LionGold to receive investment that will relieve debt

Catalist-listed LionGold Corp, one of the firms involved in the penny stock crash of 2013, is set to receive an investment to help with its outstanding debt, it announced in a Singapore Exchange filing on Friday.

Under a subscription agreement on Dec 28, Yaoo Capital Pte Ltd will subscribe for up to 21.8 billion new ordinary shares in LionGold at the issue price of 0.1 Singapore cent each, equal to the volume weighted average price of its shares on Dec 28.

LionGold said Yaoo Capital and its directors - private investors from China - "are of the view that there is untapped and discoverable potential in the group's core gold mining project in Ballarat, Australia" and will assess the situation with a view to strengthening its core business, while also looking at other areas of growth.

The aggregate consideration will be equal to the outstanding principal amount and accumulated interest that LionGold owes under a debt restructuring agreement dated June 29, 2017, as of the subscription's completion date. As the consideration will be fully set off against the outstanding debt, there will be no proceeds raised.

Subject to the terms and conditions of a deed of assignment to be entered into, Yaoo Capital intends to take on all the rights and obligations of the creditor and manager in LionGold's debt restructuring agreement.

With the completion of the subscription agreement, LionGold will be deemed to have repaid the debt.

Assuming that the maximum number of shares are issued, the subscription shares will represent a 71.5 per cent stake, resulting in a transfer of controlling interest to Yaoo Capital.

LionGold will be convening a special general meeting to seek shareholder approval for the subscription and a whitewash waiver.

Janice Heng

29 December 2018