Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF), the AIM-quoted, integrated primary vanadium producer and energy storage solutions provider with ownership of high-grade assets in South Africa, has noted an announcement from Mustang Energy PLC (LSE:MUST) regarding its investment in VRFB Holdings Limited.
Mustang Energy said that, as announced on April 27, 2021, it acquired a 22.1% interest in VRFB Holdings, a joint venture partner in Enerox Holdings Limited (EHL), for a consideration of approximately US$7.5mln under the terms of an investment agreement.
The company said the investment was financed through the issue of US$8.0mln in Convertible Loan Notes (2021 CLNs) to several investors bearing 10% interest per annum, with surplus funds being used to pay costs associated with the Investment and the general working capital requirements of Mustang Energy
A condition of the investment agreement and the 2021 CLN instrument is that if Mustang Energy shares were not readmitted to trading on the London Stock Exchange's main market for listed securities by July 31, 2022, since extended to October 28, 2022 - or such later date as may be agreed between the company and the noteholders - the company has the right to require Bushveld Minerals Limited (AIM:BMN, OTC:BSHVF), in consideration of it transferring to Bushveld Energy Limited - a 84% owned subsidiary of Bushveld Minerals - all its shares in VRFB, to issue to each noteholder as a backstop such number of new ordinary shares in Bushveld Minerals - at a price equal to the 20-day volume weighted average price prior to the date of issue - as is equivalent to the principal amount of the 2021 CLNs held together with all accrued and unpaid interest thereon.
As announced on September 2, 2022, a noteholder of a principal amount of US$1.25mln notified the company that it wished to effect the backstop in respect of its 2021 CLNs. As a result, Bushveld Minerals allotted shares to the redeeming noteholder in settlement of the backstop CLNs, as it announced on September 13, 2022. On satisfaction of the backstop and under the terms of the 2021 CLN instrument, the backstop CLNs were cancelled and are not capable of being reissued. Therefore, the outstanding principal amount of the 2021 CLNs has been reduced to US$6.75mln.
Mustang Energy said that to obviate the requirement of the company to transfer a pro-rata amount of its VRFB shares as a result of the cancellation of the backstop CLNs, Bushveld Minerals has subscribed for new convertible loan notes issued by the company with a principal amount of US$1.25mln - including accrued and unpaid interest thereon amounting to approximately US$181,000 - bearing 10% interest per annum.
Bushveld Minerals therefore now holds a total principal amount of US$2.75mln CLNs in Mustang Energy.
In addition, Mustang Energy noted that, as announced on August 3, 2022, it and Acacia Resources Limited entered into a conditional share exchange agreement under which the company proposes to acquire Acacia's 27.4% shareholding in VRFB for a consideration of approximately US$10.5mln to be satisfied by the proposed issue of 43,056,989 new ordinary shares in the capital of the company issued at 20p each.
Completion of that share exchange, together with the share purchase under the investment agreement, is conditional on the finalisation of a prospectus and a review process of that prospectus by the Financial Conduct Authority (FCA) in relation to Mustang Energy's announced reverse takeover, a process that has commenced, the company said.
Assuming successful completion of its reverse takeover, Mustang Energy would hold a total equity interest - and concurrent voting rights - in VRFB of 49.5%, with the balance of 50.5% would be held by Bushveld Energy.
Acacia Resource currently holds 2,471,600 ordinary shares, equating to approximately 24% of Mustang Energy's issued share capital, and is the company's largest shareholder.