Months of struggle ended for Lignol Energy (TSX: V.LEC, Stock Forum) when the company reported today that although management had entered into negotiations with its largest shareholder and secured note holder, DCF Capital, regarding terms of a proposed financing and possible sale of company assets, DCF had walked away from the table and appointed The Bowra Group as Receiver of the company.
According to the news release, Bowra Group, was put in place as receiver on August 22, 2014 and currently holds and controls the company's assets and undertaking.
It was stated that the company management, directors and certain shareholders were in position to provide sufficient bridge financing in order to allow the company to survive long enough until a larger financing or merger or sale transaction could be secured and had entered into discussions with DCF to negotiate terms to accommodate said funding.
This culminated in a presentation last week by management illustrating conditional terms of a proposed transaction that would see the assets and operations of Lignol sold, and if successfully executed, leave the company debt free with a modest equity value after having retired the DCF note at a discount.
Negotiations broke down over the allocation of debt versus equity and DCF announced the appointment of a receiver shortly thereafter.
Although Stephen White has resigned from the Board of Directors as a result, the remaining five members of the board and executive officers will remain, for the time being, to work with the receiver to achieve value for all shareholders.
As a result, the company will not be able to file audited financial reports for the year ended April 30, 2014 on August 28, 2014.
The market will be notified as further developments unfold.
Lignol Energy was in the news recently when the Vancouver-based company provided a financial and commercial update at the beginning of August.
Currently there are 164.0m outstanding shares with a market cap of $2.5 million.