Karelian Diamond Resources loan note amended and converted

The AIM-traded firm raised £0.24m on 10 December 2019 through a subscription of £0.12m at 4p per share, and the issue of an unsecured convertible loan note to raise the other £0.12m.

It said the fundraise was undertaken with lender Fredrik Björnberg, who it described as a member of a “prominent family” in Finland which previously owned the Luikonlahti copper mine in the Kaavi area, and founded the company which originally discovered the Lahtojoki diamond deposit over which Karelian now holds a mining concession.

The convertible loan note had a term of three years, and attracted interest at a rate of 5% per annum, payable on redemption or conversion.

Karelian said the note, including the total amount of accrued but unpaid interest, was originally convertible at a price of 10p per share.

On 29 November this year the company announced, as part of its final results for the year ended 31 May, that it had started discussions with the lender to extend the term, or conversion, of the note, saying at the time that it had “a number of options”.

It also stated that the note holder was both a supportive and significant shareholder in the company, with the board “confident” that the discussions would be satisfactorily concluded.

Fredrik Björnberg was currently interested in three million Karelian shares, representing 3.7% of its current issued share capital.

On Tuesday the company said it had agreed with the lender to vary the terms of the convertible loan note, amending the conversion price down from 10p per share to 4p.

The board noted that the revised conversion price represented an 81% premium on its closing mid-market share price on 19 December.

Following that variation, the lender immediately exercised their conversion rights, submitting a notice of conversion.

At the revised conversion price, the loan and all accrued interest totalling £0.14m as at 10 December was convertible into 3.45 million new shares.

“Following the issue of the conversion shares, Mr Fredrik Björnberg is expected to have a beneficial interest in a total of 6.45 million ordinary shares in the company, representing 7.63% of the enlarged issued share capital of the company on admission,” the board said in its statement.

At 0809 GMT, shares in Karelian Diamond Resources were down 9.09% at 2p.

Reporting by Josh White for Sharecast.com.