LONDON (Alliance News) - Crusader Resources Ltd on Friday urged shareholders to not support the resolutions proposed by a group of investors, as it agreed a solution which will enable it to continue be solvent.
Crusader said it successfully concluded its discussions with its major shareholder, the Copulos Group, and executed a binding conditional underwriting agreement for a partial underwriting of a USD4.2 million rights issue.
The Copulos Group has agreed to underwrite USD2.5 million of the issue, on the condition that Crusader shares are cancelled from trading on AIM and re-listed on ASX.
Through the whole rights issue, the company intends to raise USD4.2 million to complete the development of the Borborema and Juruena gold projects in Brazil.
Furthermore, the company will use part of the funds raised in the rights issue to complete the bankable feasibility study of its Borborema project and for general working capital.
Eligible shareholders will have the opportunity to subscribe for four new shares for every five shares held at USD0.01 per share.
Subscribers will also be issued one free-attaching option for every three new shares subscribed for, exercisable at USD0.02 each and expiring three years from the date of issue.
Furthermore, Crusader said that Chair Andrew Vickerman and Managing Director Marcus Engelbrecht,will step down from the board at the end of February.
With effect from the two resignations, Stephen Copulos will be appointed non-executive chair and Andrew Richards will join as executive director.
Crusader also refereed to a general meeting scheduled for March 22, as requisitioned by William Brown, Vitor Pty Ltd, Chinetti Investments Pty Ltd and Parkwise Corporation Pty Ltd, all of whom are shareholders in the firm.
At the meeting, the requisitioning shareholders are seeking approval for the appointment of Brett Clark, David Sanders and Carl Luttig as directors of the company and the removal of Marcus Engelbrecht and Andrew Vickerman as directors.
Noting how Engelbrecht and Vickerman will leave themselves, the company said that those two resolutions will be withdrawn.
Furthermore, if the new directors are appointed, the agreement with Copulos will not proceed.
"Neither the requisitioning shareholders, nor the nominee directors, have advised the company of any proposal to provide sufficient funding to the company to enable it to continue as a going concern, and ultimately be reinstated to quotation on ASX," Crusader said.
It added: "Accordingly, the board considers that approving the resolutions at the requisitioned shareholder meeting seriously risks the company's solvency.
"The current board considers that the partially underwritten rights issue is the most realistic strategy for raising the funds required to put the company in a position where it can adequately address ASX's queries with a view to being reinstated to trading. The board also does not intend on raising any funds over and above what it considers to be reasonably necessary to maintain is solvency and ultimately be reinstated to quotation on ASX."
Therefore the company is urging shareholders to vote against the resolutions proposed at the meeting.
Crusader shares are currently suspended from trading.