the announcement is worth reading a few times, and then worth reading between the lines.
Capital raising & conv of debt approved at general meeting
Document date: Wed 19 Jun 2002 Published: Wed 19 Jun 2002 15:50:05 Document No: 218106 Document part: A Market Flag: N Classification: Results of Meeting TUART RESOURCES LIMITED 2002-06-19 ASX-SIGNAL-G
HOMEX - Perth
+++++++++++++++++++++++++ Set out below is a summary of the capital raising and debt conversion undertaken to date by the Company pursuant to the resolutions passed at the Company's general meeting of 30 April 2002. The information below reflects the various appendix 3B announcements released to date.
Since the approval of 30 April 2002, the Company has been successful in raising a total of $648,516 at 1.5 cents per share in new equity capital for working capital purposes pursuant to resolution 2 approved at the general meeting. Of the monies raised part of the monies were used to repay interim funding received between the notice to shareholders being dispatched and the date of the meeting, with the balance available to meet ongoing funding requirements.
The Company has also successfully converted a total of $2,113,294 of debt into shares at 1.5 cents per share pursuant to resolution 5 passed at the general meeting.
Regrettably, Union Pacific Trading Pty Ltd were unable to procure an underwriter for the placement component of the proposed capital raising, although a part of the funds raised were from parties introduced by Union Pacific, and Tuart is continuing with discussions with other parties introduced by Union Pacific.
The Company has independently been in discussion with a number of parties who have expressed interest in injecting further funds pursuant to the capital raising approved at the general meeting. Unfortunately, however, the Company's share price has for some time been substantially below the issue price approved at the general meeting and as such the Company does not anticipate it will be in a position to raise substantial further funds at that share price.
Similarly, the Company does not propose at this stage to proceed with the Prospectus the subject of resolution 3 at present as it is not anticipated that existing shareholders will be interested in taking up additional shares at 1.5 cents given the current market price.
FUTURE CAPITAL RAISING INITIATIVES
The Company continues to explore a number of possible opportunities to raise further capital including raising additional equity capital, converting further debt into equity, raising additional debt funding and selling assets.
In particular, the Company has received an offer of finance from NexBanc Limited whereby Southern Wine Corporation Ltd, the manager of the Preston Vale Vineyard, can borrow substantial funds to meet vineyard expenses secured against the Preston Vale vineyard, with the loan to be repayable out of the proceeds of wine sales from the 2003 harvest pursuant to the Memorandum of Understanding with NexBanc. The Preston Vale, vineyard currently carries very little debt, but in the current climate for large scale primary production ventures Australian banks are generally reluctant to lend against these assets.
Southern Wine Corporation Ltd also has the opportunity if necessary to convene a meeting of growers to seek additional funding from them, which is currently being assessed.
The Company is also in discussions with a number of parties in relation to the possible sale of various of its mining exploration asset portfolio.
Further to resolution 1 passed at the general meeting of 30 April 2002 the Company has also reinstated its general 15% placement capacity and is looking at various proposals both to convert debt and raise additional capital by issuing shares pursuant to this capacity.
DIAMOND RIDGE VINEYARD
As previously announced, creditors of Diamond Ridge Management Company Ltd approved a Deed of Company Arrangement in relation to that company. The Deed is subject to Tuart raising at least $2,500,000 by placement of shares pursuant to the resolutions passed on 30 April 2002. The Deed is also subject to secured creditors' debts being fully satisfied prior to any distribution to unsecured creditors.
The owner of the land at Diamond Ridge, Western Australian Wine Corporation Pty Ltd has advertised the land for sale (including a substantial portion of unplanted land that is ready for cultivation) at the request of the Commonwealth Bank who hold a first mortgage over that land. Tuart has also been advised that the Commonwealth Bank has appointed a receiver in relation to this debt. Tuart is not responsible for any of the debts of Western Australian Wine Corporation Pty Ltd as they were incurred prior to Tuart acquiring the Nelson Ridge Group of Companies.
Notwithstanding this, Tuart is reviewing a proposal from NexBanc to refinance the Diamond Ridge Project along similar lines to the offer made regarding the Preston Vale Project, to determine whether it is in the interest of shareholders.
In any event, Tuart is confident that an orderly sale of the vineyard land will enable secured creditors to be repaid in full.
Hope Estate had indicated prior to the commencement of harvest that they would accept a further 214 tonnes of red grape varieties however just prior to picking they advised that due to a shortage in storage facilities they could not proceed with the transaction.
