How things can change, and what to do when the money runs out

HEAD-HUNTED, PRE-AIM IPO, TO JOIN THE BOARD OF A JERSEY COMPANY WITH AN IRON-ORE BUSINESS IN WEST AFRICA. THE EVENTUAL CESSATION OF ANCHOR-INVESTOR FUNDING LED THE BOARD TO PUT THE COMPANY INTO LIQUIDATION. A NINE-YEAR JOURNEY

My involvement

This nine-year journey involved working with an iron-ore exploration company with a fundable large-scale project in Guinea, West Africa. The project was ultimately to require c.US$ 3 billion of capital for infrastructure, including 380 km of railway to the coast and a new deep-water port to accommodate Panamax vessels and overcome the limitation of the existing ports in shallow water requiring trans-shipping. IPO and subsequent fund raising were initially successful.

2011 saw a new strategic investor from China appear on the share register, it also saw the iron-ore price collapse, and the Ebola epidemic render the large-scale project for the time being not commercially viable. This resulted in a complete overhaul of the executive team at the insistence of the new investor, who influenced the selection of the successor CEO/CFO. I dealt with consequential issues relating to employment contracts and share-related components (outgoing and incoming executives).

I then went on to develop the relationship with the strategic investor on whom over time the company became wholly reliant for funding its operating costs, while awaiting price recovery and the return of viability to make the large-scale project fundable again.

Successful discussions with the Takeover Panel lead to dis-application of the requirement for a general offer, based on a whitewash approval from the majority of shareholders, enabling further equity capital to be raised from the investor with the effect of taking it from below 30% to over 50%.

In the meantime, the company identified a viable small-scale ferronickel project capable of achieving early revenue and provide financial self-sufficiency for the company. This required an overhaul of the Mining Convention which was eventually secured.

At the end of 2018 the company needed additional funding of US$ 5 million over two years to achieve sustainable revenue in 2021 and self-sufficiency. I assumed the company Chairmanship to lead the negotiations with the strategic investor for the funding. The day before my scheduled departure for Beijing to negotiate terms, the strategic investor stated it would not be providing any further funding and pulled out.

With no other available options, the board applied for and obtained from the Court an Order to wind up the company.

Outcome

A nine-year journey with a sad end when the goal was so clearly insight. The cessation of funding by the anchor investor required the board to take the unavoidable but painful decision to apply to the Court for a winding up order, on the basis that the company was no longer able to raise the funding needed for the short remaining part of its journey to financial viability. The saddest outcome of my professional career.