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African Potash to raise £500,000 for fertiliser business

The firm is issuing over 235mln shares at 0.2125 pence each
tractor
African Potash is a fertiliser trading group

African Potash Ltd (LON:AFPO) is raising half a million pounds in a subscription and amending the terms of last year's bridging loan to pursue its fertiliser trading ambitions.

The firm is issuing over 235mln shares at 0.2125 pence each. Shares closed yesterday at 0.325p.

There is also an over-allotment option for a further 70.5mln shares,  exercisable at any time on or before November 24 this year.

In December last year, the AIM group agreed a £750,000 bridge facility with Katrina Clayton, the wife of chief financial officer, Neil Clayton. to meet its short-term working capital needs.

The amendment means the loan is now repayable on the earlier of: September 1 next year, the completion of equity financings after the Subscription which in total raise more than £1.5mln and the securing of any non-trade finance debt financing.

Clayton will receive an amendment fee of 5% of the total outstanding facility amount, which will be paid in cash from the proceeds of the subscription.

Executive chairman of AFPO Chris Cleverly said: "It is hoped that the funds raised at this time and the accommodation provided by the amendment to the existing bridge loan will provide the company with a solid platform from which to further grow our ambitious fertiliser trading programme. 

"Shareholders will be aware, from our recent announcements, of the traction which we are gaining in the market and we are confident that this funding will assist in revenue generation.  We are progressing with these initiatives and have others in the pipeline and will update the market accordingly as we progress."

Shore Capital, which has no recommendation on the stock,  ponders: "We wonder if the extension was necessary because more equity couldn’t be raised at a reasonable price to pay it off today as originally scheduled."

Shares shed over 30% to 0.225p on the day.

In-Depth - African Potash unveils second deal in less than a month

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