Beacon Hill Resources plc Restructuring Update, Open Offer & Conference Call (0935Z)

TIDMBHR

RNS Number : 0935Z

Beacon Hill Resources plc

08 December 2014

8 December 2014

Beacon Hill Resources Plc / AIM: BHR / Sector: Mining

Beacon Hill Resources Plc

("Beacon Hill" or the "Company")

Restructuring Update, Proposed Open Offer and Shareholder Conference Call

Beacon Hill, the coking coal developer focused on the Minas Moatize Coking Coal Mine in Tete, Mozambique, announces an update in respect of its proposed restructuring and its intention to launch an open offer in early 2015, which will give priority to existing private and/or smaller shareholders.

Highlights:

-- Proposed up to EUR5 million open offer intended to be launched in early 2015, post the forthcoming General Meeting, focused on minimising the dilutive impact of the restructuring on existing shareholders

-- Planned open offer to be made to shareholders at the same price as the envisaged US$14.5 million institutional fundraising in early 2015 and to include loyalty warrants

-- Shareholders participating in the open offer to receive 1 loyalty warrant for every 3 shares subscribed in the open offer, recognising the support of existing private and/or smaller shareholders in the restructuring

-- An understanding has been reached with Vitol Coal S.A. whereby an agreement is expected to be shortly entered into to postpone repayment of US$4.1 million to 31 March 2015, subject to shareholders approving all resolutions at the General Meeting to be held on Wednesday 17 December 2014

-- The Chairman, CEO and CFO of Beacon Hill will host a conference call for investors at 10.30 a.m. UK time on Tuesday 9 December 2014 to answer any queries regarding the restructuring Proposals

Justin Farr-Jones, Chairman of Beacon Hill, commented:

"I have been in constructive dialogue with our debt holders and a number of our private and smaller shareholders about the fairest method for such shareholders to participate positively in the recapitalisation and restructuring of the Company. Accordingly, the intended open offer is being structured to ensure that existing smaller shareholders are prioritised in order to maximise the opportunity for them to maintain a meaningful level of investment, mitigate dilution and participate at the same price as the envisaged US$14.5 million institutional fundraising in early 2015. In addition, the Board intends to include a loyalty warrant package in conjunction with the open offer to further recognise the support of the Company's existing shareholders.

"I am convinced that the inclusion of an open offer prioritising existing smaller shareholders together with a loyalty warrant package, alongside Vitol's repayment extension, ensures that we now have a comprehensive plan in place to address our existing shareholders' concerns, recapitalise the group's balance sheet, and maintain the Company's status as a going concern, whilst we seek final credit approval and satisfaction of the remaining conditions precedent for the new debt facility from the DFI.

"Subject to passing all resolutions at the forthcoming General Meeting, the Board will proceed immediately with its preparations for launching an open offer to shareholders in early 2015, alongside the envisaged US$14.5 million institutional fundraising, which is a key condition precedent for the new US$20 million debt facility from the DFI.

"Once the US$14.5 million fundraising has been successfully completed and the new DFI debt facility secured, we will be well positioned to rapidly develop Minas Moatize into a profitable, Tier 1 cash cost coking coal producer."

Proposed Open Offer to Shareholders

Further to the Company's announcement of 1 December 2014 (the "Announcement"), the Board has consulted with a number of the Company's smaller and private shareholders and, assuming that all of the proposed resolutions are passed by shareholders at the forthcoming General Meeting, it is the Board's intention to make an open offer of new ordinary shares in the Company to raise up to EUR5 million at the same price as the envisaged US$14.5 million institutional fundraise in early 2015. The planned open offer would be made available to all qualifying shareholders on the Company's register, following the capital reorganisation to be approved at the General Meeting, on a record date to be determined and announced at the appropriate time early in 2015. In order to maximise the new shares available for private and/or smaller shareholders under such an open offer, the Board has received assurances from the Company's largest institutional shareholder that it would not take up any of its open offer entitlements, thereby affording the Company's other shareholders (particularly private and/or smaller investors) the opportunity to secure additional open offer shares and increase their shareholding positions in the Company under an envisaged excess application facility. The Board believes that implementing an open offer is only appropriate following completion of the initial capital restructuring Proposals, and in conjunction with the envisaged larger fundraise in early 2015, to ensure that the Company is in a more stable and sustainable financial position. In addition, the Board intends to include a loyalty warrant package with the open offer to further recognise the valuable support of the Company's existing shareholders. The Board's current intention is to grant 1 loyalty warrant for every 3 shares subscribed to in the open offer by shareholders.

Completion of the proposed open offer and envisaged institutional fundraising would both be subject to the passing of the necessary resolutions by shareholders of the Company at a future general meeting of the Company.

Vitol Amendment Agreement

The Company is also pleased to announce that it has reached an understanding with Vitol Coal S.A. ("Vitol") to enter into a further amendment agreement shortly whereby, subject to the passing of all resolutions at the forthcoming General Meeting, it has agreed to extend the payment date of the US$4.1 million, which is currently due for repayment on 30 January 2015 under its existing US$10 million senior debt facility, to 31 March 2015. In return, the Company has agreed to pay Vitol a US$60,000 amendment fee (to be added to the capitalised outstanding loan balance) and to appoint an appropriate restructuring expert to advise the Board. This conditional extension by Vitol is a key condition precedent to completion of the Company's proposed up to GBP1.5 million fundraising to provide urgently required working capital prior to the year end. The Board, as previously announced, remains in discussions with Vitol to restructure its existing US$10 million senior debt facility which includes the possibility of Vitol converting such outstanding indebtedness into equity prior to 31 March 2015, simultaneous with the abovementioned envisaged US$14.5 million institutional fundraising, proposed open offer and new US$20 million debt facility from the DFI.

As set out in the Announcement, the Independent Directors consider the financing and restructuring Proposals to be in the best interests of the Company and its Shareholders as a whole and accordingly recommend that Shareholders vote in favour of all of the proposed resolutions at the General Meeting to be held on 17 December 2014 (further details of which are set out in the Announcement). The Independent Directors remain strongly of the view that it is highly likely that the Company would be forced into administration if all of the proposed resolutions are not duly passed.

Capitalised terms used but not defined above have the same meanings as set out in the Announcement.

Shareholder Conference Call

Beacon Hill will host a conference call for shareholders at 10.30 a.m. UK time on Tuesday 9 December 2014 to answer queries regarding the Financing and Restructuring Update announced on 1 December 2014.

To participate in this conference call, please dial 0808 109 0700, or [phone] if you are calling from outside of the UK, and quote the password "Beacon Hill" to the operator. Please note that all lines will be muted with the exception of Beacon Hill's management, however the Company invites shareholders to submit questions to St Brides, the Company's public relations advisers, ahead of the call via email to [e-mail]. The management team will strive to answer as many questions as possible during the course of the call.

If you have any problems accessing the call, please contact St Brides Media & Finance on [e-mail] or telephone number [phone].

**ENDS**

 
 For further information, please contact: 
 Beacon Hill Resources Plc 
 Justin Farr-Jones, Chairman ([e-mail]) 
  Rowan Karstel, Chief Executive Officer 
  ([e-mail]) 
 Strand Hanson Limited (Nominated 
  Adviser and Broker) 
  James Harris / Matthew Chandler /                        [phone] 
  Ritchie Balmer                                                  3494 
 St Brides Media & Finance Limited 
  (Financial Public Relations) 
  Susie Geliher / Elisabeth Cowell                         [phone] 
  ([e-mail])                                               1177 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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