East Perth-based North Australian Diamonds Ltd's plan to raise $6 million could face a hurdle from a major shareholder, which has filed an application to the Supreme Court to prevent the initial allotment.
East Perth-based North Australian Diamonds Ltd's plan to raise $6 million could face a hurdle from a major shareholder, which has filed an application to the Supreme Court to prevent the initial allotment.
Anglo Pacific Group PLC, which holds a 13 per cent stake, yesterday made an urgent application to the Supreme Court of Western Australia to prevent the $750,000 allotment, saying the price was too low.
North Australian today announced it had appointed Ascot Securities to oversee the three-stage $6 million raising, with the first allotment consisting of 90 million shares priced at $0.005 each.
The company allotted the shares on Friday.
The court ordered that Anglo needed to start any proceedings by close of business tomorrow and that North Australian be restrained from allotting any further shares until the end of the week.
North Australia said that on Friday, a further full hearing is scheduled to determine whether the restraint should continue until trial.
Capital raised is to fund ongoing work at North Australian's flagship Merlin diamond project in the Northern Territory.
Below is the full announcement:
North Australian Diamonds Ltd (ASX: NAD) (NADL or Company) announces that it has appointed Ascot Securities Pty Ltd (Ascot) to assist with a 3 stage capital raising to raise approximately $6 million. Ascot is a financial services licensee with a broad and diverse client base who recently completed the Top End Uranium spin out for the company. Due to the company's financial position and limited funding options the capital raising includes a component providing immediate funding. Details of the proposed capital raising are as follows:
1. a placement of 150 million shares at $0.005 per share to professional and sophisticated investors to raise $750,000. The Company has issued and allotted 90 million shares under Stage 1 on 22 August 2008. ;
2. subject to shareholder approval, a placement of 300 million shares at $0.0075 per share to raise approximately $2.25 million, expected to be undertaken in the second quarter of this financial year; and
3. subject to shareholder approval, a placement of 300 million shares at $0.01 (or such higher price as represents a price equal to 85% of the VWAP for the 10 days prior to the commencement of the placement) to raise approximately $3 million.
Stage 3 is expected to be undertaken on completion of a pre-feasibility study for the Merlin Project.
The funds raised will primarily be used to progress the Merlin Project to completion of a bankable feasibility study which the company believes is the only way to generate future value for shareholders.
Under the appointment Ascot will be paid a commission of 5% of funds raised and will be entitled to nominate one person to the board of the company. Ascot will also be entitled to the following options on a success basis:
1. on successful completion of Stage 2, 50 million options exercisable at $0.0075 per option within 3 years from the date of issue, subject to NADL's share price during any 5 day period subsequent to issue exceeding $0.02 to be issued to Ascot Securities (or its nominee). 50% of the options will be subject to a voluntary escrow period of 6 months and the remaining 50% will be subject to a voluntary escrow period of 12 months; and
2. on successful completion of Stage 3, 50 million options exercisable at $0.01 per option within 3 years from the date of issue, subject to NADL's share price during any 5 day period subsequent to issue exceeding $0.03 to be issued to Ascot Securities (or its nominee). 50% of the options will be subject to a voluntary escrow period of 6 months and the remaining 50% will be subject to a voluntary escrow period of 12 months.
At the request of Ascot who are keen to ensure the Merlin timetable and budget are achieved 50 million incentive options will also be made available to the Board exercisable at $0.0075 on achievement of appropriate milestones related to the successful outcome of the project.
Pursuant to the above mandate the company issued 90 million shares at $0.005 on 22 August 2008 and was expecting to issue the remaining 60 million shares on 25 August 2008.
On Sunday 24 August 2008 Anglo Pacific Group PLC (APG) who hold approximately 13% of the company's shares made an urgent application to the Supreme Court of Western Australia seeking an order that Company and its directors be prevented from allotting any further shares of the initial $750,000 tranche alleging that the allotment was being completed at a price which was too low. The Court ordered that APG must commence any proceedings to oppose the allotment by close of business 26 August 2008 and that the Company and its directors be restrained from allotting any further shares until the close of business Friday 29 August 2008. On Friday 29 August 2008 a further full hearing is scheduled to determine whether the restraint should continue until trial.
The issue of shares to Ascot's clients was considered and authorised by the Board of Directors who remain of the view that the placement was in the best interests of the Company taking into account all competing interests and that the placement will ensure the viability of the Merlin Project which, if successful, is expected to deliver a significant return on investment to the shareholders of the Company. The Directors are of the view that the capital raising will ensure the viability of the Company's future drilling and exploration contractcommitments.
