TIDMAGTA
RNS Number : 3123U
Agriterra Ltd
29 July 2022
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
29 July 2022
Agriterra Limited
('Agriterra' or the 'Company')
Agriterra Limited / Ticker: AGTA / Index: AIM / Sector:
Agriculture
Debt Refinancing and Working Capital Loan
Agriterra Limited, the AIM-quoted African agricultural company,
is pleased to announce a significant injection of new funds into
the Company from its major shareholder, which will enable:
-- the immediate repayment of an existing, high cost, US$6.1m
working capital facility owed to an external banking institution;
and
-- cheaper financing of grain purchasing in Mozambique without
making use of local external banking institution working
capital/overdraft facilities (which typically carry higher interest
rates, reflecting the local price of borrowing in Mozambique).
Highlights
-- Agriterra has today secured new debt funding from its
majority shareholder, Magister Investments Limited ("Magister"), in
an aggregate amount of US$7.9m (the "Magister Loans").
-- The Magister Loans comprise two unsecured facilities of
US$6.1m and US$1.8m respectively and are being provided to the
Company immediately, in full, in order to facilitate the Company's
wholly owned subsidiary, Desenvolvemento E Comercializacao Agricola
Limitada ("DECA") financing:
Ø the full repayment of DECA's existing US$6.1m debt facilities
with First Capital Bank, S.A. (the "FCB Facility") (the "External
Repayment"); and
Ø grain purchasing in Mozambique without making use of local
bank working capital/overdraft facilities.
-- Management estimates that this debt refinancing will enable
the Company to save approximately US$600,000 in annual interest and
fee costs during the first year.
Background
The External Repayment (which is being facilitated by the
proceeds from the Magister Loans), will remove material borrowing
costs from DECA's operations and therefore allow the division to
more efficiently fund its purchasing strategy. Had the facilities
been in place at 1 April 2021, the Group would have saved
US$479,000 for the year ended 31 March 2022.
The material terms of the Magister Loans are as follows:
1. US$6.1m Convertible Facility
-- Duration of 36 months, with principal and interest (as
described below) due at the end of the term, to the extent not
converted (as described below).
-- Interest will be charged on this facility at the rate of
SOFR* + 6% per annum (or part thereof, if applicable), on a daily
basis, be compounded quarterly and paid in full on the maturity
date. There are no arrangement fees payable, and prepayment is
permissible at any time, in part or in full. The current interest
rate charged on the FCB Facility is 17.6%, being the Mozambique
Prime lending rate minus 3%.
(*nb SOFR is currently 1.53%)
-- Upon the occurrence of an event of default, Magister shall
have certain enhanced recovery rights as follows (note these rights
are similar to those that were granted to Magister as part of the
prior arrangement entered into with Magister to guarantee the FCB
Facility, as announced on 15 July 2021, the "Magister Recovery
Rights"):
Ø to require the Company to issue new ordinary shares in the
capital of the Company to Magister, equal in value to the Magister
Loan plus 8% per annum (the "Restitution Amount"), at the
prevailing market price of the Company's shares at such time;
Ø if compliance with the foregoing is not possible, to require
the Company to create and issue to Magister new "8% preference
convertible" shares in the capital of the Company (convertible into
ordinary shares in the Company at a price equal to the prevailing
market price of the Company's shares), equal in value to the
Restitution Amount;
Ø if compliance with the foregoing is not possible, to require
the Agriterra group to dispose of fixed asset(s) owned with a value
equal to the Restitution Amount (after transaction costs),
determined by independent valuation, to a 3(rd) party and to then
pay such sale proceeds to Magister; and
Ø if compliance with the foregoing is not possible, to the
extent legally permitted, to require Agriterra to take such steps
as are necessary to require the transfer by a subsidiary of
Agriterra of asset(s) with a value equal to the Restitution Amount,
determined by independent valuation, to Magister.
2. US$1.8m Convertible Facility
-- Duration of 12 months, with principal and interest (as
described below) due at the end of the term, to the extent not
converted (as described below).
-- Interest will be charged on this facility at the rate of
SOFR* + 6% per annum (or part thereof, if applicable), on a daily
basis, be compounded quarterly and paid in full on the maturity
date. There are no arrangement fees payable, and prepayment is
permissible at any time, in part or in full.
(*nb SOFR is currently 1.53%)
-- Upon the occurrence of an event of default, Magister shall
benefit from the Magister Recovery Rights as described above.
Magister will have the right on one or more occasions to convert
all or part of the Magister Loans then outstanding (plus a
pro-rated amount of accrued interest) into new ordinary shares in
the capital of the Company at the prevailing 10-day VWAP of the
Company's shares the day on which the conversion notice is issued,
subject to all applicable laws and regulations, and discussion with
the Company's Nominated Adviser.
Related Party Transaction
Entering into the Magister Loans constitutes a related party
transaction under Rule 13 of AIM Rules. In this context, Caroline
Havers, Neil Clayton, Rui Sant'ana Afonso and Sergio Zandamela
(being the Directors on the Board who are considered to be
independent) confirm, having consulted with the Company's nominated
adviser, Strand Hanson Limited, that they consider that the terms
of the Magister Loans to be fair and reasonable insofar as its
shareholders are concerned.
Caroline Havers, Chair, said: "We are delighted to be in a
position to repay DECA's external funding and benefit from cheaper
working capital to fund grain purchasing, with the continued
support of Magister. This balance sheet realignment should enable
DECA to develop and benefit from a strengthened purchasing
position, free from the high local costs of the previous borrowing
in Mozambique. Again, we thank our majority shareholder, Magister,
for their support in providing this new debt funding, which
demonstrates their ongoing commitment to and faith in our
operational plans and management team."
** ENDS **
For further information please visit www.agriterra-ltd.com or
contact:
Agriterra Limited Caroline Havers
caroline@agriterra-ltd.com
=========================== ===============================
Strand Hanson Limited Ritchie Balmer / James Spinney
Nominated & Financial +44 (0) 207 409 3494
Adviser
=========================== ===============================
Peterhouse Capital Limited Duncan Vasey / Eran Zucker
Broker +44 (0) 207 469 0930
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