2020 cash flow enhancement and additional funds

RNS Number : 9516Z

Woodbois Limited

16 January 2020

 

16 January 2020

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

Woodbois Limited

("Woodbois", the "Group" or the "Company")

(AIM: WBI)

2020 cash flow enhancement and additional funds to assist trading growth

Woodbois, the African focused forestry and timber trading company, is pleased to provide an update regarding certain cash enhancement measures for 2020, set out below, that have been agreed upon with various stakeholders in order to accelerate the Company's growth as it moves toward a cashflow positive position during 2020.

Paul Dolan (CEO) commented, "Following our statement of record quarterly and annual revenues for 2019 on 7 January, I am now pleased to be able to detail important cash-management measures which will allow the Company to enter the new decade in a stronger position as we move towards generating sustainable positive cash-flow. The deferral by a year of the 2020 acquisition purchase payments by our senior management team is an important statement of support for, and confidence in, the fundamental strength of our business. I am grateful to the team, and also to our largest stakeholders for demonstrating their commitment to strengthening the Company's working capital position. This will assist our ability to continue to pursue growth opportunities and maintain our proven trajectory of rapid growth."

Deferred Consideration re Acquisition of Woodbois in 2017

On 24 May 2017 the Company (previously known as Obtala Limited) announced the acquisition of Woodbois International ApS (and subsequently changed the Company name to Woodbois Limited). The terms of the acquisition provided for deferred cash consideration of US$5.0m, payable in equal quarterly payments over 5 years, commencing 30 September 2017. The Company has agreed with the vendors, Zahid Abbas, Jacob Hansen and Hadi Ghossein or companies wholly owned and controlled by them, each a Director of the Company, to defer payments totalling $1.25m by a year, being the quarterly payments for the period from 1 January 2020 to 31 December 2020, following which quarterly payments will resume on 31 March 2021.

Internal Trading Fund ("ITF")

1798 Volantis Fund Limited ("Volantis"), a fund managed on a discretionary basis by Lombard Odier Asset Management group ("Lombard"), will provide an additional US$1.0m through investment into the Group's ITF ("Additional Loan") by way of an additional loan agreement with Woodbois Trading Limited, a wholly owned subsidiary of the Group. The Additional Loan funds may also be utilised for general working capital purposes.

The Additional Loan is on similar terms as the US$5.0m already invested in the ITF by Volantis, announced on 10 January 2019, with an interest coupon of 11.5% per annum to be paid semi-annually. The Additional Loan may be recalled by Volantis at any time and is repayable on 20 January 2021.

Furthermore, Africa Resource Investment Limited ("ARI") has agreed that, in respect of its existing $5.0m ITF loan, it will not request any withdrawal prior to 31 December 2020.

In addition, each of Volantis and Paul Dolan, Chief Executive, have indicated their intention to receive Woodbois ordinary shares ("Shares") in lieu of interest (at 11.5% pa) for the period from 1 July 2019 to 31 December 2020 in respect of their ITF loans. A further announcement will be made in this regard.  

Convertible Bond interest

In connection with the Company's 4% convertible bonds 2024 ("Bonds"), issued on 21 October 2019, Pelham Limited (a company controlled by Miles Pelham) and Paul Dolan have agreed to roll up interest payments due for the period from issue until 31 December 2020 on an aggregate $20.4m of Bonds. These agreements (the "Bond Interest Agreements") are for $20.0m of Bonds held by Miles Pelham and $0.40m of Bonds held by Paul Dolan. In the event such Bonds remain unconverted as at 31 December 2020, the rolled-up interest would result in the issue of approximately $0.98m additional Bonds at that time.

As detailed in the Company's announcement of 20 September 2019, the Bondholders are deemed to be a concert party for the purposes of the Takeover Code. In order to avoid an inadvertent breach of Rule 9 of the Takeover Code, Pelham Limited has undertaken to the Company that its aggregate interest (as defined in the Takeover Code) in Shares, when aggregated with all Shares which have been issued to (and are still held by) any other Bondholders; and all other Shares in which the other Bondholders are interested (as defined in the Takeover Code) and in respect of which the Company is aware (having made all reasonable enquiries), will not at any time exceed 28.0% of the enlarged issued Share capital of the Company. This undertaking remains in force.

Related Party Transactions

Volantis is a substantial shareholder of the Company. Accordingly, the Additional Loan is classified as a related party transaction under the AIM Rules for Companies. The independent directors (being all the directors other than Henry Turcan, who is an employee of Lombard and so is precluded from taking part in deliberations), having consulted with Arden Partners, nominated adviser, consider that the terms of the Additional Loan are fair and reasonable insofar as shareholders are concerned.

Miles Pelham is a substantial shareholder of the Company and Paul Dolan is CEO and a director of the Company. Accordingly, the Bond Interest Agreements are deemed to be related party transactions for the purposes of the AIM Rules for Companies. The independent directors (being all the directors other than Paul Dolan), having consulted with Arden Partners as its nominated adviser, consider the terms of those transactions are fair and reasonable insofar as shareholders are concerned.

Enquiries:

Woodbois Limited

Paul Dolan - CEO

www.woodbois.com

[phone]

Arden Partners Plc (Nominated adviser and broker)

Richard Johnson

[phone]

 

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