Shareholders in Navan Mining, the Dublin-listed but UK- based mining group, have been warned the firm faces liquidation unless a radical financial restructuring is approved on January 30th.
Navan shares were suspended at 33p sterling in early December after it hit a financial crisis as a result of the collapse of base metal and sulphuric acid prices and the demand from its bankers that its metal and currency hedging positions be closed out. Navan has net debt of $36 million (€40.39 million), most of which is owed to Deutsche Bank.
Navan has warned that unless the restructuring is approved by an extraordinary general meeting, the group's banking facilities - already in default - will be withdrawn, and the group will have no funds to continue trade more than a few days beyond January 30th.
"In these circumstances, the directors believe that there would be no option but to petition for administration or liquidation."
If the restructuring is approved, investors assembled by Canaccord Capital will invest £20.6 million (€26 million) for 103.4 million new shares, while the banks will convert one-third of their debt into new equity at 20p a share - with the balance being refinanced as a three-year loan.
These proposals would see existing shareholders being diluted by about 75 per cent. But shareholders are being given the opportunity to limit their dilution through a one-for-two rights issue at the same price of 20p a share.
This rights issue has not been underwritten and in the unlikely scenario of a full take-up, existing shareholders would have their Navan stakes diluted by about half.
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