TIDMOBT
RNS Number : 0223G
Obtala Limited
24 May 2017
24 May 2017
Obtala Limited
("Obtala", the "Group" or the "Company")
(AIM: OBT)
Acquisition of WoodBois International ApS
-- Acquisition of WoodBois, a leading global trader and producer of sawn timber
-- Profitable for past 5 years and immediately cash accretive to the Group
-- Historic trading revenues c$15m, profits invested in production assets
-- 102,000 acre concession in Gabon with fully operational
24,000m3 sawn capacity sawmill, 18,000m3 veneer plant opening in
2017
-- Consideration of $14.8m over 3 tranches and including c$4m Obtala equity
-- Deferred consideration over 5 years tied to management retention
Obtala Limited (AIM: OBT), the African focused agricultural and
forestry company, is pleased to announce the acquisition through
Argento Limited (its 75% owned forestry subsidiary) of WoodBois
International ApS ("WBI"), a global trader and producer of sawn
timber, for a total consideration of US$14.8 million (approximately
GBP11.4 million).
WoodBois International
Founded in 2004, WBI is engaged in the global trading of sawn
timber sourced from 100s of exclusive timber producers throughout
Africa, as well as the production of sawn timber planks and veneer
from its concessions in Gabon. WBI is headquartered in Copenhagen,
Denmark, with African trading operations based in Abidjan, Ivory
Coast, where the company leases warehouse space for inventory. WBI
has a diverse buyer base with no pronounced customer or regional
concentration with sales into the Middle East (33%), Europe (17%),
USA & Canada (15%) as well as into Africa (14%), South America
(13%) and Asia (9%). WBI's concessions in Gabon total 102,000 acres
(41,278 hectares) with an annual permitted cut of 70,000m3, the
primary species of which is Okoume. The concession rights have no
expiration but are renewable annually and are all located within
70km of WBI's sawmill and veneer facility in Mouila, Gabon. WBI,
like Obtala, is committed to sustainable forestry management and
intends to seek FSC (or similar) certification in the near
future.
Terms of the Acquisition
Argento will acquire 100% of the share capital of WBI, including
all land, fixed assets, inventory and the forestry concessions in
Gabon. The immediate plan is to accelerate the expansion of WBI's
sawmill (current annual capacity of 24,000m3 sawn timber) and
complete the upgrade of their veneer facility (planned annual
capacity of 18,000m3 veneer) within 2017. Expansion of both
business lines is estimated to cost US$500,000 in capex.
Historically investment in production has come primarily from
funds generated by WBI's trading business, whose growth has been
limited only by access to capital and trade finance that Obtala can
source. WBI's founder directors, Zahid Abbas and Jacob Hansen, each
of whom are former DLH Group executives (one of the world's largest
timber trading companies) with over 20 years' experience in African
timber sales and procurement, will remain with Obtala for a minimum
of 5 years, while Hadi Ghossein, a former diplomat and Gabonese
citizen who manages operations in Gabon, has committed for a
minimum of 3 years.
Obtala will acquire the entire issued share capital of WBI, for
a total consideration of approximately US$14.8 million to be
satisfied by a mixture of cash and new Obtala ordinary shares
payable in three tranches, subject to satisfactory completion of
Obtala's due diligence:
-- Tranche 1: Initial cash consideration of US$3 million
(approximately GBP2.31 million); and the issue of 15,641,499 new
Obtala ordinary shares within five business days of completion of
the due diligence period ("Completion");
-- Tranche 2: Further cash consideration of US$3 million
(approximately GBP2.31 million) on the earlier of 30 September 2017
and 120 days after Completion; and
-- Tranche3: Deferred cash consideration of US$5 million
(approximately GBP3.85 million) payable over five years in equal
quarterly payments commencing 30 September 2017.
The consideration shares to be issued as part of the Tranche 1
consideration, with a value at 19.0p per share of GBP2.97 million
(approximately US$3.84 million), are subject to a 24 month lock up
period, with any disposal subject to Obtala's consent and orderly
market provisions. They represent approximately 5.63% of Obtala's
current issued ordinary share capital. Any shortfall (or excess) in
working capital relative to debt assumed on completion, though not
expected to be material, will be offset by a purchase price
adjustment to Tranche 2 and Tranche 3 payments. Tranche 2 and 3
payments are conditional on the continued employment of WBI's two
founder directors, Zahid Abbas and Jacob Hansen.
During the year to 2015, WBI recorded earnings before interest
and tax in Danish Krone of DKK 2.54 million (then equivalent to
approximately GBP247,000) on turnover of DKK 106.8 million (then
approximately GBP10.40 million), and as at 31 December 2015 had
total assets of DKK 56.92 million (then approximately GBP5.61
million).
Commenting on the acquisition, Miles Pelham, Chairman of Obtala
said: "WBI's decades of experience in the timber industry leaves
them uniquely positioned in the sourcing and global distribution of
African timber. Obtala has plans for the rapid expansion of WBI's
trading business, which to date has been constrained by a lack of
access to capital, and which we have great confidence will drive
revenue and margin expansion in the forestry division.
Strategic capex in the production assets in Gabon have already
been identified which will generate cost savings and enable entry
into higher margin product lines, in line with Argento's strategy
in Mozambique. I am delighted that WBI's founders have accepted a
substantial deferred consideration and committed to remaining with
Obtala for at least the next 5 years. We can see tremendous upside
to what is already by a very accretive acquisition from WBI
management's standalone projections.
This acquisition marks a step-up the value chain as we look to
position Obtala at points where our margins are maximized and where
we see long-term sustainable growth and synergies. Extensive work
has been undertaken during the last few months examining businesses
that exhibit motivated & committed management, strong
synergies, that are at or near cashflow positive, and where a
partnership with Obtala will lead to a mutually strengthened
platform.
We will continue to follow a strategy of increasing shareholder
value both organically and by acquisition/partnerships within our
two defined strategies of Agriculture and Forestry, and no
other."
Commenting on the acquisition, Zahid Abbas, Co-Founder of WBI
said: "We are delighted to partner with Obtala, whose knowledge of
international finance and access to trading capital will enable our
business to reach a level we would not have otherwise conceived. We
have been impressed with management's understanding of African
timber markets and the unique value proposition that we can deliver
in partnership with Obtala's existing African operations.
We are committed to helping Obtala's existing forestry business
move up the value chain to achieve its targets and see substantial
synergies in our partnership."
Obtala Limited
Miles Pelham - Chairman
Paul Dolan - CEO
www.obtala.com +44 (0)20 7099 1940
ZAI Corporate Finance Limited (Nomad)
Peter Trevelyan-Clark / John Treacy +44 (0)20 7060 2220
Brandon Hill Capital (Joint Broker)
Jonathan Evans
+44 (0)20 3463 5000
Beaufort Securities Limited (Joint Broker)
Jon Belliss +44 (0)20 7382 8300
This announcement contains information which was previously
inside information for the purposes of Article 7 of the Market
Abuse Regulation EU Regulation 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
STREXLFLDEFEBBX
(END) Dow Jones Newswires
May 24, 2017 02:00 ET (06:00 GMT)
Woodbois (LSE:WBI)
Historical Stock Chart
From Apr 2024 to May 2024
Woodbois (LSE:WBI)
Historical Stock Chart
From May 2023 to May 2024