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ZYL Limited rings in recapitalisation, project and board changes

Published: 02:05 02 Apr 2013 BST

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Anthracite project developer ZYL Limited (ASX:ZYL) has settled all outstanding legal disputes with the Mbila project vendors paying their legal costs and transferring its current interest in the project to the Mbila vendors.

A placement of 68 million shares to Prestige Glory Limited will be undertaken at $0.02 to raise $1.4 million.

Prestige Glory was formed to acquire or invest in international resource projects of interest and value to China and is backed by a group of wealthy Chinese investors.

Prestige Glory will also undertake an underwritten non-renounceable rights issue, through a prospectus issue, on the basis of at least one ZYL share for every two ZYL shares held at the record date at a minimum issue price of $0.02 per share.

Prestige Glory will fully underwrite the rights issue or procure that the rights issue is fully underwritten. The issue will raise a minimum of $5.6 million net of costs.

Bridging Facility

The maturity of the existing bridging facility has been extended for a further 6 months, until 30 September 2013. In addition ZYL has commenced discussions to extend the facility from $2 million to $3 million.

Convertible Note

The company intends to to raise further capital through the issue of convertible notes.

The bridging facility will be repaid using the proceeds of the convertible notes. It is proposed that 60 convertible notes be issued, each with a face value of at least $100,000, to raise $6 million.

The convertible notes will mature after a period of 3 years from date of issue at a coupon rate of 12% per annum and are convertible at $0.03 per ZYL share.

As part of the recapitalization, Prestige Glory will, on a best endeavors basis, seek to subscribe for 100% of the convertible notes.

Revised Capital Structure

Following completion of the placement, the rights issue and the convertible notes, the company will have raised approximately $13million and the Mbila vendors and Prestige Glory will hold approximately 35% and 21% respectively of the issued share capital of ZYL on a fully diluted basis.

The percentage shareholding of Prestige Glory can increase to approximately 34% should it take up all of the shares to be issued pursuant to the rights issue.

The shares subscribed for in the placement by Prestige Glory and the shares issued to the Mbila Vendors pursuant to the Settlement Agreement will be escrowed for 12 months.

Ownership of the Projects

Following the completion of the various conditions precedent in Kangwane Beneficial Renegotiation announced 3 February 2013, the York Transaction announced on 17 February 2013 and the Settlement Agreement, ZYL will own 50.1% of the Kangwane Central Project, 50.1% Kangwane North Project, 70% of the Kangwane South Project and 74% of the Mbila Project respectively.

Board Restructure


After having reached settlement with the Mbila Vendors, Glenn Whiddon has agreed to resign from the Board of ZYL.

It is proposed that a representative of Prestige Glory will be appointed to the board as the non-executive chairman.

John Beck, a senior South African businessman, will become a consultant to ZYL. Mr Beck’s involvement with ZYL will facilitate the development process and provide access to otherwise unavailable opportunities.


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