Mining investment group CVI Corporation has collapsed after posting a loss of over $1 million earlier this year.
The collapse comes after the company had attempted to undergo a recapitalisation, and changed its name from Citiview Corp last year after investing in Velvogen, a South African coal company.
CVI announced yesterday that Jack Robert James of Palisade Business Consulting had been appointed as the company’s voluntary administrator. A meeting of creditors will be convened within eight days.
James was contacted by SmartCompany this morning but declined to comment. CVI was also contacted, but its phone lines were disconnected.
Last year, shareholders approved a number of transactions including a capital raising for the issue of up to 200 million ordinary shares at a price of $0.01 per share. However, the company has faced some problems since then.
Last year, its shares had been suspended after failing to lodge full year accounts for the year ending December 2009. It eventually lodged its accounts, but shares remained suspended.
In April the company said that the Australian Securities and Investments Commission had issued an interim order on its prospectus designed to recapitalise the business, and that no offers, issues, sales or transfers of securities under the prospectus could be carried out.
The ultimate outcome was that ASIC issued a final order on the prospectus, with the company saying it would submit a new prospectus “in the near future”. However, the ASX would not grant the company a waiver for further applications.
A meeting of shareholders was called to authorise the recapitalisation, which eventually occurred in August.
The original prospectus contained a number of investment risks, including a dependence on third party technology, a risk that it may not complete its recapitalisation proposal. It also said the company’s ability to operate as a going concern is “dependent on successful completion of the Capital Raising pursuant to this Prospectus”.
It also warned prospective investors that investing in the company involves risks that may be higher than risks associated with some other companies.
Chief executive Mark Smyth wrote to prospective investors that it was looking to raise $2 million, in order to pay various costs, provide funding to Velvogen and look for new investment opportunities.
CVI was incorporated in May 1987. Its name was changed to Citiview Energy in 1996, then Citiview Corporation in 2000. It was then changed to CVI Corporation late last year.
Interim funding measures had been identified during April to June 2010, ending with a loan agreement with Celtic Capital.
The company invests in the minerals and energy sectors with companies that “have strong growth potential”. However, after taking a controlling stake in Velvogen, it said its immediate focus was on developing this subsidiary.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
