TIDMDKL
RNS Number : 0644Z
Dekeloil Public Limited
24 May 2016
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED
STATES, AUSTRALIA, CANADA, THE REPUBLIC OF IRELAND, THE REPUBLIC OF
SOUTH AFRICA, JAPAN OR ANY JURISDICTION WHERE TO DO SO MIGHT
CONSTITUTE A VIOLATION OF LOCAL SECURITIES LAWS OR REGULATIONS.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR
ISSUE, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE
FOR, ANY NEW ORDINARY SHARES, NOR SHALL IT (OR ANY PART OF IT), OR
THE FACT OF ITS DISTRIBUTION, FORM THE BASIS OF, OR BE RELIED ON IN
CONNECTION WITH, OR ACT AS ANY INDUCEMENT TO ENTER INTO, ANY
CONTRACT OR COMMITMENT WHATSOEVER WITH RESPECT TO THE PROPOSED
PLACING.
DekelOil Public Limited
('DekelOil' or the 'Company')
Acquisition of approximately c. 30.5% stake in CS DekelOil Siva
Limited,
Proposed Placing of 834,736,160 Ordinary Shares,
at 1.325 pence per share to raise GBP11.1 million,
Proposed Share Consolidation,
Directors' Dealing
and Notice of General Meeting
Highlights
-- Acquisition of approximately 30.5% stake in CS DekelOil Siva
Limited, the Company's majority owned joint venture in the
producing palm oil project at Ayenouan
-- Transaction increases DekelOil's interest in Ayenouan to
81.5% and is earnings enhancing for Shareholders
-- By securing a greater proportion of Ayenouan's growing
revenues and cash flows, the acquisition has the potential to
accelerate the roll out of the Company's strategy to build a
leading West African palm oil producer
-- Acquisition to be funded via a proposed capital raise of
GBP10.8 million by way of placing of New Ordinary Shares to
institutional and other investors at a premium of 1.9% to the
closing share price on 23 May 2016
-- Proposed 10 for 1 Share Consolidation
DekelOil Public Limited, operator and 51% owner of the
vertically integrated Ayenouan palm oil project in Côte d'Ivoire
(the "Project"), is pleased to announce, subject to, inter alia,
Shareholder approval, a fundraise of GBP10.8 million before
expenses through a proposed placing with institutional and other
investors of 812,094,680 ordinary shares of EUR0.00003367 each at a
price of 1.325 pence per share, representing a premium of 1.9 per
cent. to the closing share price on 23 May 2016 (being the latest
practicable date prior to the announcement of the Placing). Net
proceeds of GBP10.1 million are intended to be used to fund the
proposed acquisition of approximately 30.5 per cent. of the entire
issued share capital of CS DekelOil Siva Limited ("CSDS" or the
"Ayenouan Project"), the Company's majority owned joint venture
with Biopalm Energy Limited and for working capital purposes.
Following the Acquisition, DekelOil will own approximately 81.5 per
cent. of the Ayenouan Project. DekelOil will retain the option to
acquire the approximate remaining 18.5 per cent. stake in CSDS
within six months of the First Option exercise.
In addition Cantor Fitzgerald Europe will be conditionally
placing the 22,641,480 Sale Shares at the Issue Price as agent for
Yehoshua Shai Kol.
Completion of the Placing and Acquisition are conditional upon,
inter alia, passing of Resolution 1 by Shareholders at the General
Meeting, notice of which is expected to be sent to Shareholders
later today (the "Circular"). The Circular, extracts of which are
set out below, will provide details of, and the background to the
Proposals and set out the reasons why the Board believes that the
Proposals are in the best interests of the Company and its
Shareholders. If the Resolutions are passed, the Placing Shares
will be allotted after the General Meeting and Admission of the
Placing Shares is expected to occur at 8.00 a.m. on 17 June 2016.
The Placing is not underwritten.
The Company also proposes that all of the Company's existing
ordinary shares of EUR0.00003367 ("Existing Ordinary Shares") are
consolidated on a 10 for 1 basis into new ordinary shares of
EUR0.0003367 ("New Ordinary Shares") (the "Share Consolidation").
The Share Consolidation is expected to become effective on 21 June
2016.
Copies of the Circular will be available shortly on the
Company's website (www.dekeloil.com) and will be available, free of
charge, at the offices of Cantor Fitzgerald Europe, One Churchill
Place, Canary Wharf, London E14 5RB during normal business hours on
any weekday (public holidays excepted) up to and including 30 June
2016. Unless otherwise defined in this announcement, capitalised
terms in this announcement have the meanings given to them in the
Circular.
Directors' Dealing
Tutalon Investments Limited (a related party of Youval Rasin)
will subscribe for 75,471,600 Placing Shares at the Issue Price. By
virtue of the voting control exercised by Youval Rasin over Tutalon
Investments Limited, the subscription is classified as a related
party transaction pursuant to the AIM Rules for Companies.
Following the Placing (but before the Share Consolidation), Youval
Rasin will control in aggregate 479,645,141 Existing Ordinary
Shares, representing approximately 20.4 per cent. of the
Pre-Consolidation Share Capital.
The Independent Directors, having consulted with Cantor
Fitzgerald Europe as the Company's nominated adviser, consider that
the terms of this related party transaction are fair and reasonable
insofar as the Shareholders are concerned.
Yehoshua Shai Kol is selling 22,641,480 Sale Shares in
connection with the Placing, and following the Placing (but before
the Share Consolidation), Yehoshua Shai Kol will hold 110,265,258
Existing Ordinary Shares, representing approximately 4.7 per cent.
of the Pre-Consolidation Share Capital.
Lincoln Moore, Executive Director of DekelOil, commented:
"The opportunity to add to our 51% interest in the vertically
integrated palm oil project at Ayenouan was one we could not let
pass, subject to securing a deal on acceptable terms for
shareholders. We believe we have achieved this and in our view the
support we have received from both existing and new shareholders
shows we are not alone. As our recent full year results
demonstrated, Ayenouan has the potential to be both highly cash
generative and profitable for many years to come: in the first full
year of operations, the 60 tonnes per hour extraction mill produced
35,000 tonnes of CPO, which generated revenues of EUR23.4 million
and EBITDA of EUR3.7 million net to DekelOil. With a capacity to
produce 70,000 tonnes of palm oil per annum, there is room to
double CPO production. Combined with our recently commissioned
kernel crushing plant, which is already producing value-add
products, production at Ayenouan is on course to significantly
increase going forward.
"We are therefore delighted to have agreed the two stage
transaction announced today, the first of which will see DekelOil
increase its stake in Ayenouan to approximately 81.5%. At 1.325
pence per share, we believe that the transaction will be earnings
enhancing from day one. This is an exciting period for DekelOil and
I look forward to providing further updates on our progress."
A copy of this announcement will be published, subject to
certain restrictions relating to persons resident in restricted
jurisdictions, on DekelOil's website at www.dekeloil.com. For the
avoidance of doubt, neither the content of the Company's website
nor the content of any website accessible from hyperlinks on the
Company's website (or any other website) is incorporated into, or
forms part of, this announcement nor, unless previously published
by means of a recognised information service, should such content
be relied upon in reaching a decision as to whether or not to
acquire, continue to hold, or dispose of securities in the
Company.
This announcement is not an invitation nor is it intended to be
an inducement to engage in investment activity for the purpose of
section 21 of FSMA. The Placing Shares are in any event being
placed only with (i) persons who have professional experience in
matters relating to investments and who are investment
professionals within the meaning of Article 19(5) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 of
the United Kingdom (the "Financial Promotion Order") or (ii)
persons who fall within Article 49(2)(a) to (d) ("high net worth
companies, unincorporated associations etc.") of the Financial
Promotion Order (all such persons together being referred to as
"relevant persons"). Any investment or investment activity to which
this announcement relates is available only to relevant persons and
will be engaged in only with relevant persons. Anyone other than a
relevant person must not rely on this announcement.
Cantor Fitzgerald Europe is acting as Nominated Adviser and
Broker to the Company in relation to the Proposals. Cantor
Fitzgerald Europe, which is a member of the London Stock Exchange
and is authorised and regulated in the United Kingdom by the
Financial Conduct Authority, is acting for the Company and for no
one else in relation to the Placing. Cantor Fitzgerald Europe will
not be responsible to any other person for providing the
protections afforded to its clients nor for advising any other
person in connection with the matters contained in this
announcement.
This announcement has been issued by, and is the sole
responsibility of, the Company. Cantor Fitzgerald Europe has not
authorised the contents of any part of this announcement and 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 Cantor Fitzgerald Europe, or by any of its
respective 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, and any
liability therefore is expressly disclaimed.
All statements in this announcement other than statements of
historical fact are, or may be deemed to be, "forward-looking
statements". In some cases, these forward-looking statements may be
identified by the use of forward-looking terminology, including the
terms "targets", "believes", "estimates", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their
negative or other variations or comparable terminology. They appear
in a number of places throughout the announcement and include
statements regarding the intentions, beliefs or current
expectations of the Company and/or Directors concerning, among
other things, the trading performance, results of operations,
financial condition, liquidity, prospects and dividend policy of
the Company. By their nature, forward-looking statements involve
risks and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. The Company's actual performance, result of
operations, financial condition, liquidity and dividend policy may
differ materially from the impression created by the
forward-looking statements contained in this announcement. In
addition, even if the performance, results of statements contained
in this announcement, those results or developments may not be
indicative of results or developments in subsequent periods.
Important factors that may cause these differences include, but are
not limited to, changes in economic conditions generally; changes
in interest rates and currency fluctuations; impairments in the
value of the Company's assets; legislative/regulatory changes;
changes in taxation regimes; the availability and cost of capital
for future expenditure; the availability of suitable financing; the
ability of the Group to retain and attract suitably experienced
personnel and competition within the industry. Prospective
investors should specifically consider the factors identified in
this announcement which could cause actual results to differ before
making an investment decision.
This Announcement or any part of it does not constitute or form
part of any offer to issue or sell, or the solicitation of an offer
to acquire, purchase or subscribe for, any securities in the United
States (including its territories and possessions, any state of the
United States and the District of Columbia). The Placing Shares
have not been and will not be registered under the United States
Securities Act of 1933, as amended (the "Securities Act") or with
any securities regulatory authority of any state or jurisdiction of
the United States, and may not be offered, sold or transferred,
directly or indirectly, in the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance
with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offering
of securities in the United States.
For further information please visit the Company's website
www.dekeloil.com or contact:
DekelOil Public Limited
Youval Rasin
Shai Kol +44 (0) 207
Lincoln Moore 236 1177
Cantor Fitzgerald Europe
(Nominated Adviser and Broker)
Andrew Craig +44 (0) 207
Richard Salmond 894 7000
Beaufort Securities Limited
(Broker) +44 (0) 207
Elliot Hance 382 8300
Optiva Securities Limited
(Broker)
Christian Dennis +44 (0) 203
Jeremy King 137 1903
St Brides Partners Ltd
(Investor Relations)
Elisabeth Cowell +44 (0) 207
Frank Buhagiar 236 1177
Notes:
DekelOil Public Limited is a low cost producer of palm oil in
West Africa, which it is focused on rapidly expanding. To this end,
it has a 51% interest in one of the largest oil processing mills
based in Côte d'Ivoire, which has a capacity of 70,000 tons of CPO.
Feedstock for the Mill comes from several co-operatives and
thousands of smallholders, however it also has nearly 1,900
hectares of its own plantations. Furthermore, it has a world-class
nursery with a 1 million seedlings a year capacity.
Extracts from the Circular:
EXPECTED TIMETABLE OF EVENTS
Announcement and posting of this 24 May 2016
document
Latest time for receipt of Forms 12 noon on 13
of Instruction June 2016
Latest time for receipt of Forms 12 noon on 14
of Proxy June 2016
General Meeting 12 noon on 16
June 2016
Admission and commencement of 8.00 a.m. on
dealings in the Placing Shares 17 June 2016
expected to commence on AIM
CREST accounts expected to be 17 June 2016
credited
Record date for Share Consolidation 20 June 2016
Share Consolidation becomes effective 21 June 2016
and dealing in the Enlarged Share
Capital commences
Definitive share certificates 8 July 2016
to be dispatched by
1. Each of the times and dates above are indicative only and are
subject to change. Any such change will be notified by an
announcement on a Regulatory Information Service.
2. All of the above times refer to London time unless otherwise
stated. Admission and the commencement of dealings in the Placing
Shares and New Ordinary Shares are conditional on, inter alia, the
passing of Resolution 1 at the General Meeting.
ADMISSION AND PLACING STATISTICS
Total number of Existing Ordinary
Shares 1,543,826,860
Number of Placing Shares 812,094,680
Number of Sale Shares 22,641,480
Placing Shares as a percentage 34.5 per cent.
of the Pre-Consolidation Share
Capital
Issue Price 1.325 pence
Number of Existing Ordinary Shares
in issue after Admission but before
the Share Consolidation** 2,355,921,540
Enlarged Share Capital* 235,592,154
Gross proceeds of the Placing*** GBP10.8 million
Net proceeds of the Placing attributable GBP10.1 million
to the Company
Market capitalisation of the Company GBP31.2 million
on Admission at the Issue Price
ISIN of the Existing Ordinary CY0103462210
Shares
SEDOL of the Existing Ordinary B912QY3
Shares
ISIN of the New Ordinary Shares* CY0106502111
SEDOL of the New Ordinary Shares* BYY9DG7
*assuming the resolution relating to the Share Consolidation is
approved by Shareholders at the General Meeting
**assuming no new Existing Ordinary Shares are issued prior to
the date of the General Meeting
***excluding the proceeds from the placing of the Sale
Shares
1 Introduction
The Company has announced today that it is proposing to raise
GBP10.8 million (before the deduction of fees and expenses) through
a Placing comprising the issue of 812,094,680 Placing Shares at
1.325 pence per Placing Share and intends to acquire approximately
30.5 per cent. of the issued share capital of CSDS, its majority
owned joint venture with Biopalm Energy Ltd. Under the terms of the
Option Agreement and at a GBP to Euro foreign currency exchange
rate of EUR1.29307, the Directors expect to acquire approximately
30.5 per cent. stake in CSDS will be acquired for approximately
EUR13.1 million in cash.
In addition Cantor Fitzgerald Europe will be conditionally
placing the Sale Shares at the Issue Price as agent for Yehoshua
Shai Kol.
Each of the Acquisition and Placing are conditional, inter alia,
on the passing of Resolution 1 at the General Meeting, Admission
becoming effective by no later than 8.00 a.m. on 17 June 2016 (or
such other time and/or date, being no later than 30 June 2016, as
the Company and Cantor Fitzgerald Europe may agree) and the Placing
Agreement becoming unconditional and not being terminated prior to
Admission (in accordance with its terms). It is expected that the
Placing Shares will be admitted to trading on AIM on or around 8.00
a.m. on 17 June 2016.
The Board believes that raising equity finance by the Placing is
the most appropriate method of financing for the Company at this
time. This allows both existing and new institutional investors to
be targeted and to participate in the Placing to finance the
consideration for the Acquisition. The Board believes that the
Proposals will allow Shareholders and the Placees to benefit from
the Company's expected organic growth and potential increased
profitability. The Directors also believe that the increase in
market capitalisation of the Company and the introduction of new
institutional investors pursuant to the Placing will benefit the
Company and the Shareholders (as a whole).
In addition, the Board of DekelOil are also proposing to
reorganise the Company's share capital by way of a share
consolidation which is subject to Shareholder approval.
The Board considers the Placing to be in the best interests of
the Company and its Shareholders as a whole and why the Directors
unanimously recommend that you vote in favour of the Resolutions,
as they have irrevocably undertaken to do so in respect of their
own beneficial holdings of Ordinary Shares, in aggregate
representing approximately 35.7 per cent. of DekelOil's issued
share capital as at the date of this document.
2 Background to and reasons for the Placing and Acquisition
The Ayenouan Project
DekelOil's long stated strategy is to build a major,
asset-backed West African palm oil company. Significant progress
has been made over recent years, and the past twelve months in
particular have seen significant operational and financial progress
made by the Company with its operating plant at Ayenouan.
Initially established in 2008, when DekelOil signed a 90 year
lease for 42 ha of land situated in Ayenouan, the Company's 60 ton
per hour operating plant, its plantations and its nursery are all
now fully operational and being brought up to full capacity. The
initial funding for the Ayenouan Project was partially provided by
Biopalm Energy in 2010 at the project level with an investment of
EUR8.3 million. Since DekelOil's admission to AIM in 2013, further
funds were raised in 2014 at the Company level to fund the further
expansion of the Ayenouan Project through investment into logistics
hubs, a palm kernel crushing plant and further plantings which now
benefit the operations of the Company and its returns for
shareholders. With significant progress in the operational results
of the Company, as set out in the Company's results to 31 December
2015 and in the Q1 production update made on 5 April 2016, the
Board now believe that it is time to buy back the Biopalm Stake to
ensure that the Shareholders fully benefit from the continuing
operational progress being made at the Ayenouan Project. The
Ayenouan Project benefits from a thirteen year Côte d'Ivoire tax
exemption.
The Company employs over 300 local staff and has been a member
of the RSPO since 2008 and has been working to attain RSPO
accreditation with Proforest Limited, an internationally recognised
consultant, which has assisted with the implementation of social
and environmental programmes initiated by the Company. The
Directors expect that this certification will be received later
this year and that the Company will then become the first RSPO
certified producer of CPO in Côte d'Ivoire. Almost all of the CPO
produced by the Company is sold domestically.
Joint Venture with Biopalm Energy Limited
In June 2010, the Company entered into a strategic joint venture
with Biopalm Energy Limited. The joint venture resulted in Biopalm
Energy and the Company establishing a joint venture company - CS
DekelOil Siva Ltd, incorporated in Cyprus, in respect of which
Biopalm Energy subscribed for 49 per cent. of the issued shares of
CSDS in consideration of subscription proceeds of EUR5 million and
the issue of a EUR3.3 million capital note by Biopalm Energy.
Refinancing
Since the joint venture agreement was signed, the Ayenouan
Project has transformed into a revenue generative, profitable
vertically integrated palm oil project. Having reached this
milestone, DekelOil has since implemented a strategy to strengthen
its financial position and reduce interest expense, which began in
the last six months as two debt refinancings were implemented,
which have reduced the liabilities of the Company and also reduced
the ongoing cost of debt financing to the Ayenouan Project.
In 2015, the Company cancelled a EUR5.1 million capital note
owed to Biopalm Energy which had accrued interest at 10 per cent.
per annum and ranked above that of future dividends to ordinary
shareholders. Concurrently, DekelOil agreed to waive Biopalm
Energy's outstanding equity contribution of EUR1.1 million to the
Ayenouan Project.
DekelOil announced a further refinancing in March 2016, securing
a new seven year EUR9.15 million loan with a 7 per cent. annual
coupon, replacing an EUR8.69 million loan with an interest rate of
10.5 per cent. This refinancing secured annual savings of
approximately EUR270,000 per annum in interest costs, further
improving profitability and free cashflow.
On 25 April 2016, the Company announced that it had obtained a
credit rating of A- on short term loans and BBB- on long term loans
from Bloomfield Investment Corporation, an African focused credit
rating agency. The credit rating was assessed on the basis of
DekelOil's 2014 results. DekelOil has been informed by Sogebourse
CI, a subsidiary of Société Générale S.A., that this credit rating
is sufficient to execute an investment grade senior debt refinance
of the Company's existing EUR6.9 million senior debt with the West
African Development Bank, which carries an annual interest rate of
10.5 per cent. The Board believe that any refinancing to be
undertaken would be on terms more favourable to the Company than
those of its current debt facilities.
The Company is in the process of upgrading the credit rating
assigned by Bloomfield, which is expected to significantly improve
as it will be based on the recently released 2015 final results
with a 134 per cent. increase in full year revenue to EUR23.4
million.
The Option Agreement
On 3 December 2015, the Company entered in to the Option
Agreement pursuant to which Biopalm Energy agreed to grant the
Company an option to acquire up to 980 ordinary shares of GBP1 each
in the share capital of CSDS for a total consideration of
EUR20,999,999.30. If exercised in full, it would enable the Company
to acquire 49 per cent. of the issued share capital of CSDS.
The option to acquire the Biopalm Stake has been granted in two
tranches under the Option Agreement, namely, the First Option and
the Second Option.
The First Option may be exercised at any time by the Company
after the date of the Option Agreement and up until the expiry of a
30 day notice provided by Biopalm to the Company that the First
Option will lapse. In the event that the First Option is not
exercised prior to the expiry of such 30 days in accordance with
the terms of the Option Agreement, then it will lapse. The Company
has received a communication from Biopalm Energy which purports
that the First Option shall lapse on 1 June 2016. The Company
intends to exercise the First Option before it lapses. Following
the exercise of the First Option, First Option Completion should
occur within 45 business days from the date of the exercise notice,
however the Directors expect that this will take place earlier.
The Second Option may only be exercised on or after the First
Option Completion and in any event within six months of the First
Option Completion. If the Second Option is not exercised on or
before such date, it will lapse. The purchase price for each of the
Second Option Shares is EUR21,428.57 per share.
The First Option represents the right of the Company to acquire
24.5 per cent. of the entire issued share capital of CSDS held by
Biopalm Energy for a total consideration of EUR10,500,000. The
First Option must be exercised in full, if at all. Under the terms
of the Option Agreement, at the First Option Completion, Biopalm
Energy will also transfer 100 ordinary shares that it holds in
DekelOil CI SA, a Côte d'Ivoire subsidiary of CSDS, to the Company.
Following the transfer, CSDS will hold 100 per cent. of the issued
share capital of DekelOil CI SA.
If, upon the expiry of the Second Option, there are unexercised
Second Option Shares, Biopalm Energy has the option to convert such
unexercised Second Option Shares in CSDS to shares in the Company
within ten business days of the expiry of the Second Option in
accordance with the terms of the Option Agreement. The number of
shares in the Company to be granted to Biopalm Energy pursuant to
such conversion shall be calculated by reference to the higher
of:
-- the Company's average trading price for the 3 month period
prior to the expiry of the Second Option; or
-- the Company's share price at the date of exercise of the First Option,
and rounded off to the nearest whole number.
In addition, in the event that Biopalm Energy receives shares in
the Company in accordance with such conversion, it has agreed to
certain orderly market restrictions.
The Acquisition
DekelOil has achieved its ambition to transform into a fully
operational, efficient and profitable palm oil company with a
streamlined balance sheet and growing CPO production. By acquiring
approximately 30.5 per cent of the Biopalm Stake in CSDS, the
Company will capitalise on its achievements to date and further
consolidate its interest in the Ayenouan Project. The Acquisition
will provide shareholders with an increased benefit of the growing
Ayenouan Project by retaining a greater portion of future earnings
for the benefit of DekelOil shareholders, particularly if CPO
prices improve as the Directors expect.
The Directors believe that, after commissioning the Palm Kernel
Crushing Plant in 2015, the first full year sales of PKO and palm
kernel cake will significantly contribute to the full year revenue
and EBITDA in 2016 and that the transaction will be earnings
enhancing. In addition the Board continues to consider the
Company's ability to further develop its Guitry site, to evaluate
other opportunities in Côte d'Ivoire and bordering countries, and
continues to contemplate means of enhancing the existing Mill on a
case by case basis.
As part of the Proposals and specifically in relation to the
Acquisition, the Company intends to exercise its First Option to
acquire 24.5 per cent. of the issued share capital of CSDS and
expects to acquire, approximately, a further 6 per cent. of CSDS by
way of a partial exercise of the Second Option. In total, following
the Acquisition, DekelOil expects to hold approximately 81.5 per
cent. of the issued share capital of CSDS.
The Directors also believe that the increase in market
capitalisation of the Company and the introduction of new
institutional investors through the Placing will be of benefit to
the Company and its Shareholders.
3 Financial information on the Group for the year ended 31 December 2015
The Company reported its audited financial results for the year
ended 31 December 2015 on 14 April 2015, the highlights of which
were:
-- Record full year production of 35,770 (2014: 14,242) tonnes
of crude palm oil and 6,221 (2014: 2,504) tonnes of kernels at the
Company's 70,000 tonnes per annum Mill - representing a 151 per
cent. increase on the CPO tonnages produced for the full year of
2014
-- 134 per cent. increase in revenues to EUR23.4 million (2014:
EUR10 million) and EBITDA of EUR3.7 million compared to a 2014 loss
of EUR0.4m; derived from selling 35,573 tonnes of CPO and 4,806
tonnes of kernel (2014: 13,900 tonnes and 2,444 tonnes
respectively)
-- Strengthened balance sheet via offset agreement signed with
joint venture partner, Biopalm Energy Ltd which reduces the
Company's debt position by EUR5.1m
-- Strong progress being made to establish the Company as the
first Roundtable for Sustainable Palm Oil certified, fully
functioning producer of CPO in Côte d'Ivoire
DekelOil Executive Director Lincoln Moore said, "2015 saw
DekelOil deliver on our promise to add significant value to our
West African palm oil operation. The strength of our revenues and
EBITDA for the year and the record Q1 2016 production figures
reported recently from our 60 t/hour extraction mill, highlight the
efficacy of our activities. Operationally, we have seen a
significant increase in feedstock we have received from
smallholders, which demonstrates DekelOil's standing as a
responsible and reliable processing company in the region. We have
also recently delivered our first full quarter of production from
our new KCP, which will play a strong role in building further
value in our business during 2016. In tandem with reinforcing our
business from an operational perspective, our debt re-financing has
strengthened our balance sheet, which will help with our objective
to implement a dividend policy in the future."
4 Current trading
The Company made the following announcement on 5 April 2016 by
way of a Production Update in respect of quarter one 2016:
"DekelOil Public Limited, operator and 51% owner of the
vertically integrated Ayenouan palm oil project in Côte d'Ivoire,
is pleased to announce that crude palm oil ('CPO') production for
the quarter ended 31 March 2016 has materially exceeded
management's expectations and has increased significantly in
comparison to the corresponding period in 2015.
CPO production is delivered via the Mill, which is one of West
Africa's largest, and production of Palm Kernel Oil ('PKO') and
Palm Kernel Cake ('PKC') is delivered via its 60 t/ day Kernel
Crushing Plant ('KCP') which was commissioned in November 2015,
providing DekelOil with an additional revenue stream.
CPO Production:
-- 15,141 tonnes of CPO produced in Q1 2016:
o 56.4% like-for-like increase in CPO production compared to Q1
2015
-- Production increased month on month during Q1 2016 with
production records set in February and March 2016
o January 2016 - 3,073 tonnes of CPO produced (January 2015:
2,168 tonnes)
o February 2016 - 5,733 tonnes of CPO produced (February 2015:
3,158 tonnes)
o March 2016 - 6,335 tonnes of CPO produced (March 2015: 4,352
tonnes)
-- 65,610 tonnes of fresh fruit bunches ('FFBs') delivered to
the Mill in Q1 2016 compared to 40,448 tonnes in Q1 2015 -
demonstrates DekelOil's strengthened regional position and
heightened relationships with the local farming community, as well
as the effectiveness of the Company's logistics network
-- CPO extracted at a rate of 23.1 % during the period
-- 12,082 tonnes of CPO were sold during the period at an
average price of EUR532 per tonne. CPO prices have increased
considerably during the quarter with early sales in April taking
place at a price approximately 10% higher than the average for Q1
2016
-- Gross margins, particularly in February and March have
increased considerably compared to 2015
PKO and PKC Production:
-- Successfully produced 983 tonnes of PKO and 1,355 tonnes of
PKC during the KCP's first full quarter of operations
-- PKO extraction rate of 39.9%, representing an uplift from the
previous period as production ramps up
-- 851 tonnes of PKO sold at an average price per tonne of
EUR753 and 1,014 tonnes of PKC sold at an average price per tonne
of EUR43
DekelOil Executive Director Lincoln Moore said, "The delivery of
15,141 tonnes of CPO during the quarter represents a record for
DekelOil and materially exceeds both internal and external
expectations. We are delighted that we have increased CPO
production by 56% compared to the equivalent period in 2015, and we
remain firmly on track to deliver another year of significant
production growth at the Mill in 2016. By accommodating the
requirements of local smallholders and by making our Mill easy to
access via the development of logistics hubs, we have ensured that
DekelOil's regional reputation is that of a highly professional and
reliable operator, and this is paying dividends as more farmers
bring their FFB to us, establishing the Company as a credible
player in the market place.
"Our revenues and margins are also being impacted positively
this quarter thanks to the increase in production together with the
successful ramp up of operations at the KCP which allows us to sell
PKO and PKC, both of which are value add products. Having recently
re-financed our debt on more attractive terms, and with production
going from strength to strength, DekelOil has never been in a
better position, both operationally and financially.
"We believe there remain significant opportunities for growth in
2016 and beyond from the continued increase in our production,
together with a continual improvement of our processes and
efficiencies for dealing with the substantial increase in FFB
volumes, particularly in an environment with rising prices for CPO.
We are very excited with the further step up our operations have
made in Q1 2016 and I look forward to providing further updates on
our progress."
5 Reasons for the Placing and use of proceeds
Pursuant to the Placing, both the 812,094,680 Placing Shares and
the 22,641,480 Sale Shares have been conditionally placed with new
and existing investors at the Issue Price. The Company is therefore
proposing to raise a total of GBP10.8 million (before deduction of
fees and expenses) from the Placing. The Placing is considered by
the Directors to be in the best interests of Shareholders as it
will enable the Company to pursue its stated strategy more
effectively. The intended uses of the Gross Proceeds are set out
below, though the final percentage ownership beyond 75.5 per cent.
will depend upon the prevailing Euro to GBP foreign currency
exchange rate at the date of the completion of the Acquisition:
GBPm
Acquisition of approximately 30.5 per
cent. of CSDS
(including fees payable to the Broker) 10.7
Working Capital and expenses 0.1
Gross Proceeds 10.8
=====
The Placing will raise net proceeds equivalent to the cash
consideration payable for the acquisition of approximately 30.5 per
cent. of CSDS and the remainder of the proceeds will be used for
working capital purposes. As a result, DekelOil will both
strengthen its balance sheet and preserve its existing free cash
resources. The Placing will enable the Company to commit further
capital over the next 12 months towards the delivery of its growth
strategy described above.
The Board expects the combined effect of the Acquisition and the
Placing to be earnings enhancing in the 2016 financial year.
6 Details of the Share Consolidation
As at the date of this document, the Company has 1,543,826,860
Existing Ordinary Shares in issue. The Company is proposing to
reorganise its share capital by way of a share consolidation. Under
the Share Consolidation, which is expected to take place after
close of business on the Share Consolidation Date, it is proposed
that the Existing Ordinary Shares will be consolidated so that
every 10 Existing Ordinary Shares will be consolidated into one New
Ordinary Share.
Shareholders with a holding of Existing Ordinary Shares which is
not exactly divisible by 10 will have their holdings rounded down
to the nearest whole number of Ordinary Shares. Holders of fewer
than 10 Existing Ordinary Shares will not be entitled to receive
any New Ordinary Shares following the Share Consolidation.
No Shareholder will be entitled to a fraction of a New Ordinary
Share. Any fractional entitlements arising from the Share
Consolidation will be aggregated and sold in the market and the net
proceeds will be retained for the benefit of the Company.
The Board believes that the consolidation of share capital will
result in a more appropriate number of shares in issue for a
company of DekelOil's size in the UK market. The Share
Consolidation may also help to make the New Ordinary Shares more
attractive to investors and may result in a narrowing of the
bid/offer spread, thereby improving liquidity while also lowering
price volatility.
Immediately following the implementation of the Share
Consolidation on the Share Consolidation Date, Shareholders will
still hold the same proportion of the Company's ordinary share
capital as before the Share Consolidation (save in respect of the
fractional entitlements). Other than a change in nominal value, the
New Ordinary Shares will carry equivalent rights under the
Company's articles of association to the Existing Ordinary
Shares.
All entitlements under outstanding share options shall be
recalculated accordingly as a result of the Share Consolidation
with entitlements rounded down to the nearest whole share.
All Placing Shares will be allotted prior to the Share
Consolidation therefore assuming that the resolution to approve the
Share Consolidation is passed by Shareholders at the General
Meeting, the number of Placing Shares held by Placees will be
consolidated on the same basis as the Existing Ordinary Shares as
described above.
Approval for the Share Consolidation will be sought by the
passing of Resolution 2 at the General Meeting.
Following the Share Consolidation, replacement share
certificates will be despatched by first class post to Shareholders
in respect of newly denominated New Ordinary Shares held in
certificated form. Share certificates in respect of New Ordinary
Shares are expected to be despatched within 14 days of the Share
Consolidation Date. All share certificates previously issued will
no longer be valid and should be destroyed.
In respect of Existing Ordinary Shares held in uncertificated
form, CREST accounts will be credited with the newly denominated
Depositary Interests on the Share Consolidation Date.
7 Details of the Placing
It was announced on 24 May 2016 that the Company proposes to
raise, in aggregate, GBP10.8 million (approximately GBP10.1 million
net of expenses) by way of a placing of 812,094,680 Placing Shares
with certain new and existing institutional investors, at an issue
price of 1.325 pence per share. Cantor Fitzgerald Europe has
conditionally placed all of the Placing Shares pursuant to the
Placing Agreement.
Cantor Fitzgerald Europe has also, as agent for Yehoshua Shai
Kol, placed the Sale Shares at the Issue Price with certain new and
existing institutional investors.
The issue price of 1.325 pence per share represents a premium of
1.9 per cent. to the closing price of 1.3 pence on 23 May 2016,
being the last Business Day prior to the announcement of the
Placing. The Board unanimously agrees that the level of premium and
method of issue are appropriate to secure the investment necessary
in order to undertake the Acquisition.
In connection with the Placing, the Company and Yehoshua Shai
Kol has entered into the Placing Agreement with Cantor Fitzgerald
Europe pursuant to which Cantor Fitzgerald Europe has agreed to use
reasonable endeavours, in accordance with its terms, to procure
placees for the Placing Shares and the Sale Shares at the Issue
Price and has conditionally placed the Placing Shares and the Sale
Shares with certain new and existing institutional investors. The
Placing is conditional, inter alia, on:
-- the passing of Resolution 1 at the General Meeting;
-- the First Option not having lapsed in accordance with the
terms of the Option Agreement and the Company having given notice
of exercise of the First Option in accordance with the terms of the
Option Agreement;
-- the conditions in the Placing Agreement being satisfied or
(if applicable) waived and the Placing Agreement not having been
terminated in accordance with its terms prior to Admission; and
-- Admission becoming effective by no later than 8.00 a.m. on 17
June 2016 (or such later time and/or date, being no later than 8.00
a.m. on 30 June 2016, as the Company and Cantor Fitzgerald Europe
may agree).
Accordingly, if any of these conditions are not satisfied or, if
applicable, waived, the Placing will not proceed.
The Placing Agreement contains provisions entitling Cantor
Fitzgerald Europe to terminate the Placing Agreement at any time
prior to Admission in certain circumstances that are customary for
an agreement of this nature. If this right is exercised, the
Placing will not proceed. The Placing has not been underwritten by
Cantor Fitzgerald Europe or any other party.
The Placing Agreement contains customary warranties given by the
Company to Cantor Fitzgerald Europe and a customary indemnity given
by the Company to Cantor Fitzgerald Europe in respect of
liabilities arising out of or in connection with the Placing.
Yehoshua Shai Kol has given certain warranties to Cantor Fitzgerald
Europe as to title to the Sale Shares. Cantor Fitzgerald Europe is
entitled to terminate the Placing Agreement in certain
circumstances prior to Admission, including circumstances where any
of the warranties are found not to be true or accurate or were
misleading and which in any such case is material, or the
occurrence of certain force majeure events.
Application will be made to the London Stock Exchange for the
Placing Shares to be admitted to trading on AIM. The Placing Shares
will rank pari passu in all respects with the Existing Ordinary
Shares, including the right to receive all dividends and other
distributions declared, made or paid in respect of the Existing
Ordinary Shares following Admission. It is expected that such
Admission will become effective, and that dealings on AIM will
commence, at 8.00 a.m. on 17 June 2016.
8 General Meeting
A notice convening the GM to be held at the offices of Kerman
& Co LLP, 200 Strand, London WC2R 1DJ at 12 noon on 16 June
2016 is expected to be sent to Shareholders later today and will
include the following Resolutions to be proposed at the General
Meeting:
(a) Resolution 1 - Authority to Allot the Placing Shares and
Disapplication of Pre-emption Rights in respect of the Placing
Shares
Under section 60B of the Companies Law, every time a Cypriot
public company issues shares for cash, it must first offer those
shares to its shareholders on a pro rata basis. The rights of
pre-emption in section 60B of the Cyprus Companies Law, Cap 113
may, however, be disapplied by a special resolution of Shareholders
in a general meeting of the Company.
Pursuant to section 60B(5) of the Companies Law, this letter
constitutes a written report required to be presented to all
Shareholders setting out the reasons for exclusion of the rights of
pre-emption in relation to the allotment of shares and justifying
the proposed issue price.
Resolution 1, as set out in the Notice of GM, seeks approval to
authorise the directors to allot and issue the Placing Shares at
the Issue Price as if the rights of pre-emption in section 60B of
the Companies Law did not apply.
The Board recommends that Resolution 1 be approved by the
Shareholders.
(b) Resolution 2 - Share Consolidation
Resolution 2 will be proposed as an ordinary resolution of the
Company and if passed, it will involve every 10 Existing Ordinary
Shares being consolidated into 1 New Ordinary Share and the Share
Consolidation is expected to take place after close of business on
the Share Consolidation Date.
The Board recommends that Resolution 2 be approved by the
Shareholders.
(c) Resolution 3 - Authority to Allot New Ordinary Shares and
Disapplication of Pre-emption Rights in respect of such shares
Resolution 3 will be proposed as a special resolution of the
Company to give the Directors authority to allot and issue further
shares as if the rights of pre-emption in section 60B of the
Companies Law did not apply.
The Board recommends that Resolution 3 be approved by
Shareholders.
9 Irrevocable Undertakings
The Directors have irrevocably undertaken to vote in favour of
the Resolutions in respect of their own beneficial holdings of
550,755,279 Existing Ordinary Shares, in aggregate representing
approximately 35.7 per cent. of DekelOil's issued ordinary share
capital as at the date of this document.
10 Related Party Transaction and Directors' Dealing
It is proposed that Tutalon Investments Limited (a related party
of Youval Rasin) will subscribe for 75,471,600 Placing Shares at
the Issue Price. By virtue of the voting control exercised by
Youval Rasin over Tutalon Investments Limited, the subscription is
classified as a related party transaction pursuant to the AIM Rules
for Companies. Following the Placing (but before the Share
Consolidation), Youval Rasin will control in aggregate 479,645,141
Existing Ordinary Shares, representing approximately 20.4 per cent.
of the Pre-Consolidation Share Capital. The Independent Directors,
having consulted with Cantor Fitzgerald Europe as the Company's
nominated adviser, consider that the terms of this related party
transaction are fair and reasonable insofar as the Shareholders are
concerned.
Yehoshua Shai Kol is selling 22,641,480 Sale Shares in
connection with the Placing, and following the Placing (but before
the Share Consolidation), Yehoshua Shai Kol will hold 110,265,258
Existing Ordinary Shares, representing approximately 4.7 per cent.
of the Pre-Consolidation Share Capital.
11 Action to be taken in respect of the General Meeting
A Form of Proxy is enclosed for use by Shareholders at the
General Meeting. Shareholders are requested to complete, sign and
return their Form of Proxy to Computershare Investor Services Plc,
The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, whether or not
you intend to be present at the meeting. The Form of Proxy must be
returned as soon as possible but, in any event, so as to arrive no
later than 12 noon on 14 June 2016. The completion and return of a
Form of Proxy will not preclude you from attending the General
Meeting and voting in person should you wish to do so.
Holders of Depositary Interests are requested to complete, sign
and return their Form of Instruction appointing Computershare
Company Nominees Limited (the "Custodian") to vote the underlying
Existing Ordinary Shares on their behalf at the Meeting of
Shareholders to Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZY, England as soon as possible but,
in any event, so as to arrive no later than 12 noon on 13 June
2016. If holders of Depositary Interests or their representative do
wish to attend and/or vote at the General Meeting they should
request a Letter of Representation from the Custodian in accordance
with the instructions on the Form of Instruction.
Whether or not you propose to attend the General Meeting in
person, you are strongly encouraged to complete, sign and return
your Form of Proxy or Form of Instruction in accordance with the
instructions printed thereon as soon as possible, but in any event
so as to be received, by post or, during normal business hours
only, by hand, to c/o Computershare Investor Services Plc, The
Pavilions, Bridgwater Road, Bristol, BS99 6ZY, by no later than 12
noon on 14 June 2016 for the Form of Proxy and by no later than 12
noon on 13 June 2016 for the Form of Instruction (or, in the case
of an adjournment of the General Meeting, not later than 48 hours
before the time fixed for the holding of the adjourned meeting
(excluding any part of a day that is not a Business Day)).
If you hold your shares in the Company in uncertificated form
(that is, in CREST) you may vote using the Form of Instruction or
the CREST Voting service in accordance with the procedures set out
in the CREST Manual (please also refer to the accompanying notes to
the Notice of General Meeting set out at the end of this document).
Voting instructions submitted via CREST must be received by the
Company's Depositary (Computershare Investor Services Plc) by no
later than 12 noon on 13 June 2016 (or, in the case of an
adjournment, not later than 72 hours before the time fixed for the
holding of the adjourned meeting (excluding any part of a day that
is not a Business Day)).
Appointing a proxy in accordance with the instructions set out
above will enable your vote to be counted at the General Meeting in
the event of your absence. The completion and return of the Form of
Proxy or Form of Instruction or the use of the CREST Voting service
will not prevent you from attending and voting at the General
Meeting, or any adjournment thereof, in person should you wish to
do so. However, if holders of depositary interests or their
representative do wish to attend and/or vote at the General Meeting
they should request a Letter of Representation from the Custodian
in accordance with the instructions on the Form of Instruction.
12 Recommendation and Directors' Intentions
The Directors believe that the Proposals are in the best
interests of DekelOil and its Shareholders as a whole and
unanimously recommend that you vote in favour of the Resolutions.
Each of the Directors has irrevocably undertaken to vote in favour
of the Resolutions in respect of, in aggregate, 550,755,279
Existing Ordinary Shares, representing approximately 35.7 per cent.
of the Existing Ordinary Shares in issue as at the date of this
letter.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IOEEAXSDASFKEFF
(END) Dow Jones Newswires
May 24, 2016 02:01 ET (06:01 GMT)