Cheshire-based developer Eatonfield Group has called a general meeting to enable it to draw more of its equity facility and prevent it going into administration.
The company has been forced to take the step due to it being unable to draw down the remaining £650,000 of the facility, which was provided with Jenard Properties, which is one of its development partners.
The company recently said the equity drawdown facility arranged with Jenard, to provide working capital for the group, will now run out six weeks sooner than expected in mid-July, because one of its banks had imposed difficult lending terms.
In a statement on the London Stock Exchange this morning, executive chairman Paul Williams said: "Following the most recent drawdown, £650,000 remains available under the facility for the company to draw down at any time until 31 August 2010. However, full draw down of the remaining funds is not currently possible, as the directors do not have authority to allot a sufficient number of shares to satisfy the draw down of the full amount of the facility.
"If shareholders approve the resolutions thereby enabling the directors to draw down the remaining funds available under the facility, as previously notified, the directors expect that this would provide the company with sufficient working capital to mid July 2010.
"The directors are confident that additional equity funding will be made available to the company. If shareholders do not approve the resolutions, the directors will not be able to draw down the remaining funds available under the facility and there is likely to be a shortfall in funding and it is possible that the company would be required to cease trading shortly after the general meeting and enter into administration. Accordingly, it is extremely important that shareholders vote in favour of the resolutions.
"The directors believe that the resolutions are in the best interests of the company and shareholders as a whole. The directors unanimously recommend that shareholders vote in favour of these resolutions as they intend to do in respect of their own beneficial shareholdings amounting in aggregate to 85,500,000 shares, representing approximately 29.26% of the current issued share capital of the company."
The general meeting is being held at 10am on 28 May 2010 at the company's offices in Haycroft Farm on Peckforton Hall Lane in Spurstow, Tarporley.