JOHANNESBURG (miningweekly.com) – Aim-listed African Potash has signed a £750 000, nine-month agreement for a bridge loan with company CFO Neil Clayton’s wife Katrina Clayton.
A fee of £60 000, or 8% of the loan amount applied to the bridge loan and resulted in a total amount of £690 000, which could be drawn down with immediate effect.
The loan would provide African Potash funding to bridge its short-term working capital requirements for the next three months, but the company warned that it would require further funding if it was unable to generate sufficient cash flows from its trading operations after the three-month period.
An interest rate of 1.5% a month over the nine-month term was charged on the loan and was payable in arrears on the amount of the loan outstanding at the start of each month.
The loan would be repaid in full on September 1, following the completion by African Potash of an equity financing to raise more than £1.5-million and the completion of any nontrade finance debt financing.
In the event that the company failed to make any payment of interest, a penalty of 1% a week would apply on any unpaid interest amount and would accrue daily.
"This bridge funding enables us to continue to make progress in the transformation of our business and illustrates the faith and commitment of senior management and their families to this project, as we remain focused on the roll out of our integrated fertiliser operations across Africa.
“With funding in place to cover our short-term requirements we look forward to finalising our trade finance facility, which we continue to negotiate in order to secure up to $50-million of funding to support the trading strategy,” African Potash executive chairperson Chris Cleverly said.
The company’s shares on the LSE fell by 11.48% to 1.68p by 13:10 UK time on Wednesday, compared with Tuesday’s close of 1.90p apiece.