Sherwin shares tumble on news of financial woes
PERTH (miningweekly.com) – The share price of junior Sherwin Iron tumbled by 20% on Tuesday as the company warned that it might have to appoint administrators.
The miner told shareholders this week that its recent rights issue and share purchase plan (SPP), which had raised A$80 880 and A$92 000 respectively, had been insufficient to meet Sherwin’s short-term and medium-term obligations.
The company’s largest shareholder, Jerry Ren, had opted not to take part in the rights issue or the SPP, and Sherwin had been unable to obtain a material underwriting commitment or commitment to subscribe for any material number of shortfall shares.
Despite the financial woes, the Sherwin directors said that they were optimistic about securing alternative funding for the company’s operations, and were in discussions with a major lender that would allow Sherwin to draw down up to A$10-million in cash, which was currently held in escrow under the company’s major debt facility.
The cash would otherwise have been released upon the approval of an environmental-impact statement for its Sherwin Creek iron-ore project, in the Northern Territory.
Sherwin noted, however, that these discussions were in the preliminary phase and the company was unable to give any assurance that it would lead to the release of cash within the required timeframe.
As such, Sherwin would hold off on issuing any shares under its rights issue or SPP until the resolution of these discussions.
Should Sherwin be unable to secure the release of the funds within the coming days, the company would consider appointing external administrators.
Meanwhile, Sherwin director Peter Heading has resigned his post, effective immediately.
Sherwin shares were trading at 3.2c a share late on Tuesday, down from an opening price of 3.9c a share and the previous day’s closing price of 4c a share.
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