Shares in Chaarat Gold Holdings Ltd (AIM: CGH) plummeted nearly 50% due to a debt crisis and the resignation of its executive chairman.
Martin Andersson, who was a major shareholder and provider of working capital through Labro Investments, stepped down to avoid potential conflicts of interest.
Andersson will continue to serve as a non-executive director. David Mackenzie is now acting chief executive.
The company has sufficient cash to operate for the next few weeks but lacks the funds to repay the $1.2 million due on the Labro convertible loan in September. These restructuring talks are focused on addressing this issue.
This resignation occurs amid a concerning financial situation, with $38.9 million in convertible loan notes maturing at the end of the month and an additional $1.2 million due by September 30.
With no further drawdowns on such facility currently available, the Company’s current cash balance is c. US$0.6 million, absent any repayment of these facilities, is sufficient for the Company’s ongoing requirements for the next 4-6 weeks.
Chaarat reported limited progress in its discussions with Xiwang International Company regarding a previously announced funding package.
Meanwhile, the company has been negotiating with convertible loan note holders in recent weeks to potentially restructure the outstanding debt.
“Discussions are ongoing, and there is no guarantee of a positive outcome. If negotiations fail, the board will need to consider its few remaining options, keeping its fiduciary duties to protect creditors in mind,” investors were informed.
Due to the uncertainty, shares fell by 1.4p (previous closing price 2.75p) to c1.34p, bringing the company’s valuation to less than £10 million. Over the past year, 85% of the company’s value has been lost.
