(Alliance News) - Vast Resources PLC shares plunged on Wednesday, after it announced a general meeting to propose issuing new shares to potentially repay creditors.
Shares in Vast Resources were down 24% at 0.072 pence in London on Wednesday.
The mine developer, which has interests in Romania, Tajikistan and Zimbabwe, said the meeting will take place on the morning of February 29.
Vast Resources will request shareholders grant the authority raise up to USD9.4 million through the issue of new shares. It hopes to issue shares worth GBP8.4 million in shares to raise approximately USD10.5 million.
Vast Resources is proposing the fundraise "to show good faith towards repayment of the creditors and to provide a possible solution...in the unlikely event of enforcement of security in favour of the creditors".
The creditors are A&T Investments Sarl and Mercuria Energy Trading SA.
Should the new shares be issued, it believes the funds raised would be "sufficient to repay the creditors should it be necessary", with "a small additional margin" left over for working capital.
Vast also said that to facilitate the fundraise, it will propose reorganising its share capital so that there are fewer ordinary shares in issue.
The proposals follow Vast Resources' announcement in mid-January of a debt extension agreement with the creditors, to allow it to finalise ongoing repayment initiatives. Therefore, no enforcement of security can take place until after February 29, by which time Vast must make arrangements for new facilities.
However, the company added that "The directors would like to stress that the authority is required in order to give comfort to the creditors," as "it is not expected that a material proportion of the requested authorities will be required in practice".
By Emma Curzon, Alliance News reporter
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Vast Res (VAST)