East Perth-based North Australian Diamonds Ltd has settled legal proceedings with major shareholder Anglo Pacific Group plc over a staged capital raising that was deemed too low.
East Perth-based North Australian Diamonds Ltd has settled legal proceedings with major shareholder Anglo Pacific Group plc over a staged capital raising that was deemed too low.
North Australian was facing legal action instigated late last month by Anglo, which holds a 13 per cent stake.
Anglo was challenging the first allotment of shares as part of the overall $6 million raising, saying the allotment was being completed at a price which was too low.
The first stage raised $750,000 from the issue of 90 million shares priced at $0.005.
Today North Australian said that as part of the settlement, it will place a further 60 million shares at $0.005 each of which Anglo will subscribe for 10 million.
A further 10 million shares will also be placed with Anglo with shares priced at $0.008 each.
Stage 2 of the raising will now raise $2.4 million, up from the previously announced $2.25 million, with each share priced at $0.008.
Stage 3 will raise $3 million through the issue of 300 million shares priced at $0.01 each.
Overall, North Australian will raise just over $6.5 million.
The settlement is good news for North Australian, which had planned on restricting its exploration activities in order to save money for court costs.
Below is the full announcement:
North Australian Diamonds Ltd (ASX: NAD) (NAD or Company) is pleased to announce that it has settled the proceedings commenced against the Company, its Directors, Ascot Securities Pty Ltd (Ascot) and one of its directors in the Supreme Court of Western Australia by Anglo Pacific Group PLC (APG), who is the beneficial owner of approximately 13% of the Company's shares (as announced on 27 August 2008 and 1 September 2008).
The relevant terms of the settlement are as follows.
(a) The Company will complete the Stage 1 capital raising (as announced on 25 August 2008) by placing a further 60 million shares at $0.005 per share of which APG will subscribe for 10 million shares.
(b) A further 10 million shares will be placed to APG at $0.008 per share.
(c) The Stage 2 capital raising (as announced on 25 August 2008) will proceed as varied so that, subject to shareholder approval, the Company will place 300 million shares at $0.008 per share to raise approximately $2.4 million pursuant to a prospectus. A preferential allocation of 55% of the shares to be issued pursuant to the prospectus will be available on a pro-rata basis to existing Shareholders registered as at the date of the general meeting.
(d) The Stage 3 capital raising will proceed as previously announced on 25 August 2008. Subject to shareholder approval, a placement of 300 million shares at $0.01 (or such other 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.
(e) Ascot will be paid a commission of 5% of funds raised and will be entitled to the following options on a success basis:
(i) on successful completion of Stage 2, 40 million options exercisable at $0.008 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
(ii) on successful completion of Stage 3, 40 million options exercisable at $0.008 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.
(f) Messrs Ian Hastings and Chris Orchard will be appointed to the Board within the next 2 business days in accordance with the deed of settlement.
(g) The Board will seek to find a suitably qualified CEO as soon as practicable.
(h) The number of options to be issued to the directors (subject to shareholder approval) will be reduced to 20 million options exercisable at $0.008 per share.
The Company advises that a General Meeting will be called to approve the Stage 2 capital raising as soon as possible and a notice of meeting will be sent to Shareholders in due course.
