(MENAFN- ProactiveInvestors) It is rare these days for small investors to have a company’s future directly in their hands but that’s the situation at troubled miner ().
A one-time stock market darling almost 80% of the shares in the Russian gold producer are held by private investors and it is how they vote at a crucial meeting this month that will decide the company’s fate.
The bottom line is needs its shareholders to approve a rescue re-financing otherwise it faces bankruptcy.
Peter Hambro the miner’s founder and chairman spelt out the consequences yesterday: “If they do not the Refinancing will fail and it is likely that the consequent cross-default on the Group’s loan facilities would mean that Shareholders will lose the entire value of their investment.”
While it would seem unlikely shareholders would allow this to happen there are recent precedents.
Mozambique coal miner is now in administration after failing by just 6% to get the necessary backing for its refinance package at the end of 2014.
though is in a different league to Beacon Hill.
Next year assuming the financing deal is passed it expects gold production of between 680- 700000 ounces with costs also set to fall due to the lower value of the rouble.
To get the finance package through requires 75% of the vote to be in favour which with the number of private investors involved presents a tricky proposition logistically but especially as there is reportedly a lot of anger at the way events at the miner have panned put.
Consequently and its advisers are pulling out all of the stops to mobilise support ahead of the 26 February meeting.
It’s a far cry from five years ago when the company was riding high with a share price of £10 and a market value in the billions.
Since then however it has been caught in a perfect storm where the combination of a weak gold price and stretched balance sheet has subsequently reduced that market worth to just £25mln against loans of £900mln.
The finance package will raise £155mln of new cash from a deep discount rights issue of 157 new shares for each ten held currently at a price of 5p.
Peter Hambro and chief executive Pavel Maslovskiy are chipping in significant sums to underwrite the issue while a debt for equity swap has been agreed to mop up any shares not taken up by shareholders.
Bond owners have agreed to the plan so the fate of the company now rests solely in the hands of its shareholders
An audio explaining the importance of shareholders agreeing to the plan is already up on its website while a series of roadshow meetings will explain the deal in detail and deal with the issues.
Shares were up 5% to 13.1p today.
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