R.E.A.Hldgs PLC Further re third party investment (3329H)
August 16 2016 - 8:41AM
UK Regulatory
TIDMRE.
RNS Number : 3329H
R.E.A.Hldgs PLC
16 August 2016
R.E.A. Holdings plc ("REA", or the "company")
Update regarding third party investment in PT REA Kaltim
Plantations, Indonesian bank facilities and operations
Proposed investment by DSN
REA is pleased to announce that, further to the conditional
agreement with PT Dharma Satya Nusantara Tbk ("DSN") announced on
16 May 2016, it has today signed the detailed agreements for the
purchase and subscription by PT Swakarsa Sinarsentosa ("SWA") and
PT Agro Pratama ("AP"), wholly owned subsidiaries of DSN, for
shares in in the company's principal operating subsidiary in
Indonesia, PT REA Kaltim Plantations ("REA Kaltim") for an
aggregate consideration of $15.0 million.
Completion of the share purchase and subscription is expected
within four weeks, subject to receipt of all the necessary
regulatory and any other approvals, and will result in SWA and AP
(together, the "Investors") together owning in aggregate 15 per
cent of REA Kaltim's enlarged issued share capital.
A pre-completion advance of $10 million from SWA to REA Kaltim
was duly received in June 2016. At completion, the Investors will
also make loans to REA Kaltim of $10.0 million and GBP3.9 million
on terms mirroring the terms of existing dollar and sterling loans
from the company to REA Kaltim. Such shareholder loans will be
funded as to $10 million from the repayment of the pre-completion
advance. In addition, discussions are continuing regarding further
proposed loans to subsidiaries of REA Kaltim at the intended levels
previously announced.
Pursuant to the arrangements now agreed, the Investors will also
pay 15 per cent of the amount of any recoveries arising from
certain overpayments made in respect of 2015 Indonesian corporation
tax by REA Kaltim and a subsidiary obtained prior to 1 January
2018. This may result in further payments by the Investors of up to
the equivalent of $0.85 million.
The directors welcome DSN's investment in REA Kaltim, which will
help finance the group's extension planting programme and benefit
the group's operations in terms of more efficient sourcing of
supplies, marketing and exchanges of information on agricultural
practices.
Richard Robinow, a director of the company, has confirmed that
he and his family, who hold 28 per cent of the issued ordinary
share capital of the company, currently have no intention of
divesting their shareholding and intend to continue supporting the
planned development of REA Kaltim under the joint ownership of REA
and DSN.
Rothschild is acting as financial adviser to REA in connection
with DSN's investment in REA Kaltim.
Indonesian bank facilities
Discussions with the group's principal Indonesian bankers have
now been successfully concluded. As a result, borrowings,
denominated in a combination of Indonesian rupiahs and US dollars
and totalling the equivalent of $88.6 million, have been replaced
with new increased borrowings, denominated in Indonesian rupiahs
and totalling the equivalent of $95.3 million.
The new borrowings incorporate a reduced annual revolving credit
facility (committed until July 2017) of the equivalent of $26.0
million against the previous annual revolving credit facilities of
$35.5 million. The balance of the new borrowings is repayable over
a period of five years. Assuming continued rollover of the annual
revolving credit facility (which the group has every reason to
expect), repayments of the new borrowings due in respect of the
period from now to 31 December 2017 and of the year to 31 December
2018 will amount to the equivalent of, respectively, $0.7 million
and $3.2 million, reductions of respectively $4.7 million and $19.8
million on the amounts that would have been repayable under the
borrowings that have been replaced.
Operations
The impact of the El Nino weather phenomenon has continued to
affect the group's production alongside other CPO producers in the
region. Whilst the benefits of the additional fertiliser dosages
that are now being applied must be expected to take some months to
become apparent, management does note improving bunch formation in
the field although it is not yet clear when this will translate
into improved production levels.
CPO extraction rates remain steady at just below 24 per cent
reflecting the recent refurbishment of the mills and improved mill
maintenance programmes.
Clearing and planting of new land developments is progressing at
a good pace, with 2,648 hectares cleared and 4,013 planted in the
first seven months to the end of July.
Crops and extraction rates for the seven month period to the end
of July 2016 (with comparative figures for the same period in 2015)
were as follows:
1 January to 31 July 2016 2015
FFB crops - group (tonnes) 247,000 325,000
FFB crops - external purchases
(tonnes) 52,000 77,000
FFB processed (tonnes) 296,000 399,000
Crude palm oil (CPO) produced
(tonnes) 71,000 86,000
Palm kernels produced (tonnes) 14,000 18,000
Crude palm kernel oil (CPKO)
produced (tonnes) 5,000 6,000
CPO extraction rate (%) 23.8 21.6
Palm kernel extraction rate
(%) 4.8 4.6
CPKO extraction rate (%) 32.3 33.4
Half yearly report
The company expects to publish its half yearly report for the
six months ended 30 June 2016 on or around 28 September 2016.
Enquiries
REA: +44 (0)207 436 7877
Camarco (PR): Jennifer Renwick + 44 (0)20 3757 4994
This information is provided by RNS
The company news service from the London Stock Exchange
END
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