The directors of Paragon Diamonds, the AIM-quoted diamond development company, have requested a temporary suspension in the trading of its shares with immediate effect (Monday afternoon) pending clarification of financial position.
Paragon currently has limited working capital and until a funding package has been secured there is a material uncertainty over the financial position of the company.
Paragon remains in negotiations with possible funding providers to secure finance in order to complete the acquisition of Mothae from Lucara Diamonds, provide development funding for Lemphane (both in Lesotho) and to repay short-term debts including the £500,000 loan facility which is due on 18 November 2015.
If this loan is not repaid within five business days of the due date this will constitute an event of default and the lender may request immediate repayment of the loan at 120% of the outstanding amount.
Alternatively the lender has the option to convert the outstanding loan into ordinary shares of the company at the lower of 5.22p, being the average share price on 17 June 2015 when the loan was issued, and 90% of the prevailing market price on the day that the loan is converted.
No assurances can be given regarding the terms and the timing of the funding arrangements that the directors may secure.
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