GBM merger canned after funding falls through

Gold explorer GBM Resources has been forced to terminate merger plans with Canadian company WCB Resources after a loan agreement with a funding party fell through.

Mount Pleasant-based GBM said that a loan agreement entered into with National Federal Capital for a $10 million facility in October had been terminated today after drawing down just $1.5 million.

“The company believes that there is no certainty that NFC is able to complete its obligations with further extensions to the loan agreement settlement date,” GBM said.

GBM will settle the $1.5 million repayment through the issue of 50 million shares at a 100 per cent premium price of 3 cents each (compared with GBM’s closing price today of 1.5 cents each).

Had GBM successfully drawn down on the other $8.5 million under the loan agreement, it would have met a condition required as part of its merger with WCB announced last month.

“As a consequence of the termination of the $10 million loan agreement with NFC, the company has not been able to meet its financing pre-condition of securing the required debt funding of $8.5 million by March 31,” GBM said.

“As a result the binding heads of agreement with WCB is now terminated.

“The company however, will continue to seek alternative funding and should the appropriate funding be sourced, WCB and GBM will consider re-opening merger discussions at that time.”

GBM shares were 6.25 per cent lower to 1.5 cents each at the close.