Woodbois Ltd (LON:WBI) on Thursday announced a “cash flow enhancement” as it revealed details of deals with past vendors and certain lenders.
The aim is to accelerate the African timber company's growth as it moves toward a cashflow positive position during 2020, the forestry firm said in a statement.
It comes after Woodbois last week told investors that revenues increased by around 48% last year to around US$20mln, after four successive record quarters from its forestry and trading businesses.
Today, Woodbois chief executive Paul Dolan said: “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.”
Deferred additional acquisition payments
The company has agreed with Zahid Abbas, Jacob Hansen and Hadi Ghossein – all Woodbois directors and vendors in the company’s 2017 acquisition of Woodbois International ApS - that deferred payments, paid quarterly over five years and totalling US$1.25mln by a year, will now pause.
Payments to Abbas, Hansen and Ghossein will resume from 31 March 2021.
Additional loan and equity-for-interest agreements
At the same time, 1798 Volantis Fund (a vehicle of Lombard Odier Asset Management) has agreed to provide a US$1mln loan, on similar terms to a US$5mln loan provided in January 2019.
And, fellow creditor Africa Resource Investment Limited has agreed that it will not request any withdrawal prior to 31 December 2020.
Meanwhile, Volantis and Woodbois' chief executive Paul Dolan have both agreed to receive shares rather than cash as payments for interest (accruing in the period between 1 July 2019 to 31 December 2020) on loans to the company.
The company noted that shares issued under the agreement will be priced at a 9% discount to the prevailing price (a 10-day volume-weighted average price) immediately prior to stated interest payment periods – the first being 31 December 2019, followed by 30 June 2020 and 31 December 2020.
This related party transaction has been deemed by independent directors and Woodbois nominated advisor as “fair and reasonable insofar as shareholders are concerned”.
Similarly, Pelham Limited and Paul Dolan – holders of the company’s convertible bonds - have agreed to roll up interest for the period up to 31 December, so that scheduled cash payments will instead be added to the outstanding debt.
Pelham holds US$20mln of convertible bonds. Dolan, meanwhile, is the holder of US$400,000 convertible bonds and he loaned the company US$295,520 via the internal trading fund.
Dolan confident in Woodbois' "fundamental strength", thanks stakeholders
In Thursday’s statement, Dolan added: “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."