Dual-listed Ipsa will, in two weeks’ time, seek out shareholder approval for the sale of its sole operating asset in an attempt to avoid administration.

The group, which on Tuesday explained to shareholders the rationale behind its plans to sell its UK holding company Blazeway Engineering, which owns Newcastle Cogeneration (NewCogen), aimed to gather shareholders at a general meeting on February 16 to vote on the proposed sale.

“Our efforts have continued to seek ways to secure the survival of the company for the benefit of all shareholders,” CEO Mark Otto said in a notice to shareholders on Tuesday.

Last week, Ipsa announced the plans to raise working capital and avoid sending the South African operating subsidiary into business rescue in the absence of other funding solutions in a tight timeframe.

“Following a marketing exercise conducted by Ipsa to seek a buyer of all of or a significant interest in NewCogen, which to date has not resulted in any offer acceptable to the company, an unsolicited offer has been received from Sloane Corporation, which has agreed to assume responsibility for settling the majority of the company’s creditors with a few exceptions, including Ethos,” he explained.

Ipsa’s working capital and creditor pressure had deteriorated further after a mechanical failure of one of NewCogen’s gas turbines in November, following which, Sloane, owned and operated by former Ipsa director Peter Earl, who left in July last year, agreed to acquire the operation for £1.86-million – £50 000 in cash and the balance to be settled through noncash considerations.

Should shareholders shelve the sale proposal, Ipsa and NewCogen would enter into loan agreements with Sloane to repay all amounts already invested.

Sloane had already paid £50 000 towards NewCogen’s outstanding liabilities and agreed to set aside £280 000 to be drawn down and used to settle some of NewCogen’s creditors and obligations.

The independent power plant developer reiterated its “extremely” tight working capital and that, as it remained reliant on the leniency of its creditors, it risked heading for administration should it fail to obtain suitable funding solutions.

“The transaction, if completed, will release Ipsa from a significant portion of its outstanding liabilities. This will, in turn, place the company in a stronger position to meet all of its remaining obligations to creditors – most notably, Ethos Energy Italia – out of other asset disposals, with any residual balance for shareholders, as Ipsa turns itself into a cash shell that will seek a reverse takeover,” chairperson Richard Linnell previously commented.

Despite the sale, the estimated £3.2-million owed to Ethos would leave Ipsa’s financial health in a critical state.

However, the company would focus on satisfying its remaining creditors through the sale of the balance of plant associated with the previously sold 701DU turbines and the collection of the receivable from power plant operator Rurelec.

As part of a 2013 deal that saw Rurelec acquiring two gas turbines from Ipsa for £16.1-million, the Latin America-focused group had been paying Ipsa’s primary creditor Ethos in installments.

Ipsa’s shares remained suspended on the London and Johannesburg bourses pending the release of its financial accounts for the year ended March 31, 2015, and the interim periods to September 30, 2015.