ECT Finance Limited (ECTF), a subsidiary of ASX listed Environmental Clean Technology Limited (ASX: ECT), has inked an agreement to provide security for A$1 million loan that it has applied to the loan portfolio of equity lending facility.
In July 2017, ECTF executed the equity lending facility (ELF) for the conversion of options into shares via the issue of limited resource loans secured against the shares. The company has adopted this method of financing to minimise the requirement for fresh equity raising while maintaining the flexibility of ELF loan and security book.
As per today’s announcement, proceeds from A$1
As per the today’s announcement, ECTF will utilize the loan proceeds to partially clearly off the wholesale loan balance outstanding from ECT. Subsequently, it will assist ECT to fund the expenses relating to operations and capital works to be taken in Victoria and India commercial projects.
ECT Finance Chairman, Jim Blackburn commented, “The company’s current balance of ~A15.54 million wholesale loan and an existing security value of A$15.62 million reflects the significant opportunity for the company to bring forward loans repayment via this method.” said that the company is constantly looking forward to the alternative options where current loan book can be securitised ahead of individual repayments.
The company stated that the wholesale loan balance to ECT will be A$14.54 million post securitisation loan fully drawdown. Whereas, security backing is expected to reach approximately A$15.45 million, from current A$15.62 million.
The management believes that this type of lending method may also be relevant when it the company would have to fund the cash component of the AUD 3.5 million project bond for its India project. The timeline for this is expected to fall after the signing of the Research Collaboration Agreement (RCA) and before the initial funding by its project partners, expected in coming months.
Mr. Blackburn told its shareholders that there are sufficient alternatives available with the company to furnish the needs of the India project bond and to ensure that equity capital raisings are the last option that it will take.
About India Project: India Project is the company’s research and development project that aims at advancing ECT’s production technologies- Coldry and Matmor. For this purpose, ECT has partnered with India’s national lignite authority-NLC India Limited, and India’s national iron ore authority-NMDC Limited to fund and execute the project jointly. Both the authorities will together contribute approximately AUD 30 million in capital funding which will be aligned by ECT through the issue of bond.
In today’s trading session, the stock of Environmental Clean Technology Limited traded flat. However, 706,828 shares changed hand on 7 December 2018. ECT stock last traded at $0.012.
Looking to the past performance of the company, we can see there has been decent improvement in the stock price of the company. Its because ECT’s share price has gone up by 9.09% over the past one year but to the contrary, it has fallen by 14.29% in the past three months as at 7 December 2018.
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