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Ncondezi Energy – contender for AIM’s most expensive loan extended, but it’s still cash crunch ahoy

By Steve Moore | Thursday 11 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Writing yesterday on Ncondezi Energy (NCCL) I noted its “Project and Funding Update” including even “sufficient funding until the end of May… subject to the extension of the Shareholder Loan repayment date”. We now have a “Shareholder Loan Extension” announcement.

This states that “the company has been able to agree an amendment to the repayment terms of the Shareholder Loan, with repayment now due on 2 September 2017. This provides the company with more time to progress the project and better develop loan repayment options in addition to raising additional working capital by the end of May. All other terms of the Shareholder Loan remain the same”.

As noted yesterday, the “Shareholder Loan” is from directors and management of Ncondezi as well as some significant external shareholders and the amount repayable has “increased from 1.5x to 2.0x the loan amount outstanding ($2.2 million)… in accordance with its terms”.

Those terms included that “if repayment occurs after 10 May 2017, the repayment multiple increases to 2.0x”. The terms have been in place since last summer and a March update included that “the company is engaging with the lenders under the shareholder loan and evaluating all options with respect to its repayment or refinancing”. However, nothing was ultimately delivered in that regard.

Hmmm, is this really currently that uninvestable that the noted terms were unbeatable? If so, I’d suggest it not looking good for shareholders with additional working capital still required by the end of the month! Natch, this currently remains a strongest possible bargepole stock.

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