TIDMDCP
RNS Number : 0960N
Diamondcorp Plc
20 October 2016
20 October 2016
DiamondCorp plc
AIM share code: DCP & JSE share code: DMC
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", "the Group" or "the Company")
NEW FINANCING FACILITY Totalling GBP700,000
Board Changes
DiamondCorp plc, the Southern Africa focussed diamond mine
development and exploration company, is pleased to announce that,
following the accelerated financing discussions as previously
announced, the Company has entered into a Shariah-compliant secured
convertible financing facility (the "Facility") with Rasmala plc
("Rasmala"), a leading independent investment manager and
shareholder in the Company.
Financing Facility
The Company and Rasmala have agreed to the drawdown by
DiamondCorp of two tranches under the Facility, for a total
principal amount of GBP700,000. The first of the tranches (the
"First Tranche"), in the amount of GBP400,000, is to be drawn down
immediately. The second of the tranches (the "Second Tranche"), in
the amount of GBP300,000, is anticipated to be drawn down in the
near term.
The Facility will mature on 15 December 2016, with the option
for early repayment at DiamondCorp's discretion. The Facility is to
be repaid either in cash or convertible at Rasmala's discretion on
maturity of the Facility (or earlier in certain circumstances as
detailed below) into new ordinary shares at the equivalent of a 30
per cent. discount to the average daily volume weighted average
price of the Ordinary Shares across each trading day from the date
of the agreement of the Facility to the date of conversion.
DiamondCorp will pay a markup on the commodities underpinning the
Facility (whose value is equal to the principal drawn down) at an
equivalent rate of 15 per cent per annum during the eight week
term. The Facility is secured against up to 5,000 carats of
diamonds currently held in inventory and/or to be produced from
operations. Further details of the Facility terms are provided
below.
The proceeds of the Facility will satisfy the Company's
immediate term funding requirement of not less than approximately
GBP500,000, and shall be utilised for working capital purposes,
which, as per previous announcements, the Company urgently required
in order to continue trading as a going concern in the immediate
term.
Board Changes
The Company also announces the following Board changes pursuant
to the terms of the Facility:
Euan Worthington, current Chairman of DiamondCorp, has resigned
from the Board, effective immediately, but shall remain as an
employee of the Company for the immediate future in order to ensure
an orderly handover of his responsibilities.
Chris Ellis, current Non-Executive Director of DiamondCorp,
shall shortly be formally appointed as Independent Interim
Non-Executive Chairman and on or by 31 October 2016. It is
currently intended that Mr Ellis' appointment shall be on an
interim basis to oversee the formal sale process as announced on 18
October 2016 ("Formal Sale Process").
Rasmala has been granted the right to appoint an individual to
the Board of DiamondCorp, subject to satisfactory completion of
terms and in accordance with applicable rules and regulations. The
right by Rasmala is in addition to the continued role of Michael
Toxvaerd as Non-Executive Director of both DiamondCorp and
Rasmala.
Further announcements in relation to the forthcoming changes to
the Board shall be made as appropriate.
Financial and Corporate Update
As also previously announced, and notwithstanding entry into the
Facility, the Company requires an additional equity and/or debt
financing of c.GBP2.5 to GBP3.0 million in the near term to cover
the anticipated cash required to fund operations through to
commercial production. There can however be no certainty that the
Company will subsequently secure the necessary funding solutions to
meet its longer term financial requirements.
Pursuant to the Formal Sale Process, as entered into on 18
October 2016, the Board continues to explore all options available
to the Company in parallel with its discussions to secure
additional funding, including a corporate transaction such as a
merger with or offer for the Group by a third party or a sale of
the Group's businesses.
Consequently, and also pursuant to the terms of the Facility and
in accordance with Rule 21.1 of the Takeover Code (the "Code"), it
is the Board's intention to convene a General Meeting as soon as
possible in order to seek shareholders' approval to provide the
Board with increased authorities to, inter alia, allot and issue
equity securities and to dis-apply statutory pre-emption rights in
the event of a requested conversion of the Facility (in excess of
the current authorised share capital). The passing of the requisite
resolutions are a condition of the Facility. A further announcement
in relation to the publication of the circular to shareholders, and
notice of General Meeting, is due to be made on or prior to 31
October 2016.
Paul Loudon, CEO, commented, "We are pleased to have secured
this new financing facility, which will enable us to sustain our
operations at the Lace diamond mine whilst we conduct our Formal
Sale Process and evaluate all options available to us."
"I would like to take this opportunity to thank Euan for the
contribution he has made to the Company as Chairman since its IPO
in 2007, including financial support in every fund raising and a
deep experience in the London mining capital markets which proved
invaluable at board level. We wish him the greatest of success in
his future endeavours."
"I look forward to welcoming Chris into his new position in due
course and I look forward to working with him during this
challenging stage of the Company's development."
Further Terms of the Facility and Regulatory Disclosures
The Facility is structured as a Shariah-compliant commodity
murabaha agreement with the option to convert.
Under the terms of the Facility, DiamondCorp will pay a markup
on the commodities underpinning the Facility (whose value is equal
to the principal drawn down) at an equivalent rate of 15 per cent
per annum during the eight week term (payable in either cash or new
DiamondCorp ordinary shares at Rasmala's discretion). In the event
of a delay payment, the Company must pay a daily delay payment from
the due date to the date of actual payment on the overdue amount at
a rate of 2 per cent. per annum in addition to the Facility rate of
15 per cent. per annum. This penalty is structured in a
Shariah-compliant manner.
The Company is required pursuant to the terms of the Facility to
convene a General Meeting as soon as possible, with such circular
published on or prior to 31 October 2016, to seek to obtain
shareholder approval to increase authorities to a level considered
sufficient to fulfil its obligations to issue Ordinary Shares to
Rasmala pursuant to the terms of the Facility.
Rasmala shall be precluded from issuing a conversion notice for
any number of new ordinary shares as shall (i) exceed the current
authorised share capital of the Company unless and until increased
by way of the passing of a resolution(s) at a general meeting of
the Company; (ii) result in Rasmala holding in excess of 29.99 per
cent of the issued ordinary shares of DiamondCorp as at the
conversion date; and/or otherwise trigger an obligation to make a
mandatory offer of the Company.
The outstanding principal amounts of the Facility drawn down by
DiamondCorp under the Facility may become repayable (in either cash
or new DiamondCorp ordinary shares at Rasmala's discretion) ahead
of maturity of the Facility in the event that, and at Rasmala's
discretion, the Company: (i) has released one or more announcements
pursuant to Rule 2.4 of the Code ('the announcement of a possible
offer') and/or (ii) has released one or more announcements pursuant
to Rule 2.7 of the Code ('the announcement of a firm intention to
make an offer').
Rasmala shall put in place appropriate confidentiality
provisions to ensure that members of its board and staff who, under
all applicable rules and regulations, are classified as insiders
for the purpose of inside information in relation to the Company
are appropriately segregated from the team authorised to deal with
the Facility and the arrangements arising thereunder.
An administration fee of GBP25,000 in respect of the First
Tranche has become payable to Rasmala, and a further administration
fee of GBP25,000 in respect of the Second Tranche will be paid by
the Company pro rata to the total amount drawn down under the
Facility relative to the total principal amount. The Company shall
also reimburse appropriate legal costs incurred.
The First Tranche of the Facility is collateralised against
2,800 carats of the Company's current diamond inventory. The Second
Tranche of the Facility is to be collateralised against an
additional 2,200 carats, in aggregate, of the Company's future
diamond inventory, to be supplied in instalments every week from
Lace mine production.
The Facility provides for customary events of default. On and at
any time after the occurrence of an event of default, Rasmala may
at its absolute discretion by written notice to the Company,
declare all outstanding amounts under the Facility to be
immediately due and payable, together with any other sums then owed
by the Company to Rasmala.
Where a company enters into a related party transaction, under
the AIM Rules for Companies (the "AIM Rules") the independent
directors of the company are required, after consulting with the
company's nominated adviser, to state whether, in their opinion,
the transaction is fair and reasonable in so far as its
shareholders are concerned.
By virtue of both Rasmala's current interests in the Company,
which represent approximately 11.6% of the Company's issued share
capital, and current Board representation, it is considered to be a
"related party" as defined under the AIM Rules and accordingly the
Facility is considered to be a "related party transaction" for the
purposes of Rule 13 of the AIM Rules.
The independent directors of DiamondCorp (being each of the
directors with the exception of Michael Toxvaerd, who is also a
director of Rasmala), having consulted with the Company's nominated
adviser, Panmure Gordon (UK) Limited, consider that the terms of
the Facility are fair and reasonable insofar as the Company's
shareholders are concerned.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Chris Ellis, Interim Chairman-designate
Tel: +44 (0) 20 3151 0970
UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/Karri Vuori/Atholl Tweedie
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR"). Market soundings, as defined in MAR, were taken in respect
of the Facility, with the result that certain persons became aware
of certain inside information in relation to the Facility, as
permitted by MAR. That inside information is set out in this
announcement. Therefore, those persons that received inside
information in relation to the Facility in a market sounding are no
longer in possession of such inside information relating to the
Company and its securities.
The notification below, made in accordance with the requirements
of the EU Market Abuse Regulation, provides further details in
respect of Michael Toxvaerd's interest in the Facility described
above. Michael Toxvaerd is a director of Rasmala and of
DiamondCorp.
Michael Toxvaerd
1 Details of the person discharging managerial
responsibilities / person closely associated
a) Name Michael Toxvaerd
2 Reason for notification
a) Position / status Non-Executive Director
b) Initial notification Initial
/ amendment
3 Details of the issuer, emission allowance
market participant, auction platform, auctioneer
or auction monitor
a) Name DiamondCorp plc
b) LEI (Pending)
4 Details of the transaction(s): section to
be repeated for (i) each type of instrument;
(ii) each type of transaction; (iii) each
date; and (iv) each place where transactions
have been conducted
a) Description of Secured financing facility
the financial with the option to convert
instrument, type into new ordinary shares
of instrument of 0.1 pence each in DiamondCorp
plc
Identification ISIN: GB00B183ZC46
code
b) Nature of the Entry into a convertible
transaction debt facility with Rasmala
plc (of which Michael Toxvaerd
is also a director)
c) Price(s) and volumes(s) Price(s) Volume(s)
Conversion Dependent on
price(s) to conversion
be calculated price(s)
according to
VWAP, as described
above
d) Aggregated information N/A
e) Date of the transaction 2016-10-20
f) Place of the transaction London Stock Exchange, AIM
(XLON)
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCURVORNWARUAA
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