Mining investment trust GRIT (LON:GRIT) has breached one of the covenants on £5mln worth of 9% convertible loans.
Under the loan terms, the ratio of the value of its investment portfolio to the principal outstanding (coverage ratio) had to remain above 4.1.
But the trust’s net asset value is now 35.4p per share and as a result the ratio has reduced to 3:8.
GRIT has ten days to restore the cover ratio to 4 times, otherwise the outstanding loan notes fall due for immediate repayment.
The company's directors are carefully considering what action should be taken, the statement said.