As noted above, if the Greenstone Placing proceeds, Greenstone
may, dependent on the outcome of the Placing and Open Offer have
the ability to increase its shareholding on any conversion of the
Tranche One Notes to 30 per cent. or more of the then Issued Share
Capital.
As further noted above, if the Underwriting Facility is used, or
further Convertible Loan Notes are issued in respect of unpaid
interest, Greenstone will have the ability to further increase its
shareholding, and any such conversion will likely cause
Greenstone's holding to exceed 30 per cent. or more of the then
Issued Share Capital.
If Greenstone were to convert the Convertible Loan Notes in full
or in part, then, whether or not a Mandatory Offer is required and
whether or not any such Mandatory Offer is accepted or rejected,
Greenstone would be able to exercise significant influence over the
Company and may, depending on its resulting shareholding, be able
to control all matters requiring approval by Shareholders including
the election of directors, sales of assets, share issues and
amendments to the Articles.
Pursuant to the Relationship Agreement, which remains in force
for such time that Greenstone (or any member of its group) retains
a Significant Interest in the Company, certain restrictions are
placed on Greenstone, including (but not limited to) a requirement
for all agreements between the Company and Greenstone (or its
group) to be concluded on an arm's length basis, an undertaking not
to influence or seek to influence the running of the Company or any
member of the Group at an operational level (without the consent of
the Company's chief executive officer), an undertaking not to
exercise voting rights to seek or procure any amendment to the
Articles which would be inconsistent with the terms of the
Relationship Agreement, and usual orderly market restrictions.
Greenstone also enjoys certain benefits and protections pursuant
to the Relationship Agreement, including (but not limited to) the
right to appoint a director to the Board whilst Greenstone (or any
member of its group) holds a Significant Interest, the right for
the Greenstone-nominated director to join certain committees of the
Company, a right to participate in any issue of equity carried out
by the Company so as to maintain Greenstone's percentage
shareholding, and certain marketing rights in relation to the
products produced by the Company's projects (including, without
limitation, the Namib Project).
Under the Relationship Agreement, Greenstone will have the
right, from 3 July 2017, being the third anniversary from the date
of the Relationship Agreement, and for so long as it holds an
interest in voting rights representing 15 per cent or more of the
rights to vote at a general meeting of the Company, to nominate
potential customers and be afforded the opportunity to negotiate
and purchase on an arm's length basis and on terms no less
favourable to the Company than those offered to third parties a
proportion of the Company's mineral production, equal to its
interest in such voting rights. Therefore, for so long as such
right exists, any conversion of Convertible Loan Notes will
increase such right.
Events of default under the Convertible Loan Note Instrument
Pursuant to the terms of the Convertible Loan Note Instrument,
the Convertible Loan Notes shall become repayable in full at the
election of holders of a majority of the Convertible Loan Notes,
following applicable grace periods, on the occurrence of certain
events triggering a default, as summarised in Appendix I above.
Potential dilution of current Shareholders
Shareholders who do not (or, due to regulatory restrictions, are
not given the opportunity to) participate in the Open Offer to the
full extent of their pro rata entitlement will experience
significant dilution in their ownership and voting interests in the
Company on any conversion of the Convertible Loan Notes by
Greenstone. In such circumstances, such Shareholders' proportionate
ownership and voting rights in the Company will be reduced and the
percentage that their Ordinary Shares will represent of the then
total Issued Share Capital will be reduced accordingly.
This list of risk factors should not be considered an exhaustive
statement of all potential risks and uncertainties.
APPENDIX III
Definitions
The following definitions apply throughout this announcement,
except where the context requires otherwise:
"AIM" the AIM market operated by the London Stock Exchange
"AIM Rules" the rules for AIM companies as issued by the London
Stock Exchange from time to time governing, inter alia, the
admission of securities to AIM
"Articles" the articles of association of the Company, in force
from time to time
"Board" or "Directors" the board of directors of the Company
"Business Day" any day (excluding Saturdays, Sundays and public
holidays) on which banks are open in the City of London for the
conduct of normal banking business
"Code" the UK Takeover Code on Takeovers and Mergers
"Convertible Loan Notes" means the unsecured 10 per cent.
convertible loan notes 2018 to be issued to Greenstone in
accordance with the terms of the Convertible Loan Note Instrument
and Subscription Agreement, subject to the Resolution being
approved at the General Meeting and satisfaction or waiver of the
Conditions
"Convertible Loan Note Instrument" means the convertible loan
note instrument to be executed by the Company, subject to approval
of the Resolution at the General Meeting, constituting the
Convertible Loan Notes
"FT Exchange Rate" means the exchange rate from GBP to US$
quoted in the Financial Times on the Business Day immediately prior
to the date on which the Company first makes an announcement
setting out the terms of the Open Offer and the Placing
"Group" the Company and its subsidiaries as at the date of the
Circular
"Independent Directors" each of Brett Richards, James Beams,
Mark Thompson, Keith Marshall, Ken Sangster and Ding Chan
"Issued Share Capital" the issued share capital of the Company
from time to time, being 1,915,875,310 Ordinary Shares as at the
date of the Circular
"London Stock Exchange" London Stock Exchange Plc
"Mining Licence" a mining licence in respect of a defined area
of land, which is situated within the wider prospecting area
covered by the exploration licence EPL2902 held by the Company in
relation to the Namib Project, for which an application is
pending
"Ordinary Shares" the ordinary shares of 0.2 pence each in the
capital of the Company
"Panel" the Panel on Takeovers and Mergers
"Qualifying Shareholders" means Shareholders other than those in
respect of whom the Directors consider that extending the Open
Offer is impractical
"Recruitment Process" means the recruitment by the Company of a
new Chief Financial Officer, a General Manager of Mining for the
Namib Project and a Project Controller for the Namib Project
"Relationship Agreement" means the relationship agreement
entered into between the Company and Greenstone dated 3 July
2014
"Shareholders" holders of Ordinary Shares
"Significant Interest" means an interest in voting rights
representing 15 per cent. or more of the rights to vote at a
general meeting of the Company attaching to Ordinary Shares
"Strand Hanson" Strand Hanson Ltd, the Company's nominated and
financial adviser for the purpose of the AIM Rules
"Subscription Agreement" means the subscription agreement
entered into between the Company and Greenstone on 10 August 2015
relating to the Greenstone Placing
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland
"United States" or "US" the United States of America, its
territories and possessions, any state of the United States of
America and the district of Columbia and all other areas subject to
its jurisdiction
"GBP" pounds sterling, the lawful currency of the UK from time
to time
"US$" US dollars, the lawful currency of the United States from
time to time
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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