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Ortac Resources secures £20 mln financing - UPDATE

Published: 13:48 14 May 2012 BST

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Ortac Resources (LON:OTC) has entered into a £20 million equity financing facility to fund further development of its Šturec Project in Slovakia.

The equity line is with Darwin Strategic and allows the company to draw down from the facility at any time over the next three years.

Vassilios Carellas, Ortac's chief executive, said the move ensured the firm had a flexible source of funding in addition to its current cash treasury of £7.8 million to "readily execute Ortac's development objectives".  

"This is particularly important at present when, in the board's view, the current share price does not reflect the true value of the company."

"The structure of this facility with Darwin not only strengthens our ability to grow the business providing for a significantly stable position should potential acquisitions arise but also shows a clear sign of confidence in our current strategic assets in Slovakia, further highlighted by Henderson Global Investors (HGI) increasing its holding in Ortac last week to 11.06 per cent."

Darwin is majority owned by funds managed by Henderson Volantis, which is in turn, a subsidiary of HGI, the firm said.

Under any draw down on the facility, Ortac will issue subscription notices to Darwin and allot to Darwin new company shares.

The subscription price for the shares will be at a 5 per cent discount to an agreed reference price determined during 15 trading days following the receipt of a subscription notice.

There is also an over-allotment facility available to Ortac, under which it may authorise Darwin to increase the amount of the draw down, the company said.

Alongside the equity line facility, Ortac has entered into a warrant agreement with Darwin on May 11 for it to subscribe to up to 20 million shares, exercised at 1.25 pence each at any time before it expires in 36 months.

Broker Seymour Pierce said that with the £7.8m cash the company has in the treasury at present, this new facility provided management with a substantial and flexible financing option as it evaluates Sturec.

Seymour Pierce kept its target price for Ortac shares unchanged at 4 pence.

 

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