Resources Prima says $2m loan will stave off bankruptcy

A $2 million convertible loan provides Resources Prima Group with immediate financing to address going concern issues, despite a condition that imposes an 18 per cent interest if shareholders disapprove of conversion, the Indonesian coal miner said in response to queries by the Singapore Exchange (SGX).

The deal is likely to be approved as the company's executive chairman and chief executive Agus Sugiono controls a 40.5 per cent stake and has undertaken to vote in favour of the conversion of the loan to shares, it said on Tuesday night.

On Aug 6, the suspended Catalist-listed Resources Prima entered into an agreement with Mr Ang Liang Kim, a substantial shareholder, to borrow up to $2 million under a convertible loan.

Under the deal, it agrees to convert the full amount of the drawn-down loan into shares at a conversion price of 0.1 cent a share when trading of the company's shares resumes.

The loan will bear zero interest if shareholders give their approval, but interest of 18 per cent a year if they do not approve.

In its response to SGX, the company said it faced a shortage of cash and financing to continue operations after its main operating subsidiary PT Rinjani Kartanegara went bankrupt last year. Without the loan, its board would not be able to sign off on financial statements on a going concern basis and may be required to put the firm into bankruptcy proceedings, it added.

A version of this article appeared in the print edition of The Straits Times on September 06, 2018, with the headline 'Resources Prima says $2m loan will stave off bankruptcy'. Print Edition | Subscribe