REG - Agriterra Ltd - Debt facility and Related Party Transaction

AgriterraAnnouncement

14/06/2023 11:45

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RNS Number : 7207C  Agriterra Ltd  14 June 2023

14 June 2023

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

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

 

US$1.9 million debt facility 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 US$1.9m working capital facility (the
"Facility") from First Capital Bank, S.A. (the "Bank") to enable it to finance
and support its maize buying operations (the "Financed Maize"). The Financed
Maize will 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 equivalent to US$1.9 million (in
Mozambican Metical) until June 2024

·    Interest rate set at the prime lending rate (Mozambique Central Bank)
plus 0.5%, which is equivalent to 24%.

·    Arrangement fees and commission of 1%.

 

Caroline Havers, Non-Executive Chair, said: "We are delighted to have secured
this financing and repeated support from First Capital Bank. This will enable
us to benefit from a strengthened purchasing position and set up our maize
operations for a successful trading, processing and sales season. We also
thank our majority shareholder, Magister Investments Limited, for their
support in providing the cash backed guarantee which secures the facility,
which demonstrates their ongoing commitment to and faith in our operational
plans and management team."

 

Further Details on the Facility

As a condition to providing the Facility, the Bank required that the Company
provide a cash backed guarantee (equal to 110% of the size of the Facility) 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 50.58 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 be liable to pay Magister a fee of 1.75% of the amount
drawn under the Facility (the "Guarantee Fee"), being a maximum amount of
US$35,000, which will be invoiced by Magister as the Facility is drawn down.

 

·    Provision of the Magister Guarantee 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 volume-weighted
average trading price of AGTA's shares over the 5 trading days prior to the
occurrence of an event of default;

 

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;

 

·    subject to certain conditions, the Magister Guarantee may be renewed
and/or extended automatically to reflect any future renewals, amendments
and/or extensions to the terms of the Facility (assuming a guarantee remains
required).

 

Related Party Transaction

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 are considered to be
independent of Magister) consider, having consulted with the Company's
nominated adviser, Strand Hanson Limited, that the terms of the Magister
Guarantee are fair and reasonable insofar as its shareholders are concerned.

 

 

 Agriterra Limited                    Caroline Havers
                                      caroline@agriterra-ltd.com (mailto:caroline@agriterra-ltd.com)

 Strand Hanson Limited                Ritchie Balmer / James Spinney
 (Nominated & Financial Adviser)      Tel: +44 (0) 207 409 3494
 Peterhouse Capital Limited           Lucy Williams / Rose Greensmith / Eran Zucker

 (Broker)                             +44 (0) 207 469 0930

 

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