Closing of first phase of fundraise

RNS Number : 6192A

Chaarat Gold Holdings Ltd

13 September 2018

 

13 September 2018

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

Not for release, publication or distribution to United States newswire services or for release, publication or dissemination in the United States and does not constitute an offer of the securities herein.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or any other jurisdiction.  Any securities described in this press release have not been, and will not be, registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration except in transactions exempt from, or not subject to, registration under the US Securities Act and applicable US state securities laws.  There is no public offering of the securities in the United States expected.  Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from Chaarat and that will contain detailed information about Chaarat and management, as well as financial statements.

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

Closing of first phase of fundraise of up to US$100 million

On 28 August 2018 (and as corrected by an announcement on 6 September 2018), Chaarat (AIM: CGH) announced that it had received commitments for approximately US$17 million in the first phase of up to US$100 million of a convertible debt placement (the "Fundraise") with existing convertible investors, as well as select new investors. Chaarat is pleased to announce that this first phase of the Fundraise has now successfully closed as anticipated. 

The second phase of the Fundraise, as also announced on 28 August 2018, is ongoing and is expected to close by the end of September/early October 2018. Following positive feedback from potential investors, Chaarat will amend the terms of the up to US$100 million Convertible Notes (the "2021 Notes"). Under the previous terms, interest would accrue at 10% per year for the first 18 months and then at 12% per year thereafter and be in Payment-In-Kind ("PIK") form, where a single interest payment is due on the final repayment date (31 October 2021) provided that no conversion has occurred. This shall be replaced with a combined interest rate made up of a cash coupon of 6% payable semi annually and a 4% interest rate per year PIK which increases to 6% per year for the last 18 months of the term of the 2021 Notes, again provided that no conversion has occurred. The revised terms will apply to the whole Fundraise pursuant to "most favoured nation" provisions benefitting first phase investors in the Fundraise.

In addition, post closing of phase two of the Fundraise, Chaarat will apply for a listing of the 2021 Notes, anticipated to be on the Frankfurt Open Market (Freiverkehr). It is also now anticipated that the 2021 Notes will be cleared and settled through Euroclear and Clearstream, the international clearing and settlement systems.

The previously announced acquisition is progressing towards the signing of definitive documentation. The transaction remains subject to final and confirmatory due diligence. However, substantial due diligence work has already taken place and the transaction is at an advanced stage, with the signature of definitive documents expected by the end of September/early October 2018 and completion in early/mid-November 2018.

The First Phase Closing

The first phase of the Fundraise comprised the issue on 11 September 2018 of a total of US$17,580,000 of secured 2021 convertible notes with a conversion price of £0.37 / share and a 10% interest rate per year which increases to 12% per year for the last 18 months (prior to the anticipated amendments referred to above).

Investors in the 2021 Notes consisted of both holders of existing convertible notes maturing in 2018 and 2019 ("Existing Notes") ("Existing Noteholders") and new investors.

·     Existing Noteholders invested a total of US$14,230,000 in the 2021 notes, comprising:

-     Reinvestment of US$8,805,000 of their Existing Note redemption proceeds into the 2021 Notes (of which US$1,055,000 represents the interest accrued on the Existing Notes and the balance represents principal on the Existing Notes); and

-     Investment of a further US$5,425,000.

·     New investors subscribed for US$3,350,000 of the 2021 Notes (which, together with the investment of a further US$5,425,000 by Existing Noteholders mentioned above, represents a total additional cash investment of US$8,775,000).

Existing Noteholders converted US$9,486,602 (comprising principal of US$8,400,000 and US$1,086,603 interest) of their holdings into (after rounding) 24,067,806 new ordinary shares in the Company ("Ordinary Shares") at conversion prices of:

·     675,833 Ordinary Shares for each US$250,000 (and pro rata for any amounts less than US$250,000) of Existing Notes (as to 15,994,537 Ordinary Shares); and

·     565,355 Ordinary Shares for each US$250,000 (and pro rata for any amounts less than US$250,000) of Existing Notes (as to 8,073,269 Ordinary Shares).

A total of US$4,323,671 was redeemed in cash to one Existing Noteholder, pending the outcome of ongoing discussions as to his potential re-investment.  Other Existing Noteholders have been paid balancing interest payments totaling US$16,849.

Following the closing of the first phase of the Fundraise, and the conversion of US$9,486,602 of Existing Notes into 24,067,806 Ordinary Shares, the Company's existing issued share capital has increased to 395,699,682 Ordinary Shares (rather than 395,594,906, as previously announced) and the total number of voting rights, on the basis of one vote per Ordinary Share, is therefore 395,699,682 (rather than 395,594,906, as previously announced). The Ordinary Shares were issued on 11 September 2018 and application for these Ordinary Shares to admission on AIM is expected to be made in due course upon restoration of trading of the Company's Ordinary Shares on AIM.

The Company intends to raise additional growth capital in a second fundraising round and is targeting a further closing in late September 2018.

Enquiries

Chaarat Gold Holdings Limited      

Martin Andersson (Chairman)	[phone]
Artem Volynets (CEO)	[e-mail]
Numis Securities Limited
John Prior, Paul Gillam (NOMAD)	[phone]
James Black (Corporate Broking)
BMO Capital Markets Limited
Jeffrey Couch, Thomas Rider (Joint Broker)	[phone]
Powerscourt
Conal Walsh	[phone]
Matthew Attwood	[e-mail]
Isabelle Saber

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic with a large, high grade resource - the Chaarat Gold Project. The Company's key objective is to become a low-cost gold producer generating significant production from the development of the Chaarat Gold Project. Chaarat is engaged in an active community engagement programme to optimise the value of the Chaarat investment proposition.

Chaarat aims to create value for its shareholders, employees and communities from its high-quality gold and mineral deposits in the Kyrgyz Republic by building relationships based on trust and operating to the best environmental, social and employment standards.

Further information is available at www.chaarat.com 

China Nonferrous Metals International Mining Co Ltd ("CNMIM")

Chaarat is required to give notice to CNMIM if it intends to issue any Ordinary Shares for cash or non-cash consideration. CNMIM may, within 15 business days of receipt of such notice being issued in connection with any conversion of Notes into Ordinary Shares, give written notice to require Chaarat to issue such number of Ordinary Shares to CNMIM, on the same terms as the issue of such Ordinary Shares, as is necessary to maintain the percentage shareholding of CNMIM in the Company prior to conversion. Once the Existing Notes are converted, and if and when any 2021 Notes are converted, the required notice in respect of the issue of Ordinary Shares on conversion will be sent to CNMIM and a further announcement made, if appropriate.  CNMIM currently holds 22,469,289 Ordinary Shares representing 6.05% of the issued share capital of Chaarat.

Subscription for 2021 Notes by Labro and a Director and concert party arrangements

Labro Investments Limited ("Labro") has subscribed for US$1,000,000 of 2021 Notes (by way of reinvesting US$375,000 of Existing Notes being redeemed, including interest of US$50,000, plus an additional US$575,000).  As announced previously, Martin Andersson is indirectly beneficially interested in the majority of the shares in Labro.  Following the Fundraise, including the conversion of Existing Notes by other noteholders into Ordinary Shares, Labro will continue to hold 131,878,037 Ordinary Shares representing approximately 33.33% (rather than 33.34%, as previously announced) of the Company's share capital and 21,367,521 warrants to subscribe for Ordinary Shares ("Labro Warrants") and, in addition, US$1,000,000 of 2021 Notes (which are convertible into 2,111,484 Ordinary Shares in respect of principal on the 2021 Notes and up to around 696,789 Ordinary Shares in respect of interest on the 2021 Notes assuming interest is converted into Ordinary Shares and that the 2021 Notes are converted at the final maturity date of 31 October 2021).

Martin Wiwen-Nilsson has subscribed for US$425,000 of 2021 Notes (by way of reinvesting US$375,000 of Existing Notes being redeemed, including interest of US$50,000).  Following the Fundraise, including the conversion of Existing Notes by other noteholders into Ordinary Shares, he will continue to hold 9,998,237 Ordinary Shares representing 2.53% of the Company's share capital and 200,000 options to subscribe for Ordinary Shares ("MWN Options") and, in addition, US$425,000 of 2021 Notes (which are convertible into 897,380 Ordinary Shares in respect of principal on the 2021 Notes and up to around 296,135 Ordinary Shares in respect of interest on the 2021 Notes assuming interest is converted into Ordinary Shares and that the 2021 Notes are converted at the final maturity date of 31 October 2021).

Labro and Martin Wiwen-Nilsson are members of the Concert Party (as referred to and defined in the Company's announcement on 27 October 2017) (the "Concert Party").  The Board (excluding Martin Andersson and Martin Wiwen-Nilsson) has therefore agreed that their participation in the issue of 2021 Notes will not trigger a requirement to make a mandatory offer under the Articles (see "Further information relating to the Issue" below).  If all Labro Warrants and MWN Options were exercised and all 2021 Notes issued to Labro and Martin Wiwen-Nilsson were converted (but no other warrants or options to subscribe for Ordinary Shares were exercised, no other 2021 Notes were converted and no other Ordinary Shares were issued), the Concert Party would hold 192,405,615 Ordinary Shares representing 45.67% (rather than 45.68%, as previously announced) of the resulting enlarged share capital.

1.	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Labro Investments Limited
2.	Reason for the notification
a)	Position / status	Person closely associated with the Chairman
b)	Initial notification / amendment	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument,  type of instrument		10% Secured Convertible Loan Notes 2021 10% Secured Convertible Loan Notes 2018
	Identification code		VGG203461055 (this relates to the Ordinary shares of US$0.01 each in the Company into which the 10% Secured Convertible Loan Notes 2021 and the 10% Secured Convertible Loan Notes 2018 may become convertible)
b)	Nature of the transaction		Purchase of 10% Secured Convertible Loan Notes 2021 Redemption of 10% Secured Convertible Loan Notes 2018
c)	Currency		USD
d)	Price(s) and volume(s)				Price(s)	Volume(s)
				Purchase of 10% Secured Convertible Loan Notes 2021	US$1.00	1,000,000
				Redemption of 10% Secured Convertible Loan Notes 2018	US$1.00	375,000
e)	Aggregated information		Aggregated volume Aggregated price Aggregated total Purchase of 10% Secured Convertible Loan Notes 2021 1,000,000 US$1.00 US$1,000,000 Redemption of 10% Secured Convertible Loan Notes 2018 375,000 US$1.00 US$375,000* * US$426,678.08, including accrued interest.
f)	Date of the transaction		11 September 2018
g)	Place of the transaction		Off market

1.	Details of the person discharging managerial responsibilities / person closely associated
a)	Name	Martin Wiwen-Nilsson
2.	Reason for the notification
a)	Position / status	Director
b)	Initial notification / amendment	Initial notification
3.	Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)	Name	Chaarat Gold Holdings Limited
b)	Legal entity identifier	213800T2A5CV84VTFJ70
4.	Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)	Description of the financial instrument,  type of instrument	10% Secured Convertible Loan Notes 2021 10% Secured Convertible Loan Notes 2018
	Identification code	VGG203461055 (this relates to the Ordinary shares of US$0.01 each in the Company into which the 10% Secured Convertible Loan Notes 2021 and the 10% Secured Convertible Loan Notes 2018 may become convertible)
b)	Nature of the transaction	Purchase of 10% Secured Convertible Loan Notes 2021 Redemption of 10% Secured Convertible Loan Notes 2018
c)	Currency	US$
d)	Price(s) and volume(s)	Price(s) Volume(s) Purchase of 10% Secured Convertible Loan Notes 2021 US$1.00 425,000 Redemption of 10% Secured Convertible Loan Notes 2018 US$1.00 375,000
e)	Aggregated information ·     Aggregated volume ·     Aggregated price ·     Aggregated total	Aggregated volume Aggregated price Aggregated total Purchase of 10% Secured Convertible Loan Notes 2021 425,000 US$1.00 US$425,000 Redemption of 10% Secured Convertible Loan Notes 2018 375,000 US$1.00 US$375,000* * US$426,678.08, including accrued interest.
f)	Date of the transaction	11 September 2018
g)	Place of the transaction	Off market

 

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