A relief rally on new short-term funding drives gas storage play Infrastrata (INFA:AIM) 82.2% higher to 0.82p.
The market had effectively priced the company to go bust after it revealed on Wednesday that it needed an injection of funds in January to continue as a going concern.
STAY OF EXECUTION
A £300,000 facility with fellow AIM constituent Baron Oil (BOIL:AIM) takes care of immediate working capital needs (at a 6% interest rate) but only represents a stay of execution.
The announcement comes alongside otherwise fairly irrelevant full year numbers from the loss-making company covering the 12 months to 31 July.
The company needs another £3m to progress the front end engineering and design of its Islandmagee gas storage project in Northern Ireland.
This section of today’s announcement should also make for a sobering read for investors.
It reads: ‘The board aims to raise additional finance to repay the Loan before 30 April 2017. However, in the event that the loan were to convert to an on-demand facility and Baron subsequently demanded repayment of the loan, then in the absence of additional financing to allow for repayment, the enforcement of Baron's security arrangements would likely result in the value attributable to shareholders being severely reduced or potentially becoming nil.’
HIGH HOPES
The company began life as a spin-off from Egdon Resources (EDR:AIM) in January 2008 when its main project consisted of a plan to build huge natural gas storage chambers in Dorset. Then known as Portland Gas, its ambitions here were thwarted thanks to a lack of project finance.
