Aim-listed Beacon Hill Resources is proposing an up to €5-million open offer focused on reducing the dilutive impact of its restructuring on existing shareholders and to rapidly develop its flagship Minas Moatize coking coal mine, in Tete province, Mozambique, into a profitable Tier 1 cash cost producer.

The open offer is scheduled for early 2015, subject to the passing of all resolutions by the Beacon Hill shareholders at its forthcoming general meeting on December 17.

Beacon Hill chairperson Justin Farr-Jones last month said that he had been in constructive dialogue with the company’s debt holders and a number of its private and smaller shareholders about the fairest method for such shareholders to participate positively in the recapitalisation and restructuring of Beacon Hill.

The open offer of new ordinary shares in Beacon Hill will give priority to existing private and/or smaller shareholders to maintain a meaningful level of investment and to participate at the same price as the envisaged $14.5-million institutional fundraising early this year, which is a key condition precedent for the new $20-million debt facility from the Development Finance Institution (DFI).

An understanding has also been reached with Vitol Coal SA to postpone the repayment of $4.1-million of its existing $10-million senior debt facility, from January 30 to March 31, subject to shareholders approving all resolutions at the general meeting.

“The inclusion of an open offer prioritising existing smaller shareholders together with a loyalty warrant package, alongside Vitol’s repayment extension, ensures that we now have a comprehensive plan in place to address our existing shareholders’ concerns, recapitalise the group’s balance sheet and maintain the company’s status as a going concern, while we seek final credit approval and satisfaction of the remaining conditions precedent for the new debt facility from the DFI,” says Farr-Jones.

Beacon Hill adds that the company’s independent directors still believe strongly that it is highly likely that it will be forced into administration if all of the proposed resolutions are not duly passed.