Serabi seeks restructure

02/01/2009 Robert Tyerman

Hard-pressed Brazilian gold play Serabi Mining proposes a hefty share equity write-down as it contemplates further fundraising.

The AIM-quoted company, which is focused on projects in Brazil’s Jardim do Ouro district, told the market in November it was in talks with potential bidders for the whole company or some of its assets, but, so far, nothing concrete has emerged. Serabi, advised by Numis Securities, says equipment delivery delays at its Palito mine had hit production and forced a strategic review by chairman Graham Roberts and fellow directors, who concluded further ‘substantial development’ would be needed – requiring new capital.

Meanwhile, collapsing stock markets were making capital raising an ever tougher proposition. Serabi’s shares, which were floated in 2005 at 30p and hit 54.5p the following year, have traded below their 10p par value since September and now languish at a mere 1.25p, but company law precludes equity raising below par.

For that reason, the company wants to wants to subdivide and re-classify each of its 10p ordinary shares into one new ordinary share with a new par value of 0.5p and one ‘effectively valueless’ deferred share with a 9.5p par value and no rights to votes or dividends. This would leave a clear field for as yet un-issued, but authorised shares to be subdivided into 20 new ordinary shares with a 0.5p par value.

Serabi’s directors say they intend to vote their shares, amounting to a combined 27.9 per cent of the company in favour of the restructure at a special shareholders’ meeting on 28 January.

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