Coal explorer Pan Asia failed to sell 95 per cent of the shares on offer in a capital raising last month — and yesterday admitted its underwriter doesn’t want them either.

The underwriter is controlled by Pan Asia’s chairman, Peter Chai.

Stockhead reported last month that Mr Chai was set to control 55.11 per cent of the coal explorer after his underwriter was supposed to mop up the remaining stock.

Pan Asia (ASX:PZC) tried to raise $1.2 million in September from a 1-for-1 rights issue, but got only $55,442.

The underwriter, an organisation called Investment Advisers Alliance (IAA), was supposed to pick up the slack in the month to October 10.

It hasn’t and is now in default.

“IAA has not subscribed for any shortfall shares pursuant to the underwriting agreement and is therefore in default,” Pan Asia told investors.

However, Mr Chai told Stockhead the default was a misunderstanding: he thought he had 90 days instead of 30 after the rights issue closed to find buyers for the remaining stock.

He says he has several stockbrokers who are keen to buy into the Pan Asia issue for their clients, and he also wants more shareholders on the register.

“We’re trying to expand our shareholder base,” he said, adding that the register would be “more proper” with a larger varriety of shareholders.

According to its annual report, Mr Chai is the only director to own shares in Pan Asia, holding 63 million via indirect interests.

The company has issued 736 million new shares at 0.3c and 0.2c since July this year, almost doubling the number of shares on issue by June 30.

Pan Asia recorded a loss this year of of $611,591 and a net operating cash outflow of $824,599.

Its net liabilities total $5 million, and it’s selling off assets.

In June a major board upheaval saw the exit of chief executive Alan Hopkins, director Luke Martino and company secretary Louisa Martino.

Mr Chai, Sean Chai and Gary Williams joined the board, and Brett Crowley became company secretary.

Mr Chai says there’s nothing suspicious behind the board changes.

“It was a normal change of the guard,” he said. “There’s no turmoil. We have the same plan as the board had last year.”