Continental Coal has executed a binding term sheet with UK corporate advisory firm, Empire Equity, to provide A$5 million of limited recourse bridge funding, but significant changes to the board are a condition to providing the funding.

The funds raised will be applied towards general operating expenses and payments to creditors of the company that do not otherwise agree to standstill agreements, allowing the company to continue trading as a going concern while it continues to seek to undertake a broader recapitalisation and restructure of Continental Coal and its financial arrangements.

A condition to providing the funding is the resignation or termination of the CEO, CFO and non-executive directors Mike Kilbride and Johan Bloemsma on closing. Peter Landau, a former executive director of the company, Paul D’Sylva, who is the venture partner of Empire Equity, Mike Gibson, who is currently the CEO of Genet South Africa, a mineral resources and mining service company, and a nominee from the creditors group will join the board on closing.

The shares of the company will remain suspended from trading on both the ASX and AIM markets. The reconstituted board of directors will consider a decision on seeking to lift the suspension of the shares following the closing of the transaction and pending the provision of further clarification of its financial position to the market.

Closing is currently expected to take place with the delivery of the investment amount in cleared funds by Wednesday 29 January 2014 to a settlement agent who is to ensure payment to various trade creditors. The remaining funds will be deposited into the operating bank account of the Company to fund on-going operating expenses while it completes the proposed rights offering.