Conditional Refinancing & Business update

RNS Number : 2964O

African Battery Metals PLC

28 January 2019

 

28 January 2019

AFRICAN BATTERY METALS PLC ("ABM" or the "Company")

REFINANCING, BUSINESS STRATEGIC UPDATE AND UPDATE ON RESUMPTION OF TRADING

African Battery Metals plc (LON:ABM) the AIM listed African focused exploration company developing projects in strategic battery metals today announces a refinancing and business strategic update.

HIGHLIGHTS:

§ Conditional placing and subscription (the "Refinancing") raising £1,000,000 at a price of 0.5 pence per new ordinary share, resulting in the issue of 200,000,000 new ordinary shares of 0.1 pence each, (the "Refinancing Shares");

§ The Refinancing of the Company is subject to the passing of all resolutions at a General Meeting to be held by the Company, (the "General Meeting") (further details of which are set out below), the resumption to trading in the Company securities on AIM and the admission of to trading on AIM of the Refinancing Shares, Creditor Shares, Fee Shares and Director Shares ("Admission");

§ Each Refinancing Share has an attaching warrant to subscribe for a new ordinary share of 0.1 pence each in the Company, ("New Ordinary Shares"), at a price of 1 pence per share with a two-year life to expiry (the "Refinancing Warrants") from the date of Admission;

§ The refinancing exercise will allow payment of all material Company creditors through a mixture of cash and/or shares and enable the Company to be essentially debt free with a robust cash position sufficient for at least 12 months of operation when considering current business costs and operational plans;

§ Subject to the passing of resolutions at the General Meeting and the conditions detailed below, Roger Murphy, CEO and Matt Wood, Executive Director to step down from the board with Andrew Bell to be appointed Executive Chairman and Paul Johnson as Executive Director;

§ Andrew Bell and Paul Johnson (or their connected parties) have committed to subscribe for £50,000 each in the Refinancing on the terms as outlined above. Additionally, Red Rock Resources, a company of which Andrew Bell is a director, has committed to subscribe for £100,000 in the Refinancing; and

§ A full strategic and operational review will be undertaken to ensure corporate costs are minimised, to target forward exploration resources in a prioritised manner and to consider potential new opportunities to complement and diversify the Company's interests.

Roger Murphy, Chief Executive Officer of African Battery Metals commented: 

"Following the Company's announcement on 11 December 2018, I am pleased to report the board have been able to negotiate and conclude a business restructuring and refinancing package that enables the Company, subject to shareholder approval at General Meeting, to return to trading on the market.

I would like to thank all the parties involved including my fellow board members and our advisers, for their support during what has been an intensive six weeks of work and discussions to reach this point today.

Of paramount importance is that the Company has now been financially stabilised and that it utilises this fresh start to grow and return value to our shareholders.  In this regard I thank shareholders for their support and trust that the business can now flourish and become a strong natural resource exploration and development company. I wish the new management team the very best in this endeavour."

DETAILED TRANSACTION INFORMATION

Refinancing Exercise:

§ Conditional Placing and subscription raising £1,000,000 at a price of 0.5 pence per New Ordinary Share, resulting in the issue of 200,000,000 new ordinary shares of 0.1 pence each, subject to the passing of all resolutions at a General Meeting to be held by the Company, the resumption of trading in the Company securities on AIM and the admission to trading on AIM of the Refinancing Shares, Creditor Shares, Fee Shares and Director Shares ("Admission")

§ Each Refinancing Share has an attaching warrant to subscribe for one New Ordinary Share at a price of 1 pence per share with a two-year life to expiry from the date of admission resulting in the issue of 200,000,000 1 pence warrants;

§ Proposed new directors Andrew Bell and Paul Johnson to each subscribe for 10,000,000 New Ordinary Shares in the Refinancing representing a financial commitment of £50,000 per proposed director; and

§ Red Rock Resources plc ("Red Rock Resources"), a company of which Andrew Bell is a director and a significant shareholder as defined by the AIM Rules for Companies, has committed to subscribe for 20,000,000 new ordinary shares in the Refinancing, representing a commitment of £100,000.

Business Creditor Settlement:

§ Following Admission outstanding amounts owed to creditors will be settled and the Company will have no material debts remaining;

§ This will be partly accomplished by a cash payment to certain creditors representing 70% of their outstanding balances;

§ In addition, certain creditors have elected to receive New Ordinary Shares, (the "Creditor Shares") in lieu of outstanding balances (rather than the cash payment referred to above) as a result of this 13,402,938 New Ordinary Shares at 0.5 pence per share will be issued to settled approximately £67,014 of credit balances.  Creditor Shares issued are subject to lock-in agreement for a period of six months from Admission. Additionally, Mr Brian Moritz, a former non-executive director of the Company has been granted 6,000,000 warrants to subscribe for New Ordinary Shares at the warrant price of 0.5 pence with a life to expiry of two years from Admission in settlement of the amount due to him from the Company (the "Creditor Warrants");

§ In addition to the above, directors Roger Murphy, Matt Wood and Iain Macpherson, have agreed to settle all outstanding amounts due from the Company, (net of tax) through the issue of new ordinary shares at 0.5 pence per share ("Director Shares"). The Director Shares will be subject to a lock-in agreement for a six month period.  Further detail on the issue of Director Shares can be found below:

Director	Director Shares to be issued on Admission	Total number of Ordinary Shares held on Admission*	% of Enlarged Share Capital held on Admission*
Roger Murphy	1,644,670	3,360,762	0.93%
Matt Wood	642,120	1,893,090	0.52%
Iain Macpherson	769,230	2,056,664	0.57%

*As adjusted by the proposed issue of Refinancing Shares, Creditor Shares, Fee Shares and Director   Shares.

In addition to the Director Shares, certain of the Creditor Shares are being issued to related parties of the Directors, such that 2,000,000 New Ordinary Shares are being issued to ONE Advisory Ltd, a company connected to Matt Wood, in lieu of fees due, and 8,605,738 new ordinary shares are being issued to Ongeza Mining, a company connected to Iain Macpherson.

The proposed issue of the Director Shares and the issue of Creditor Shares to One Advisory Ltd and Ongeza Mining as described above is a related party transaction for the purposes of AIM Rule 13 by virtue of the Director Shares being issued to Roger Murphy, Iain Macpherson and Matt Wood and their related parties. Scott Richardson Brown, the independent Director for the purposes of the issue of the Director Shares and the issue of Creditor Shares to One Advisory Ltd and Ongeza Mining considers, having consulted with the Company's nominated adviser, SP Angel, that the issue of the Director Shares to such related parties is fair and reasonable insofar as the Shareholders are concerned.

General Meeting:

§ The Company proposes to hold the General Meeting in February 2019 to secure shareholder approval for the issue of equity and warrants in the refinancing and to authorise the board to issue further new Ordinary Shares on a non-pre-emptive basis to support future activities of the Company;

§ Irrevocable undertakings to vote in favour of the General Meeting resolutions have been secured from existing shareholders holding 64,925,666 ordinary shares of the Company, representing 47.54% of the Company's issued ordinary shares;

§ A further announcement will be made by the Company confirming dispatch of the circular and notice of General Meeting. 

Business Restructuring:

§ Subject to the passing of resolutions at the General Meeting, Roger Murphy, CEO of ABM will step down at the conclusion of the General Meeting and Matt Wood, Executive Director, will step down immediately following the publication of the Audited Financial Accounts of the Company for the year ended 30 September 2018;

§ Roger Murphy is to provide consultancy services to the Company following his resignation to support with the transition following the General Meeting;

§ One Advisory Limited, ("One Advisory") a company of which Matt Wood is a director and shareholder, will continue to provide administrative support in respect of accounting, general legal and company secretarial support;

§ In addition, subject to passing of resolutions at the General Meeting, Andrew Bell and Paul Johnson will be appointed as directors in the roles of Executive Chairman and Executive Director respectively, with effect from the conclusion of the General Meeting;

§ It is proposed that Red Rock Resources, a Company of which Andrew Bell is significant shareholder and acts as CEO & Chairman, and Value Generation Limited, a Company beneficially owned by Paul Johnson will be awarded 5,000,000 New Ordinary Shares at 0.5 pence per share each as payment for restructuring fees ("Fee Shares"), representing a total of £50,000 costs settled by this share issue.  The Fee Shares issued are subject to a lock-in agreement for a period of six months from Admission;

§ Andrew Bell and Paul Johnson to be granted 13,613,929 management options each, (the "Management Options") at a strike price of 1 pence, vesting immediately on conclusion of the General Meeting and with a life to expiry of 3 years. These options will only be exercisable once the volume weighted average share price of the Company is 1.5 pence or greater for five consecutive trading days, after which they may be exercised at any time.

The proposed issue of the Management Options as described above is a related party transaction for the purposes of AIM Rule 13 by virtue of the Management Options being awarded to Andrew Bell and Paul Johnson. Scott Richardson Brown and Iain MacPherson, being the independent Directors for the purposes of the award of the Management Options considers, having consulted with the Company's nominated adviser, SP Angel, that the issue of the Director Shares to such related parties is fair and reasonable insofar as the Shareholders are concerned.

Business Strategic and Operational Review:

§ A programme of core cost review has been undertaken and the corporate plc costs of the business have been reduced to minimal levels; 

§ All board incentivisation will be: reflective of the cash position of the Company; performance based and will be published on the Company's website for full transparency;

§ The Company is to undertake a full strategic and operational review to: 

-      Review existing Company interests and target exploration resources in a prioritised manner;

-    To develop a Strategic and Operational Plan for the Company, which will be published by market announcement for the benefit of all shareholders; and

-      To identify, review and if appropriate acquire new opportunities to complement and diversify existing business interests.  This may include the potential acquisition of interests within Africa, or new territories.  In addition, this may include Battery Metals interests or interests in other commodity categories.

Appointment of Joint Broker:

§ SI Capital Limited to be appointed as joint broker to the Company with effect from conclusion of the General Meeting, subject to passing of all resolutions and the resumption of trading in the Company's securities on AIM; and 

§ SI Capital Limited are to be awarded 2,500,000 warrants to subscribe for New Ordinary Shares at the above warrant price of 1.0p with a life to expiry of two years ("Broker Warrants").  In addition, SP Angel Limited (Joint Broker) to also to be awarded 2,500,000 Broker Warrants on the same terms.

Proposed board changes - Further information

A noted above, it is proposed that, subject to the passing of resolutions at the General Meeting to be held by the Company, Roger Murphy will step down from the Board with immediate effect and Matt Wood will step down upon publication of the Company's audited results for the year ended 30 September 2018. Iain Macpherson and Scott Richardson Brown will remain as non-executive directors of the Company. It is further proposed that Paul Johnson will be appointed Executive Director and Andrew Bell be appointed as Executive Chairman.

Paul Johnson

Paul Johnson holds a degree in Management Science from the University of Manchester Institute of Science and Technology and is a Chartered Accountant, Chartered Loss Adjuster and Associate of the Chartered Insurance Institute.  Paul is the Chief Executive Officer of Value Generation Limited a family investment and advisory company focused on the natural resource and related fintech sectors. 

Paul Johnson is an experienced public company director and has previously been Chief Executive Officer of Metal Tiger plc (AIM), Metal NRG plc (NEX) and China Africa Resources plc (AIM).  He has been Chairman of ECR Minerals plc (AIM) and Non-Executive Director of Greatland Gold plc (AIM), Papua Mining plc (AIM) and Thor Mining plc (AIM).

Andrew Bell

Andrew Bell began his career as a natural resources analyst at Morgan Grenfell & Co. in the 1970s. His business experience encompasses periods in fund management and advisory work at leading financial institutions, international corporate finance work and private equity. Andrew Bell's listed company directorships are Regency Mines plc (AIM)Non-Executive Director, Red Rock Resources Plc (AIM), Chairman and Chief Executive Officer, and Jupiter Mines Ltd (ASX), Non-Executive Director. Andrew Bell is also a former Director various resource sector companies including Star Striker Ltd (now Intiger Group Ltd) (ASX), and a former Non-Executive Chairman of Greatland Gold Plc (AIM).

Andrew Bell has considerable sector experience, and his relevant skills also include financial, business and legal analysis, knowledge of Africa and Asia, as well as experience of public markets.

Further information in relation to the appointment of Mr Paul Johnson and Mr Andrew Bell pursuant to paragraph (g) of Schedule Two of the AIM Rules for Companies appears below.

Paul Johnson (aged 49)
Current Directorships / Partnerships	Past Directorships / Partnerships (last 5 years)
Loncad Limited Value Generation Limited Tomas Capital Limited Glenpani Capital Limited GPC 101 Limited Catalyst Information Services Limited	Thor Mining Plc Metal NRG Plc Pembridge Resources Plc (formerly China Africa Resources Plc) Rockfire Resources Plc (formerly Papua Mining Plc ) NTZ Resources Limited Metal Capital Limited Metal Tiger Plc Open 2 Barter Limited Greatland Gold Plc Catalyst Strategies Limited Strathmore Accountants Limited Commercial Assure Limited ECR Minerals Plc
Neither Paul Johnson or any entity controlled by him holds any shares in the Company as at the date of this announcement. Andrew Ronald McMillan Bell (aged 63)
Current Directorships / Partnerships	Past Directorships / Partnerships (last 5 years)
Allied Energy Services Limited Esteq Limited Jupiter Mines Limited Mid Migori Mining Ltd (Kenya) Oro Nickel Ltd (PNG) Red Rock Kenya Ltd (Kenya) Red Rock Resources Congo SAU Red Rock Resources Plc Regency Mines Australasia Pty Ltd Regency Mines Plc RRR Kenya Limited (Kenya) Steelmin Limited	Bell Hydrocarbons Limited Four Points Mining SAS (Columbia) General Mining Limited Gold Elephant Limited Goldstone Resources Limited Greatland Gold Plc Melville Bay Ltd Resource Star Limited Star Striker Limited

Neither Andrew Bell or any entity controlled by him holds any shares in the Company as at the date of this announcement.

Mr Bell was a Director of General Mining Limited, a holding company established in 2004. The company had no profits. In July 2011, the company was wound-up under a winding-up order due to unpaid fines to HM Revenue and Customs.

In 1993 a fall in the value of properties held as a security for its loans following the substantial fall in property values of the early 1990s resulted in The Housing Loan Corporation PLC, a company of which Andrew Bell was non-executive chairman, going into administrative receivership. The company was dissolved in 2001. No criticism of the directors was made

Andrew Bell entered into an individual voluntary arrangement ("IVA") with his creditors in 1993 (High Court No. 709 of 1993). Andrew Bell had made or was guarantor of borrowings secured on properties, including development properties. Following a substantial rise in interest rates and decline in capital values at the beginning of the 1990s, he was left with debts he could not meet and was advised to enter into an IVA. The IVA concluded on 31 December 1997.

There is no other information that is required to be disclosed pursuant to paragraph (g) of Schedule Two of the AIM Rules for Companies.

ADMISSION AND TOTAL VOTING RIGHTS

The Company has conditionally raised £1,000,000, before expenses, through the proposed issue of 200,000,000 new ordinary shares of 0.1p each in the Company at a price of 0.5 pence per share with certain existing Shareholders and new investors. As noted above, the Refinancing of the Company is subject to the passing of all resolutions at a General Meeting to be held by the Company, the resumption of trading in the Company securities on AIM and the admission to trading on AIM of the Refinancing Shares, Creditor Shares, Fee Shares and Director Shares. Subject to the passing of resolutions at the General Meeting to be held by the Company, application will be made for the Refinancing Shares, Director Shares, Creditor Shares and Fee Shares to be admitted to trading on AIM and it is expected that Admission will become effective and dealing in the Shares will commence on or about 18 February 2019.  The Refinancing Shares, Creditor Shares, Fee Shares and Director Shares will rank pari passu with the existing Ordinary Shares. 

Following Admission, the Enlarged Issued Share Capital of the Company will be comprised of 363,038,101 ordinary shares of 0.1 pence each.  The above figure of 363,038,101 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in ABM under the FCA's Disclosure and Transparency Rule.

SUMMARY OF PROPOSED COMPANY FINANCIAL INSTRUMENTS

Subject to the passing of the General Meeting resolutions and lifting of the AIM trading suspension, the following table summarises the equity, warrants and options in issue.

Financial Instrument	Equity	Warrants/Options
Existing Issued Ordinary Share Capital	136,579,143
Existing Options / Warrants		8,578,980
Refinancing Shares	200,000,000
Refinancing Warrants		200,000,000
Creditor Warrants		6,000,000
Fee Shares	10,000,000
Creditor Shares	13,402,938	nil
Director Shares (fee settlement)	3,056,020	nil
Broker Warrants		5,000,000
New Director Options		27,227,858
Totals	363,038,101	246,806,838

**Ends**

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information please visit https://www.abmplc.com/ or contact:

African Battery Metals plc
Roger Murphy (CEO)	[phone]
SP Angel Corporate Finance (Nomad and Joint Broker)
Ewan Leggat	[phone]

SI Capital Limited (Proposed Joint Broker)

Nick Emerson                                                                                                                    [phone]

NOTES TO EDITORS

ABM is an AIM listed, Africa focused, resource company exploring for the key metals used in next generation batteries that fuel the new electric vehicle revolution. The Board and team of advisors, who have proven expertise in African exploration, mining and project generation, have identified an opportunity to utilise the Company's position to become a leader in the London market for investors to gain exposure to the battery metal commodity suite, particularly cobalt, lithium, copper and nickel. 

 

END

 

 

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