Hummingbird Resources plc could be delisted and bought out after it agreed to convert US$30 million debt into shares for its main creditor.
CHALLENGES
Negotiations on debt restructuring continue with the company’s primary lenders Coris Bank International and CIG SA and its largest shareholder Nioko Resources Corporation.
Hummingbird said that challenges at Yanfolila in southern Mali, equipment availability, working capital constraints and delays at Kouroussa in Guinea had placed “significant strain” on its balance sheet and ability to meet near-term debt repayment.
On 6 November the company received an outstanding $10m loan from CIG, as announced in September, which is one third of the unsecured debt due to CIG.
Hummingbird also agreed in principle to CIG’s proposed debt-to-equity conversion for the principal amount outstanding to be converted into new ordinary shares in the company and issued to CIG’s subsidiary, Nioko.
The conversion, at 2.6777 pence per ordinary share, would increase Nioko’s voting rights to approximately 71.8%.
Hummingbird said that Nioko had indicated it intended to delist the company following completion of the proposed debt-to-equity conversion.
Nioko has also agreed in principle its “firm intention” to make an offer for Hummingbird’s entire issued ordinary share capital outside its ownership for 2.6777 pence per ordinary share.
Hummingbird added it had secured waiver agreements to defer the $30m debt owed in repayments due on 31 October.
The company has held “informal, non-binding” talks with “several parties” regarding the sale of certain assets including Dugbe in Liberia, whose owner received a $75m offer.
COMPANY MOVES
The debt restructuring talks also resulted in the appointment of Geoff Eyre as board interim chief executive officer with immediate effect, at Nokio’s request.
Mr Eyre will “drive a transformation plan” to improve operational performance.
EY Parthenon will support the board with a “comprehensive financial review” currently at an “advanced stage”.
Regulatory checks are now complete on Nioko director Oumar Toguyeni who has joined the board as a non-executive director.
Dan Betts remains executive chairman.
“We are navigating through a pivotal period for the company, and the decision to restructure our debt with the support of our lenders, CIG and major shareholder, Nioko, is a crucial step toward achieving financial stability,” said Mr Betts.
“Nioko has expressed its commitment to work with all stakeholders including suppliers to find a sustainable solution.
“By extending the payment deadline and converting the new CIG loan into equity, we aim to provide a solid foundation for our future operations.
“With Geoff Eyre at the helm as interim CEO, we will conduct a thorough review of the business, enabling better informed strategic decisions that align with our long-term goals.
“We remain committed to protecting the interests of our shareholders as a whole during this transition which is evidenced by the possible offer from Nioko at the same price as the debt-to-equity conversion.”