FUNDING UPDATE – DISCUSSIONS REGARDING A NON-BINDING FUNDING OFFER ARE ONGOING


GEOSENTRIC OYJ      STOCK EXCHANGE RELEASE March 16, 2012 at 16:50

 

 

FUNDING UPDATE – DISCUSSIONS REGARDING A NON-BINDING FUNDING OFFER ARE ONGOING

 

As previously announced, the Company did not raise the full targeted amount in its directed rights offering last year and, as a result, the Company has been continuing to explore all options available to it to ensure that it has sufficient liquidity to secure its operations through 2012 and beyond. The Company’s current cash resources are only sufficient to finance the business into Q1 2012 and any alternative funding options should therefore be concluded as soon as possible.

 

To address this issue the Company has proposed issuing a secured interest-bearing loan note and has been in contact with its known major shareholders to seek their interest in such an instrument and to request their feedback on any alternative terms or instruments that may be more acceptable or attractive to them. On March, 6, 2012, the Company reported that, although it had not received any definitive investment commitments, it had received a non-binding proposal from an independent advisory business representing a number of investors for a funding of up to €250,000. On March 9, 2012, the Company reported that it was been engaged in active discussions on this proposal to answer a number of questions that were raised and to secure acceptable terms for this proposed investment. Based on these discussions the Company has submitted a counter proposal to the independent advisory business seeking to address their requirements while securing the best possible terms for the Company. Although the Company has not yet received a response to its counter proposal, the Company is aiming to finalise a definitive investment agreement in the next few days with a cash remittance shortly thereafter. The Company will update the market again as soon as these discussions are completed and in any event no later than March 26, 2012.

 

The Company has already announced and confirmed directly with the major shareholders that, in the absence of securing any viable alternatives, the Board would be left with no choice other than to seek an orderly disposal of the Company’s assets (which are comprised almost entirely of its 24% equity investment in GHNV), which ultimately could lead to a winding up of the Company. Given the previously reported first preference of €5 million that Schroders has over the assets of GHNV on any disposal or winding up, this is likely to lead to equity shareholders of the Company receiving no final capital distribution on a winding up.

 

Meanwhile the Board continues to retain and pursue, where appropriate, all realistic strategic options open to it in order to raise the necessary funding including another directed share offering, further cost cutting measures where possible, asset sales and other possible sources of external finance.

 

 

GEOSENTRIC OYJ

 

Board of Directors

 

Distribution:

NASDAQ OMX Helsinki

Principal news media