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LONDON (Alliance News) - Ascent Resources PLC shares plummeted on Monday after it said Chief Executive Len Reece has resigned from the company in light of the company's dire financial position caused by the ongoing delays in approvals for the Peti?ovci field in Slovenia.
The company said it is unlikely to secure the already delayed permit for the field until 2016 and urged shareholders to approve its proposed resolutions at an upcoming meeting, so that it can raise short-term funds to keep the company afloat.
Ascent shares were down 24% to 0.138 pence per share on Monday morning.
"In recognition of the company's current funding position, management changes are being implemented with a view to conserving the company's funding, in particular until the Integrated Pollution Prevention and Control permit is awarded in final form," said Ascent.
"The principal change is that Len Reece, Ascent's chief executive over the past 3 years, resigned as a director of the company on August 14, 2015 and the company has commenced a redundancy process in relation to his role as CEO," it added.
The company is trying to secure the necessary permits to install a gas gathering and separation station at its Peti?ovci field in Slovenia, but last month the company said it believed there had been at least one objection against its plans.
On Monday, the company said two parties had filed objections in August to which the company has responded. Ascent said the appeals will be heard in the first instance by the Environment Ministry with potentially a further appeal to the courts.
The permit was applied for in July 2014, and the Slovenian Environmental Agency approved the IPPC permit in December 2014. The objections are now the only thing standing in the company's way of securing the permit.
"Although there can be no guarantee that the IPPC permit will be issued, based on legal advice received to date the board of Ascent remains firmly of the view that the required IPPC permit will be issued in final form," it said.
"What is less certain is the time that the appeal process will take; guidelines suggest that the first appeal should take a maximum of two months and the second a maximum of three months, however in practice these guidelines are sometimes exceeded. Should the process be referred to the Slovenian courts it is likely that the final permit would not be awarded until 2016," it added.
The delay to the permit is significant as it is stopping the company from securing financing for the project and stretching the company's working capital, which it will need to address in the short term.
"Until the appeal process has been exhausted, the company and its partners are not able to finalise bank funding to start construction work," it said.
Ascent is in negotiations with several potential sources of additional financing, although no terms have yet been agreed. The company has a GBP7 million loan facility in place, but the drawdowns are at the sole discretion of the lender, which the company said "should not be relied upon as a sole source of financing".
That GBP7 million facility was not intended to be used to cover delays in permitting, but Ascent has recently secured GBP250,000 of the facility to fund its working capital requirements.
"The directors believe that it is prudent to have the ability to procure additional funds through the issue of new ordinary shares on a non-pre-emptive basis," it said.
At its annual general meeting due to be held on September 3, the company has asked shareholders to vote in favour of a resolution for the board to issue shares worth up to GBP1.5 million without being required to offer those equity securities on a pre-emptive basis.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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