Update on the Comarco transaction and COVID-19

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11 May 2020 

Anglo African Agriculture Plc
(“AAA” or the “Company”)

Update on the Comarco transaction and COVID-19

The Board of AAA today issues an update on its existing operations in the current Coronavirus environment and progress on the proposed Reverse Takeover of the Comarco group of companies (the “Comarco Transaction”).

We are pleased to report that the Company’s trading subsidiary, Dynamic Intertrade (“DI”), is fully operational despite the Coronavirus lockdown in South Africa.  As a food manufacturer DI is an essential manufacturer under South African regulations.  In addition, all staff working at DI have always kept to an extremely high standard of hygiene as dictated by FSSC requirements and worn masks and protective clothing ensuring safety of employees and products. Although DI is trading in a difficult environment it is still supplying to its major customers and production is continuing at a pace. It is expected, based on indicative orders, that for the six months ending 31 October 2020, that revenues will be almost double the corresponding period in the previous year. One of the major customers recently issued a six-month production order amounting to some US$1m starting July this year. Although the indicative orders look positive, due to the uncertainties caused by the Coronavirus the company cannot give future guidance year on year.

Progress with the Comarco Transaction has been protracted, mainly due to the general capital markets environment and the fact that many investment decisions have been put on hold until the effects of the Coronavirus are understood.  Comarco as a Port and Marine logistics operator is currently not materially affected by Coronavirus, however there is a slow down as with all trade worldwide. Activity on the Mozambique LNG project has also slowed down due to contractors not been able to travel and a general 30-day lockdown in Mozambique.  

The parties are in the process of documenting an extension of the longstop date to 31 August 2020. Given that the futures of both Comarco and AAA are closely related, it is the companies’ shared belief that the current delay will not change the long-term outcome.  As announced on 31 December 2019, one option being evaluated is to accept investors at asset level in the Port and to then complete the RTO of Comarco group into AAA. The Company is also considering initiatives to jointly build a marine logistics division within AAA using an organic route with the help of Comarco.  This would allow us to grow AAA, give exposure to a high growth business and create more free cash flow.

The $1million loan (“Loan”) the Company advanced to Comarco will have a repayment value of approx. $1.3million (£1.1million) and is repayable on 12 November 2020.  The Company has security to cover the Loan, being an option to acquire, for nominal consideration, the shares of Touchwood Investments Limited.  Touchwood’s major asset is a 4.75 acre area of land at the Comarco port which Knight Frank in Kenya recently valued at $12million  The Company also received permission from the holder of the £250,000 convertible loan notes which AAA issued as part of that financing to defer the remaining interest into a capital repayment.

The Company and its advisors are currently working on the above initiatives and will update the market in due course.

The Board remains confident of the future for the Company despite the current global environment which is affecting so many companies.

For further information, please visit www.aaaplc.com or www.comarcogroup.com contact the following:

Anglo African Agriculture Plc
David Lenigas, Non-Executive Chairman Rob Scott, Executive Director	[phone] [phone]
Comarco Group Simon Phillips (Chief Executive) Charlie Pettifer	[phone] [phone]
VSA Capital Limited (Financial Adviser and Corporate Broker)	[phone]
Andrew Monk (Corporate Broking) Andrew Raca, Maciek Szymanski (Corporate Finance)