TIDMKRPZ
RNS Number : 8070M
Kropz PLC
13 May 2020
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
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REGULATIONS.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
13 May 2020
Kropz Plc
("Kropz" or the "Company")
Equity Facility, Proposed Placing and Open Offer
and
General Meeting Notice
Kropz Plc (AIM: KRPZ), an emerging African phosphate explorer
and developer, announces it has entered into a conditional
convertible equity facility of up to US$ 40 million (not exceeding
a maximum of ZAR 680 million) with ARC Fund, the Company's major
shareholder ("Equity Facility"). The Company also intends to
undertake an equity placing to existing and new institutional
investors ("Placing") and an open offer to existing shareholders
("Open Offer") to raise up to a further US$ 7 million, before
expenses ("Fundraising") following completion of the Equity
Facility. The proceeds of the Fundraising and the Equity Facility
will be used to bring the Company's Elandsfontein phosphate
project, located in South Africa, into production, advance the new
feasibility study at its Hinda project in the Republic of Congo,
and for general working capital purposes.
HIGHLIGHTS
Equity Facility, Proposed Placing and Open Offer
-- Equity Facility commitment of up to US$ 40 million (not
exceeding a maximum of ZAR 680 million (conversion rate is subject
to a maximum fixed rate of US$1= 17 ZAR) provided by ARC Fund,
which can be drawn down at the discretion of Kropz (subject to
Kropz shareholder approval at the General Meeting);
-- Repayment of the Equity Facility and any interest thereon
will be in the form of conversion into ordinary shares in the
Company and issued to ARC Fund, at a conversion price of 6.75 pence
per Ordinary Share ("Equity Facility Shares") each quarter, and any
US$ amount will be converted to GBP at an agreed rate of US$ 1=0.86
GBP;
-- First quarterly draw-down expected on 10 June 2020 for US$ 8
million with conversion into Equity Facility Shares expected to
take place immediately, and quarterly thereafter;
-- Further Placing and Open Offer with new and existing
shareholders of the Company of up to US$ 7 million before expenses
at a price of 6.75 pence per share, the same as the conversion
price for the Equity Facility Shares;
-- The Open Offer will be open to all existing shareholders.
Further details will be sent out in a circular to be posted to
shareholders following the shareholder meeting. ARC Fund intends to
subscribe for an amount of US$ 2 million in the Open Offer;
-- The Equity Facility will be accompanied by a bank guarantee
from one of ARC Fund's banks (the "ARC Guarantee") which is in
agreed form, for up to a maximum exposure of US$ 40 million (not
exceeding a maximum of ZAR 680 million) provided to Kropz
Elandsfontein (Pty) Ltd ("Kropz Elandsfontein"), of which the
Company holds a 74 per cent. interest. Kropz will reimburse the ARC
Fund for the costs of the ARC Guarantee through the issue of new
Ordinary Shares issued at 6.75 pence per Ordinary Share to be
issued at the same time as the quarterly drawdown and conversion of
the Equity Facility;
-- The Equity Facility will be secured on the shares which Kropz
Plc holds in Cominco Resources Ltd ("Share Charge"). The Equity
Facility is conditional on the entering into the Share Charge,
which will be entered into before the General Meeting;
-- Any proceeds raised above US$ 40 million will be utilised by
the Company to advance the new feasibility study for Hinda and for
general working capital; and
-- The Placing and Open Offer, and the drawdowns of the Equity
Facility are conditional on shareholder approval which is being
sought from the Company's shareholders at a general meeting to be
held in Tunbridge Wells on 29 May 2020 ("General Meeting").
Restructured BNP Facility
-- Kropz Elandsfontein and BNP Paribas SA ("BNP") are currently
in discussions with respect to the proposed entry into an amendment
and restatement agreement pursuant to which Kropz Elandsfontein and
BNP would agree to amend and restate the term loan facility
agreement entered into on or about 13 September 2016 (as amended
from time to time), whereby BNP agreed to make available to Kropz
Elandsfontein a credit facility of up to US$ 30 million ("Proposed
BNP Facility Amendment Agreement"). The facility has been fully
drawn. The Proposed BNP Facility Amendment Agreement would inter
alia extend the final repayment date to Q3 2024, with capital
repayments expected to commence in Q4 2022 and interest rate of
6.5% US plus LIBOR, up to project completion and 4.5% US plus LIBOR
thereafter; and
-- BNP has received credit approval for the Proposed BNP
Facility Amendment Agreement, subject to satisfactory
documentation, due diligence and conditions precedent.
Notice of General Meeting and Irrevocable Undertakings
-- The General Meeting will be held on 29 May 2020 at Suite 4F,
Easistore Building, Longfield Road, North Farm Estate, Tunbridge
Wells, TN2 3EY, United Kingdom ;
-- As a result of government measures in respect of COVID-19,
shareholders should not attend in person and are strongly
encouraged to submit a form of proxy appointing the chair of the
General Meeting as their proxy. Shareholders who do seek to attend
the General Meeting will not be admitted to the meeting;
-- A copy of the circular will be available on the Company's website;
-- The Company is proposing at the General Meeting, resolutions
to give the Company's directors authority to allot and issue, on a
non-pre-emptive basis, shares in the Company to meet the full
demand under the Equity Funding, Placing and Open Offer (these are
in addition to the authorities granted at the previous Annual
General Meeting); and
-- The Company has received irrevocable undertakings from
shareholders holding 69.83 per cent. of the Company's issued share
capital to vote in favour of the resolutions proposed.
Elandsfontein
-- Kropz Elandsfontein has awarded the Engineering, Procurement,
Construction and Management contract to DRA Projects SA (Pty) Ltd,
a diversified global engineering, project delivery and operations
management group; and
-- Assuming the drawdowns of the Equity Facility and Fundraising
are approved at the General Meeting, the target date for commercial
production at Elandsfontein will remain unchanged at the revised
date of Q4 2021.
Mark Summers, Interim CEO of Kropz, commented :
"I am pleased to report today's Equity Facility made available
by the ARC Fund, our major shareholder, and the proposed Placing
and Open Offer. The proceeds raised, alongside the Equity Facility,
will be used to bring Elandsfontein into production and advance the
new feasibility study at Hinda."
For further information visit www.kropz.com or contact:
Kropz Plc
Mark Summers (Interim CEO) +27 (0)79 744 8708
Grant Thornton UK LLP ("GT") Nominated Adviser
Richard Tonthat
Samantha Harrison
Niall McDonald +44 (0)20 7383 5100
Hannam & Partners ("H&P") Joint Broker
Andrew Chubb
Ernest Bell +44 (0)20 7907 8500
Mirabaud Securities Ltd ("Mirabaud") Joint Broker
Rory Scott +44 (0)20 3167 7220
Edward Haig-Thomas +44 (0)20 3167 7222
Tavistock Financial PR & IR (UK)
Emily Moss +44 (0)20 7920 3150
Jos Simson kropz@tavistock.co.uk
Oliver Lamb
R&A Strategic Communications PR (South Africa)
James Duncan +27 (0)11 880 3924
james@rasc.co.za
About Kropz
Kropz is an emerging African phosphate explorer and developer,
with an advanced stage phosphate project in South Africa and a
phosphate project in the Republic of Congo. The vision of the Group
is to become a leading independent phosphate rock producer and to
develop into an integrated, mine-to-market plant nutrient company
focusing on sub-Saharan Africa.
Equity Facility, Proposed Placing and Open Offer
Kropz's major shareholder, ARC Fund, has committed to provide
the conditional Equity Facility of up to the ZAR equivalent of US$
40 million (which cannot exceed ZAR 680 million (conversion rate is
subject to a maximum fixed rate of US$ 1= 17 ZAR)) to the Company.
The Equity Facility will be accompanied by the ARC Guarantee, not
exceeding ZAR 680 million provided to Kropz Elandsfontein. It must
be noted that the majority of the capital and operational
expenditure of Kropz Elandsfontein is incurred in ZAR. The Equity
Facility will be drawn down on a quarterly basis at the discretion
of Kropz, subject to shareholder approval at the General Meeting.
The first quarterly drawn down is expected to take place on 10 June
2020 and quarterly thereafter.
The Equity Facility is convertible following a drawdown into
newly issued ordinary shares of 0.1 pence each ("Ordinary Shares")
in the capital of the Company ("Equity Shares") at a fixed price of
6.75 pence per Ordinary Share (the "Conversion Price") and a fixed
exchange rate of US$ 1= GBP 0.86 at each quarterly draw-down.
Following a conversion, the Company will apply for the Equity
Shares to be admitted to trading on AIM.
The first quarterly drawdown in June will also be used to repay
the capital element of the fully drawn ZAR 30 million
(approximately US$ 1.98 million) loan facility from ARC Fund
announced on 26 February 2020, as set out in the loan facility.
Interest of ZAR 681,710 (approximately US$ 40,101) will be settled
at that date in cash by Kropz Elandsfontein to ARC.
The Equity Facility will bear interest at the aggregate of 6.5
per cent. and one-month LIBOR ("Interest") in the event that a
conversion does not occur. In certain events of default by the
Company or the Company not having sufficient share authorities in
place to permit the issue of Ordinary Shares on a conversion, ARC
Fund may elect to accelerate repayment of any sums drawn under the
Equity Facility together with accrued interest and a further
default rate of interest of 4 per cent., such that such sums are
immediately due and payable. It is the Company's intention to have
drawdown and conversion occur together on the quarterly schedule
thereafter.
In addition to the Equity Facility, Kropz is intending to launch
the Placing and Open Offer of up to US$ 7 million before expenses.
The Placing and Open Offer price will be the same as the Conversion
Price of 6.75 pence per share. Up to US$ 5 million proceeds from
the Placing and Open Offer will be used to advance the new
feasibility study at Hinda and to provide general working capital,
with any further sums raised being applied to Elandsfontein and
thereby reducing the amounts which the Company would potentially
draw down under the Equity Facility.
The Open Offer for approximately GBP 3.44 million (approximately
US$ 4 million) will be available to all qualifying shareholders,
allowing them to subscribe in proportion to their existing
shareholding. The ARC Fund intends to subscribe for US$ 2 million
in the Open Offer.
The Company is also offering a firm Placing to existing and new
investors, of up to US$ 3 million.
The Placing and Open Offer, and the drawdowns of the Equity
Facility, are conditional on shareholder approval which is being
sought from the Company's shareholders at the General Meeting.
Elandsfontein
Confirming the announcements of 14 February 2020, the latest
metallurgical test work on the Elandsfontein phosphate mine (the
"Project") completed by Eriez, Pennsylvania and JESA, Florida (the
"Test Work"), has demonstrated a robust processing alternative to
the previous flotation circuit.
The Test Work has consistently shown that the Elandsfontein
phosphate mine processing plant (the "Plant") will produce a final
saleable concentrate to expected specification of 68 per cent. BPL
(approximately 31 per cent. P(2) O(5) ) using a flotation
configuration of direct followed by reverse, flotation circuit.
This type of circuit has been successfully employed throughout the
industry, for decades.
Supplementary design work has been completed to advance the
front-end engineering, and has identified that additional
equipment, infrastructure and modifications to the original plant
are needed to cater for the requisite process modifications. The
capital costs have been estimated to AACE Class 3 level (accuracy
range of -20 per cent. to +30 per cent.).
The further time required for the Test Work together with newly
identified long-lead items and associated structural works will
impact timing and capital costs to first production. Accordingly,
the target date for commercial production at Elandsfontein is now
Q4 2021, with a total estimated funding requirement of US$ 40
million (ZAR 680 million), excluding the US$ 12 million (ZAR 200
million) already held by Kropz Elandsfontein and including working
capital, debt repayments and capital expenditure.
Hinda and Aflao
Kropz has completed a competitive tender for an updated
feasibility study for its currently 100 per cent. owned Hinda
project in the Republic of Congo (which is expected to be diluted
to 90 per cent. through the participation of the government of the
Republic of Congo), aligned with the capacity of the existing road
and port facilities. The tender award and associated work programme
for Hinda are subject to securing additional funding.
The feasibility study will be completed six months following
tender award, subject to relaxation of the current lockdown
restrictions in the relevant countries.
As previously announced, the Company has decided to divest its
interests in Aflao and is currently in consultation with the
project's other shareholders regarding the implementation of this
decision, which may include other shareholders taking up the
Company's interest. The Company will not be providing any further
funding towards Aflao.
Notice of General Meeting and Irrevocable Commitments
The General Meeting will be held at 11 a.m. on 29 May 2020 at
Suite 4F, Easistore Building, Longfield Road, North Farm Estate,
Tunbridge Wells TN2 3EY, United Kingdom.
On 26 March 2020 the UK Parliament passed legislation
prohibiting, among other things, public gatherings of more than two
people, which was to take effect immediately. The only exceptions
to these restrictions are where the gathering is of people who live
together or where the gathering is "essential for work purposes".
The board does not believe that attendance by a shareholder at the
General Meeting is considered to meet this criteria.
The board therefore urges shareholders to comply with the UK
Government's instructions. The board will ensure that a quorum of
two shareholders is present at the General Meeting to allow it to
take place and for the proxy votes to be exercised. In order that
any proxy votes of those shareholders who choose not to attend are
fully reflected in the voting on the resolutions, the chair of the
meeting will direct that voting on all resolutions set out in the
notice of meeting will take place by way of a poll. Under the
Company's articles of association, votes on a poll may be given
personally, by a corporate representative or by proxy. Every
shareholder who is present by proxy shall have one vote for each
share held by them.
Shareholders are therefore strongly recommended to submit a Form
of Proxy appointing the chair of the General Meeting as their
proxy. Shareholders will not receive a hard copy form of proxy for
the general meeting in the post. Instead, they are able to vote
electronically using the link www.signalshares.com. Proxy votes
must be received no later than 11 a.m. on 27 May 2020.
The board understands that beyond voting on the formal business
of the meeting, the general meeting also serves as a forum for
shareholders to raise questions and comments to the board.
Therefore, if shareholders have any questions or comments relating
to the business of the meeting that they would like to ask the
board then they are asked to submit those questions in writing via
email to mark@kropz.com no later than 11 a.m. on 27 May 2020. The
board will publish a summary of any questions received together
with a written response on the Company's website as soon as
practicable after the conclusion of the general meeting. Only
questions from registered shareholders of the Company will be
accepted.
A copy of the circular will shortly be available for the
purposes of AIM Rule 26 on the Company's website at
www.kropz.com.
An announcement will be made should the measures being
implemented by the United Kingdom Government prevent the holding of
the meeting in accordance with the notice set out at the end of
this document.
Board Recommendation and Irrevocable Commitments
The board believes the resolutions to be proposed at the General
Meeting are in the best interests of the Company and its
Shareholders as a whole. Accordingly, the board unanimously
recommends that Shareholders vote in favour of the resolutions. The
Company has received irrevocable undertakings from shareholders
holding 69.83per cent. of the Company's issued share capital to
vote in favour of the resolutions proposed in order to provide the
Company with the authority to allot and issue the Equity Facility
Shares, Placing Shares and Open Offer Shares.
It is noted that, both before and after the Equity Funding, the
Placing and the Open Offer, on an aggregate basis, ARC Fund and
Kropz International S.a.r.l. (" Kropz International ") will
continue to hold more than 50 per cent. of the voting rights in the
Company.
Related Party Transaction
The entering into the Equity Facility and restatement of Kropz
Elandsfontein shareholder agreements to implement the Equity
Facility with ARC Fund, together with the agreed form of the
associated ARC Guarantee to Kropz Elandsfontein and reimbursement
of costs of the ARC Guarantee to ARC Fund, is a related party
transaction ("Transaction") pursuant to Rule 13 of the AIM Rules.
Machiel Reyneke is a director of the Company and the representative
of ARC Fund. Further, as noted below, ARC Fund and Kropz
International are treated as acting in concert for the purposes of
the City Code on Takeovers and Mergers (the "Code") and have
individual and aggregate interests in the Ordinary Shares as set
out above. Mike Nunn, a director of the Company, is the beneficial
owner of Kropz International. Accordingly, Mr Reyneke and Mr Nunn
have not been involved in the approval of the Transaction by the
Company's board.
The directors of the Company who are considered independent for
the purposes of the Transaction, having consulted with the
Company's nominated adviser, consider the terms of the Transaction
to be fair and reasonable insofar as the Company's shareholders are
concerned.
Concert Parties and Impact on Shareholdings
As noted in the Company's AIM admission document, ARC Fund and
Kropz International are treated as acting in concert for the
purposes of the Code and have individual and aggregate interests in
the Ordinary Shares as set out in the table below. It is noted
that, both before and after the closing of the Equity Facility,
Placing and Open Offer, on an aggregate basis, ARC Fund and Kropz
International hold and will continue to hold more than 50 per cent.
of the Ordinary Shares and voting rights in the Company. On a
standalone basis ARC Fund, through its option with Kropz
International, currently has a fully diluted interest of 50.5 per
cent. of the Company (see footnote 3 below).
Maximum Interests in Ordinary Shares(1)
Maximum no.
of shares to Maximum shareholdings
be issued pursuant following Equity
Existing to Equity Facility, Facility, Placing
ordinary Placing and Open and Open Offer
shares Offer (1) (1)
No. % No. No. %
--------------------- ------------ ---- --------------------- ---------------------- ----
ARC Fund (2)(3) 139,600,912 49.3 540,317,772 679,918,684 81.6
Kropz International
S.a.r.l (2)(4) 54,933,474 19.4 9,878,300 64,811,774 7.8
Concert Party 194,534,386 68.6 550,196,072 744,730,458 89.3
(1) Assumes for illustrative purposes that the Equity Facility
is fully drawn, that ARC Fund subscribes for an amount equal to
US$2 million in the Placing and Open Offer, that Kropz
International subscribes for its full entitlement under the Open
Offer, and that there are no other participants in the Placing or
Open Offer. The fee payable by ARC pursuant to the ARC Guarantee of
1.75 per cent. per annum, the cost of which is repaid to ARC by
Kropz, is assumed to be paid to ARC by Kropz via the issue of
additional new ordinary shares per the Company's intended drawdown
schedule.
(2) ARC Fund and Kropz International are deemed to be acting in
concert as defined in the Code.
(3) Kropz International has undertaken to ARC Fund to transfer
to it such number of Ordinary Shares for nil consideration as are
needed to ensure ARC Fund shareholding is above 50.5 per cent. (the
"Option"). As a consequence of this, under the arrangements between
ARC Fund and Kropz International outlined in the Admission
Document, Kropz International agreed not to vote 20,000,000
Ordinary Shares it holds for a period of 12 months following
Kropz's admission to trading on AIM on 30 November 2018, due to the
lock-ins provided by Kropz International at that time. This
agreement has subsequently been extended until 30 November 2020 and
will remain in effect until the earlier of this date, or the
exercise of the Option.
(4) Kropz International and ARC Fund have entered into an
arrangement pursuant to which Kropz International has granted to
ARC Fund a call option over 50 per cent. of its shareholdings. The
call option over Kropz International's Ordinary Shares can be
exercised by ARC Fund if the value of ARC Fund's shareholding on
the third anniversary of Admission is 20 per cent. lower than its
value on IPO on 30 November 2018. The call option has an
alternative settlement of cash or assets, if the transfer of the
Ordinary Shares would require the transferee to make a Rule 9 offer
for the Company pursuant to the City Code.
(5) Mike Nunn, a director of Kropz, holds his beneficial
interest in Kropz through Kropz International.
(6) Exchange rate used throughout is the exchange rate fixed in
the ARC facility of US$ 1= GBP 0.86 and US$ 1= ZAR 17.
Important Information
This announcement is for information purposes only and the
information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may or should be placed by any person for any purpose
whatsoever on the information contained in this announcement or on
its accuracy or completeness. The information in this announcement
is subject to change. This announcement is not intended to and does
not constitute, or form part of, an offer to sell or an invitation
to purchase any securities or the solicitation of an offer to buy
any securities, nor shall there be any purchase, sale or exchange
of securities or such solicitation in any jurisdiction in which
such offer, solicitation or sale or exchange would be unlawful
prior to the registration or qualification under the laws of such
jurisdiction.
Neither this announcement, nor the information contained within
it, is for publication or distribution, in whole or in part,
directly or indirectly, in or into the United States (including its
territories and possessions, any State of the United States and the
District of Columbia) (collectively, the "United States"),
Australia, Canada, Japan or any other jurisdiction where to do so
would constitute a violation of the relevant laws of such
jurisdiction. The distribution of this announcement or the
information contained within it may be restricted by law in certain
jurisdictions and persons into whose possession any document or
other information referred to herein comes should inform themselves
about and observe any such restriction. Any failure to comply with
these restrictions may constitute a violation of the securities
laws of any such jurisdiction.
The information in this announcement does not constitute or form
part of any offer or an invitation or solicitation or advertisement
to purchase and/or subscribe for securities in South Africa,
including an offer to the public for the sale of, or subscription
for, or an invitation or the solicitation of an offer to buy and/or
subscribe for, securities as defined in the South African Companies
Act, No 71 of 2008 (as amended) ("Companies Act") or otherwise and
will not be distributed to any person in South Africa in any manner
that could be construed as an offer to the public as contemplated
in the Companies Act. The information in this announcement is only
addressed to and directed at persons in South Africa who fall
within one of the categories listed in section 96(1)(a) of the
South African Companies Act ("South Africa Relevant Persons").
Furthermore, the information in this announcement does not
constitute a prospectus registered and/or issued in terms of the
Companies Act.
The shares referred to herein may not be offered or sold,
transferred or delivered directly or indirectly, in the United
States unless registered under the US Securities Act of 1933, as
amended (the "US Securities Act") or offered in a transaction
exempt from, or not subject to, the registration requirements of
the US Securities Act and in accordance with any applicable
securities laws of any state or other jurisdiction of the United
States. The shares referred to herein have not been and will not be
registered under the US Securities Act or under the applicable
securities laws of Australia, Canada, the Republic of South Africa
or Japan. There will be no public offer of the shares in the United
States, Australia, Canada, the Republic of South Africa or Japan.
The shares referred to herein may not be offered or sold in
Australia, Canada, the Republic of South Africa or Japan or to, or
for the account or benefit of, any national, resident or citizen of
Australia, Canada, the Republic of South Africa or Japan.
This announcement has been issued by and is the sole
responsibility of Kropz. No representation or warranty, express or
implied, is or will be made as to, or in relation to, and no
responsibility or liability is or will be accepted by Grant
Thornton UK LLP, H&P Advisory Limited or Mirabaud Securities
Limited, or by any of their affiliates or agents as to, or in
relation to, the accuracy or completeness of this announcement or
any other written or oral information made available to any
interested party or its advisers, and any liability therefore is
expressly disclaimed.
ENDS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOGGPUAPAUPUGPW
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