TIDMKRPZ
RNS Number : 4272Q
Kropz PLC
26 February 2021
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014 which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
26 February 2021
Kropz Plc
("Kropz" or the "Company")
New Convertible Facility Agreement
Kropz Plc (AIM: KRPZ), an emerging African phosphate explorer
and developer, announces it has entered into a new conditional
convertible equity facility of up to US$ 5 million ("New Equity
Facility"), with ARC Fund ("ARC"), the Company's major shareholder,
in order to fund the ongoing work at the Company's Hinda phosphate
project ("Hinda"), located in the Republic of the Congo
("RoC").
The US$ 5 million facility is in addition to the US$ 40 million
facility which ARC and the Company entered into in May 2020
("Existing Equity Facility").
New Equity Facility Highlights
-- The New Equity Facility commitment of up to US$ 5 million
provided by ARC, which can be drawn down at the discretion of
Kropz;
-- This further financing is within the authorisation limits
given at the last AGM in August 2020 and has received the relevant
consent from the South African Reserve Bank ("SARB");
-- Repayment of the New Equity Facility and any interest thereon
will be in the form of conversion into ordinary shares in the
Company and issued to ARC, at a conversion price of 4.202 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=GBP
0.73; and,
-- First draw-down expected on 10 March 2021 for US$ 2 million
with conversion into Equity Facility Shares expected to take place
immediately, and every quarter thereafter.
Further details on the New Equity Facility
ARC has committed to providing the unconditional Equity Facility
of up to US$ 5 million (conversion rate is subject to a fixed rate
of US$ 1= 0.73 GBP) to the Company. The Equity Facility will be
drawn down on a quarterly basis at the discretion of Kropz (this
transaction is within the authorisation limits given at the last
AGM in August 2020). The first quarterly drawn down is expected to
take place on 10 March 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
4.202 pence per Ordinary Share (the "Conversion Price") and a fixed
exchange rate of US$ 1= GBP 0.73 at each quarterly draw-down.
Following a conversion, the Company will apply for the Equity
Shares to be admitted to trading on AIM.
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
may elect to accelerate repayment of any sums drawn under the New
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.
Hinda
As the Company announced on 4 February 2021, Kropz appointed
Hatch Africa (Pty) Ltd ("Hatch"), a leading global engineering and
construction firm, to complete the updated feasibility study
("Updated FS") on Hinda. The Updated FS will target a phased
approach in line with the terms of the mining investment agreement,
with initial production of one million tonnes per annum ("Mtpa") of
phosphate rock being exported from the existing port facility at
Pointe-Noire, which is 50 km from Hinda. A second phase production
ramp-up of two Mtpa will also be evaluated with export from a new
port site, located north of Pointe-Noire.
Related Party Transaction
The New Equity Facility 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.
Further, as noted below, ARC 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 (being the directors excluding Mr
Reyneke and Mr Nunn), 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.
Draw Down
As noted above, the Company will be making the first draw down
request under the New Equity Facility on or around 10 March 2021.
Further details of this draw down, as well as the fourth quarterly
draw down request under the Existing Equity Facility, will be made
in a separate announcement in due course.
The subsequent draw downs under the Existing and New Equity
Facilities are expected to be made on or about 10 June 2021 and
quarterly thereafter, in line with the terms of the Equity
Facilities.
Concert Parties and Impact on Shareholdings
As noted in the Company's AIM admission document, ARC 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 Existing and the New
Equity Facilities, on an aggregate basis, ARC 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, through its option with Kropz International,
currently has a fully diluted interest of 86.5 per cent. of the
Company (see footnote 3 below).]
Maximum Interests in Ordinary Shares (1)
Maximum no.
of further
shares to be
issued pursuant Maximum shareholdings
to Original following Original
Existing and New Equity and New Equity
ordinary Facilities Facilities
shares (1) (1)
No. % No. No. %
--------------------- ------------ ---- ----------------- ---------------------- ----
ARC (2) 409,948,665 73.4 354,418,954 764,367,619 83.7
Kropz International
S.a.r.l (2)(3) 54,933,474 9.8 0 54,933,474 6.0
Concert Party 464,882,139 83.2 354,418,954 819,301,093 89.7
(1) Assumes for illustrative purposes that the Existing and New
Equity Facility is fully drawn.
(2) ARC and Kropz International are deemed to be acting in
concert as defined in the Code.
(3) Kropz International and ARC have entered into an arrangement
pursuant to which Kropz International has granted to ARC a call
option over 50 per cent. of its shareholding. The call option over
Kropz International's Ordinary Shares can be exercised by ARC if
the value of ARC'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.
(4) Mike Nunn, a director of Kropz, holds his beneficial
interest in Kropz through Kropz International.
(5) Exchange rates used are fixed at US$ 1= GBP 0.73 for the New
Equity Facility and US$ 1= GBP 0.86 for the Existing Equity
Facility.
For further information visit www.kropz.com or contact:
Kropz Plc
Mark Summers (CEO) +27 (0)79 744 8708
Grant Thornton UK LLP Nominated Adviser
Samantha Harrison
Harrison Clarke
George Grainger +44 (0) 20 7383 5100
Hannam & Partners Broker
Andrew Chubb
Ernest Bell +44 (0)20 7907 8500
Tavistock Financial PR & IR (UK)
Emily Moss +44 (0) 207 920 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 Plc
Kropz is an emerging African phosphate explorer and developer,
with an advanced stage phosphate mining 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.
-S-
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