(Alliance News) - 7Digital Group PLC said Tuesday investors rejection of the authority for the company to issue shares for cash could hinder a fundraise needed to stave off administration.
Shares in 7digital closed 25% lower at 0.16 pence in London on Tuesday.
At its annual general meeting on Tuesday, the resolutions to authorise 7digital to allot shares for cash were rejected by 44% of votes cast with just 56% in favour. Consequently, the resolutions did not secure enough votes in favour to pass.
7digital emphasised that it still believed that it needed to raise GBP4.5 million in additional funds through a subscription and debt-for-equity swap. Should it fail to raise these funds, 7digital warned it was "highly likely that the company would need to be placed into administration."
The failure to pass the resolution "therefore creates greater execution risk for any subsequent equity raise by the company since further shareholder approval would be required in order to implement this."
"Clearly, the directors are extremely disappointed with this unsatisfactory outcome and therefore intend to engage with the relevant shareholders, where possible, with a view to securing their support for a follow-on financing," 7digital added.
