MagIndustries' (TSE:MAA) shares tanked more than 35% in Friday morning trading after it reported that TSC Capital will in fact not be investing in the company as originally announced in December.
The private placement financing, announced in a letter of intent, was contingent on TSC Capital completing satisfactory due diligence on the company.
"We are disappointed that we could not reach final financial terms with TSC. However, the management team will continue to work diligently with the Company's advisors on the alternative transactions that we are currently assessing," said CEO Rich Morrow.
MagIndustries has retained BMO Capital Markets as its financial advisor to assist the company in considering strategic alternatives. The proceeds from TSC's investment would have been used to meet a targeted debt/equity ratio of 70:30 for financing of the company's Mengo potash project in the Republic of Congo.
The private placement agreed on with TSC was for 222.4 million units at a price of C$0.335 per unit.
As consideration for entering into the letter of intent, MagIndustries issued to TSC 113.5 million common share purchase warrants. Should these warrants be exercised, TSC would have a near 20% stake in the company.
MagIndustries was trading at $0.19 as of 11:56am EST, down by nearly 36%.