Debt Refinancing and Working Capital Loan

RNS Number : 3123U

Agriterra Ltd

29 July 2022

 

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

29 July 2022

Agriterra Limited

('Agriterra' or the 'Company')

Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture

Debt Refinancing and Working Capital Loan

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce a significant injection of new funds into the Company from its major shareholder, which will enable:

· the immediate repayment of an existing, high cost, US$6.1m working capital facility owed to an external banking institution; and

· cheaper financing of grain purchasing in Mozambique without making use of local external banking institution working capital/overdraft facilities (which typically carry higher interest rates, reflecting the local price of borrowing in Mozambique).

Highlights

· Agriterra has today secured new debt funding from its majority shareholder, Magister Investments Limited ("Magister"), in an aggregate amount of US$7.9m (the "Magister Loans"). 

· The Magister Loans comprise two unsecured facilities of US$6.1m and US$1.8m respectively and are being provided to the Company immediately, in full, in order to facilitate the Company's wholly owned subsidiary, Desenvolvemento E Comercializacao Agricola Limitada ("DECA") financing:

Ø the full repayment of DECA's existing US$6.1m debt facilities with First Capital Bank, S.A. (the "FCB Facility") (the "External Repayment"); and

Ø grain purchasing in Mozambique without making use of local bank working capital/overdraft facilities.

· Management estimates that this debt refinancing will enable the Company to save approximately US$600,000 in annual interest and fee costs during the first year.

Background

The External Repayment (which is being facilitated by the proceeds from the Magister Loans), will remove material borrowing costs from DECA's operations and therefore allow the division to more efficiently fund its purchasing strategy. Had the facilities been in place at 1 April 2021, the Group would have saved US$479,000 for the year ended 31 March 2022.

The material terms of the Magister Loans are as follows:

1.  US$6.1m Convertible Facility

· Duration of 36 months, with principal and interest (as described below) due at the end of the term, to the extent not converted (as described below).

· Interest will be charged on this facility at the rate of SOFR* + 6% per annum (or part thereof, if applicable), on a daily basis, be compounded quarterly and paid in full on the maturity date. There are no arrangement fees payable, and prepayment is permissible at any time, in part or in full. The current interest rate charged on the FCB Facility is 17.6%, being the Mozambique Prime lending rate minus 3%.

^{(*nb SOFR is currently 1.53%)}

· Upon the occurrence of an event of default, Magister shall have certain enhanced recovery rights as follows (note these rights are similar to those that were granted to Magister as part of the prior arrangement entered into with Magister to guarantee the FCB Facility, as announced on 15 July 2021, the "Magister Recovery Rights"):

Ø to require the Company to issue new ordinary shares in the capital of the Company to Magister, equal in value to the Magister Loan plus 8% per annum (the "Restitution Amount"), at the prevailing market price of the Company's shares at such time;

Ø if compliance with the foregoing is not possible, to require the Company to create and issue to Magister new "8% preference convertible" shares in the capital of the Company (convertible into ordinary shares in the Company at a price equal to the prevailing market price of the Company's shares), equal in value to the Restitution Amount;

Ø if compliance with the foregoing is not possible, to require the Agriterra group to dispose of fixed asset(s) owned with a value equal to the Restitution Amount (after transaction costs), determined by independent valuation, to a 3^rd party and to then pay such sale proceeds to Magister; and

Ø if compliance with the foregoing is not possible, to the extent legally permitted, to require Agriterra to take such steps as are necessary to require the transfer by a subsidiary of Agriterra of asset(s) with a value equal to the Restitution Amount, determined by independent valuation, to Magister.

2.  US$1.8m Convertible Facility

· Duration of 12 months, with principal and interest (as described below) due at the end of the term, to the extent not converted (as described below).

· Interest will be charged on this facility at the rate of SOFR* + 6% per annum (or part thereof, if applicable), on a daily basis, be compounded quarterly and paid in full on the maturity date. There are no arrangement fees payable, and prepayment is permissible at any time, in part or in full.

^{(*nb SOFR is currently 1.53%)}

· Upon the occurrence of an event of default, Magister shall benefit from the Magister Recovery Rights as described above.

Magister will have the right on one or more occasions to convert all or part of the Magister Loans then outstanding (plus a pro-rated amount of accrued interest) into new ordinary shares in the capital of the Company at the prevailing 10-day VWAP of the Company's shares the day on which the conversion notice is issued, subject to all applicable laws and regulations, and discussion with the Company's Nominated Adviser.

Related Party Transaction

Entering into the Magister Loans constitutes a related party transaction under Rule 13 of AIM Rules. In this context, Caroline Havers, Neil Clayton, Rui Sant'ana Afonso and Sergio Zandamela (being the Directors on the Board who are considered to be independent) confirm, having consulted with the Company's nominated adviser, Strand Hanson Limited, that they consider that the terms of the Magister Loans to be fair and reasonable insofar as its shareholders are concerned.

Caroline Havers, Chair, said: "We are delighted to be in a position to repay DECA's external funding and benefit from cheaper working capital to fund grain purchasing, with the continued support of Magister. This balance sheet realignment should enable DECA to develop and benefit from a strengthened purchasing position, free from the high local costs of the previous borrowing in Mozambique. Again, we thank our majority shareholder, Magister, for their support in providing this new debt funding, which demonstrates their ongoing commitment to and faith in our operational plans and management team."

** ENDS **

For further information please visit www.agriterra-ltd.com or contact:

Agriterra Limited	Caroline Havers [e-mail]
Strand Hanson Limited Nominated & Financial Adviser	Ritchie Balmer / James Spinney [phone]
Peterhouse Capital Limited Broker	Duncan Vasey / Eran Zucker [phone]

 

END

 

 

MSCFLFSVDVIAFIF