REG - Agriterra Ltd - Debt Refinancing and Working Capital Loan

AgriterraAnnouncement

29/07/2022 15:00

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RNS Number : 3123U  Agriterra Ltd  29 July 2022

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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.

 

29 July 2022

Agriterra Limited

('Agriterra' or the 'Company')

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

 

Debt Refinancing and Working Capital Loan

 

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to
announce a significant injection of new funds into the Company from its major
shareholder, which will enable:

 

·    the immediate repayment of an existing, high cost, US$6.1m working
capital facility owed to an external banking institution; and

 

·    cheaper financing of grain purchasing in Mozambique without making
use of local external banking institution working capital/overdraft facilities
(which typically carry higher interest rates, reflecting the local price of
borrowing in Mozambique).

 

Highlights

 

·    Agriterra has today secured new debt funding from its majority
shareholder, Magister Investments Limited ("Magister"), in an aggregate amount
of US$7.9m (the "Magister Loans").

 

·    The Magister Loans comprise two unsecured facilities of US$6.1m and
US$1.8m respectively and are being provided to the Company immediately, in
full, in order to facilitate the Company's wholly owned subsidiary,
Desenvolvemento E Comercializacao Agricola Limitada ("DECA") financing:

 

Ø the full repayment of DECA's existing US$6.1m debt facilities with First
Capital Bank, S.A. (the "FCB Facility") (the "External Repayment"); and

 

Ø grain purchasing in Mozambique without making use of local bank working
capital/overdraft facilities.

 

·    Management estimates that this debt refinancing will enable the
Company to save approximately US$600,000 in annual interest and fee costs
during the first year.

 

Background

 

The External Repayment (which is being facilitated by the proceeds from the
Magister Loans), will remove material borrowing costs from DECA's operations
and therefore allow the division to more efficiently fund its purchasing
strategy. Had the facilities been in place at 1 April 2021, the Group would
have saved US$479,000 for the year ended 31 March 2022.

 

The material terms of the Magister Loans are as follows:

 

1.    US$6.1m Convertible Facility

 

·    Duration of 36 months, with principal and interest (as described
below) due at the end of the term, to the extent not converted (as described
below).

 

·    Interest will be charged on this facility at the rate of SOFR* + 6%
per annum (or part thereof, if applicable), on a daily basis, be compounded
quarterly and paid in full on the maturity date. There are no arrangement fees
payable, and prepayment is permissible at any time, in part or in full. The
current interest rate charged on the FCB Facility is 17.6%, being the
Mozambique Prime lending rate minus 3%.

((*nb SOFR is currently 1.53%))

 

·    Upon the occurrence of an event of default, Magister shall have
certain enhanced recovery rights as follows (note these rights are similar to
those that were granted to Magister as part of the prior arrangement entered
into with Magister to guarantee the FCB Facility, as announced on 15 July
2021, the "Magister Recovery Rights"):

 

Ø to require the Company to issue new ordinary shares in the capital of the
Company to Magister, equal in value to the Magister Loan plus 8% per annum
(the "Restitution Amount"), at the prevailing market price of the Company's
shares at such time;

 

Ø if compliance with the foregoing is not possible, to require the Company to
create and issue to Magister new "8% preference convertible" shares in the
capital of the Company (convertible into ordinary shares in the Company at a
price equal to the prevailing market price of the Company's shares), 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
3(rd) 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 Agriterra 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.

 

2.    US$1.8m Convertible Facility

 

·    Duration of 12 months, with principal and interest (as described
below) due at the end of the term, to the extent not converted (as described
below).

 

·    Interest will be charged on this facility at the rate of SOFR* + 6%
per annum (or part thereof, if applicable), on a daily basis, be compounded
quarterly and paid in full on the maturity date. There are no arrangement fees
payable, and prepayment is permissible at any time, in part or in full.

((*nb SOFR is currently 1.53%))

 

·    Upon the occurrence of an event of default, Magister shall benefit
from the Magister Recovery Rights as described above.

 

Magister will have the right on one or more occasions to convert all or part
of the Magister Loans then outstanding (plus a pro-rated amount of accrued
interest) into new ordinary shares in the capital of the Company at the
prevailing 10-day VWAP of the Company's shares the day on which the conversion
notice is issued, subject to all applicable laws and regulations, and
discussion with the Company's Nominated Adviser.

 

Related Party Transaction

 

Entering into the Magister Loans constitutes a related party transaction under
Rule 13 of AIM Rules. In this context, Caroline Havers, Neil Clayton, Rui
Sant'ana Afonso and Sergio Zandamela (being the Directors on the Board who are
considered to be independent) confirm, having consulted with the Company's
nominated adviser, Strand Hanson Limited, that they consider that the terms of
the Magister Loans to be fair and reasonable insofar as its shareholders are
concerned.

 

Caroline Havers, Chair, said: "We are delighted to be in a position to repay
DECA's external funding and benefit from cheaper working capital to fund grain
purchasing, with the continued support of Magister. This balance sheet
realignment should enable DECA to develop and benefit from a strengthened
purchasing position, free from the high local costs of the previous borrowing
in Mozambique. Again, we thank our majority shareholder, Magister, for their
support in providing this new debt funding, which demonstrates their ongoing
commitment to and faith in our operational plans and management team."

 

 

** ENDS **

 

 

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

 

 Agriterra Limited                   Caroline Havers

                                     caroline@agriterra-ltd.com (mailto:caroline@agriterra-ltd.com)

 Strand Hanson Limited               Ritchie Balmer / James Spinney
 Nominated & Financial Adviser

                                   +44 (0) 207 409 3494

 Peterhouse Capital Limited          Duncan Vasey / Eran Zucker

 Broker                              +44 (0) 207 469 0930

 

 

 

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