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Agriterra Ltd - US$4.6m financing and Related Party Transaction

RNS Number : 8367N
Agriterra Ltd
26 May 2020
 

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.

 

26 May 2020

Agriterra Limited ('Agriterra' or the 'Company')

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

 

US$4.6 million financing and Related Party Transaction

 

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce that its wholly-owned subsidiary, Desenvolvemento E Comercializacao Agricola Limitada ("DECA") has secured a c. US$4.6m working capital facility (the "Facility") from First Capital Bank, S.A. (the "Bank") to enable it to finance and secure the purchase of up to 42,000 tonnes of raw maize during the period May 2020 to August 2020 (the "Financed Maize"). The Financed Maize will then be processed and sold by DECA from its facilities in Chimoio, Mozambique into the local wholesale, retail and NGO markets.

 

The material terms of the Facility from the Bank are as follows:

·    Revolving overdraft facility of MZN 306m (c. US$4.6m) for 12 months

·    Interest rate of 85% of Mozambique Central Bank prime rate, which is currently 17.90%

·    Interest payment holiday for 6 months

·    Arrangement fees of 1.1%

 

As a condition to providing the Facility, the Bank has required that the Company provide a cash backed guarantee as security (the "Bank Security"). In order to satisfy this condition, the Company has entered into an agreement with Magister Investments Limited ("Magister"), the Company's 50.01 per cent. shareholder, pursuant to which Magister has agreed to provide the necessary security (the "Magister Guarantee").

 

The material terms of the Magister Guarantee are as follows:

 

·    Agriterra will pay Magister a fee of 1.75% of the total facility amount (the "Guarantee Fee") being US$80,500 shortly after entering into the Facility/Magister Guarantee.

 

·    Provision of the Magister Guarantee by Magister is subject to the prior and ongoing satisfaction of the certain revenue account segregation and reporting conditions with which DECA and AGTA agree to comply.

 

·    In the event that the Bank take action to enforce the Bank Security or in the event of a breach of the Magister Guarantee by Agriterra or by DECA (as applicable), in order to recover the equivalent amount called upon by the Bank plus interest calculated at 8% per annum (the "Restitution Amount"), Magister shall be entitled by notice in writing to exercise one of the following rights in the following order:

 

Ø to require Agriterra to issue new ordinary shares in the capital of AGTA to Magister, equal in value to the Restitution Amount (at the par value of Agriterra's ordinary shares, provided that the prevailing Agriterra share price at such time is no less than the par value per share);

 

Ø if compliance with the foregoing is not possible, to require Agriterra to create and issue to Magister new "8% preference convertible" shares in the capital of Agriterra (convertible into ordinary shares in Agriterra at a price equal to the par value per share), 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 3rd 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 AGTA 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.

 

Related Party Transaction

The entering into the Magister Guarantee constitutes a related party transaction under Rule 13 of AIM Rules. In this context, Caroline Havers, Neil Clayton and Sergio Zandamela (being the Directors on the Board who do not represent Magister) confirm, having consulted with the Company's nominated adviser, Strand Hanson Limited, that they consider that the terms of the Magister Guarantee to be fair and reasonable insofar as its shareholders are concerned.

 

Caroline Havers, Executive Chair, said: "We are delighted to have secured this significant facility which should enable us to benefit from a strengthened purchasing position and set up our maize operations for a successful trading, processing and sales season. We could not have achieved access to these funds without the support of our majority shareholder, Magister Investments Limited, and are grateful that they have agreed to provide the cash backed guarantee which secures the facility. We believe that this demonstrates their commitment to our business and the faith and belief which we all have in the ability of our in-country management team to successfully manage an increased buying programme."

 

** ENDS **

 

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

 

Agriterra Limited

Strand Hanson Limited
(Nominated & Financial Adviser and Broker)

Caroline Havers

James Spinney / Ritchie Balmer

[email protected]

+44 (0) 207 409 3494

 


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