”