REG - Bens Creek Group PLC - Placing and Subscription to raise £6.0 million

Bens CreekAnnouncement

18/08/2022 07:00

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RNS Number : 3976W  Bens Creek Group PLC  18 August 2022

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AS IT FORMS PART OF UK DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
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Bens Creek Group plc

 

("Bens Creek" the "Company" or the "Group")

 

Placing and Subscription to raise £6.0 million

 

 

Bens Creek Group plc (AIM: BEN), the owner of a metallurgical coal mine in
North America supplying the steel industry, is pleased to announce that it has
raised £6.0 million (before expenses) by way of:

 

·     a placing of 9,999,998 new ordinary shares of 0.1p each in the
capital of the Company (the "Placing Shares"), at a price of 30 pence per
share (the "Issue Price") raising c. £3.0 million (the "Placing"); and

 

·     an issue of 10,000,002 new ordinary shares of 0.1p each in the
capital of the Company (the "Subscription Shares") at the Issue Price to
certain investors, being MBU Capital Group Limited ("MBU"), Mohammed Iqbal
(the beneficial owner of MBU) and Bluestar Global Capital Limited
("Bluestar"), raising c. £3.0 million (the "Subscription"). The aggregate
proceeds from the Subscription is made up of MBU (c.£500,000), Mohammed Iqbal
(c.£1,000,000) and Bluestar (£1,500,000).

 

The Issue Price represents a discount of 10.4 per cent. to the closing
mid-market share price of an existing ordinary share of 0.1p each in the
capital of the Company ("Ordinary Shares") on 17 August 2022, being the last
business day prior to this announcement.

 

Highlights of the Placing and Subscription

·    The Placing and Subscription (together the "Fundraise") has raised
£6.0 million (before expenses) with certain existing institutional and new
investors, by way of a placing of 9,999,998 new Ordinary Shares at the Issue
Price and a Subscription for an aggregate of 10,000,002 new Ordinary Shares in
the Company at the Issue Price by Mohammed Iqbal along with existing
investors, MBU and Bluestar.

 

·    The Placing Shares and the Subscription Shares will represent
approximately 5.3 per cent. of the enlarged issued share capital of the
Company.  The Company has utilised certain of its existing authority to issue
such new ordinary shares for cash on a non-pre-emptive basis.

 

·     Mohammed Iqbal, the ultimate controlling party of MBU, has
personally subscribed for 3,333,336 Subscription Shares in the Subscription,
which will represent 0.89 per cent. of the enlarged issued share capital of
the Company.

 

·    MBU, the Company's largest shareholder, has subscribed for 1,666,666
Subscription Shares in the Subscription, which will represent 0.45 per cent.
of the enlarged issued share capital of the Company. Upon completion of the
Fundraise, MBU are expected to be interested in 212,601,701 Ordinary Shares in
the Company representing 56.78 per cent. of the enlarged issued share capital.
This holding, combined with Mohammed Iqbal's personal holding, will represent
57.67 per cent. of the enlarged issued share capital of the Company.

 

·     Bluestar, a private company and an existing shareholder in Bens
Creek, has subscribed for 5,000,000 Subscription Shares in the Subscription,
which will represent 1.34 per cent. of the enlarged issued share capital of
the Company. Upon completion of the Fundraise, Bluestar are expected to be
interested in 14,887,777 Ordinary Shares in the Company representing 3.98 per
cent. of the enlarged issued share capital.

Background to and reasons for the Fundraise

 

The Company intends to transition from the use of a contractor model with
respect to its earthmoving/advancement above ground equipment, working in
parallel with the Highwall Miner contractor, to an equipment owner operator,
which the Board expects in turn will lead to increased production of
metallurgical coal and cost efficiencies.

 

The net proceeds of the Fundraise will be used to pay purchase deposits for
the required equipment that is intended to be supplied by Komatsu, a worldwide
leading supplier of surface mining and earth moving equipment, and for general
working capital purposes.

 

Separately the Company has recently completed the outright purchase of its
initial fleet of mining and earth moving equipment at a cost of $5.4m, funded
from the Company's existing cash resources. However, it is envisaged that part
of the equipment acquired will be financed to provide the Company with
additional working capital for its ongoing operations.

 

Following on from the revenue generated from the recent three train deliveries
to Integrity for a total of 33,000 clean tonnes of coal earlier this month,
the Company is considering reducing the amount drawn down on its working
capital facility, details of which were announced by the Company on 6 June
2022. The Company also has a further 7 trains booked between now and November
2022.

 

Adam Wilson, Chief Executive Officer of Bens Creek, commented:

"I am very pleased to announce the successful Placing and Subscription and are
grateful for the strong support for our strategy by new and existing
shareholders, particularly MBU and its beneficial owner Mohammed Iqbal.

The net proceeds from this Placing and Subscription will enable us to fulfil
the next stage of our growth strategy which is to move away from a contractor
model and become an owner of our own rolling stock of heavy equipment. As such
we have already started to acquire a fleet and with this fundraise, we will be
able to fulfil this objective with new equipment from Komatsu.

The new equipment and new fleet will substantially improve the company's
ability to Highwall mine metallurgical coal above ground as we move towards
getting the new permit with our above ground Highwall Miners, as we will then
have a much larger area under permit to use two, and potentially even three,
highwall miners. Accordingly, we need to control the "yellow iron" mobile
equipment that does the advancement work and allows these highwall miners to
mine into the seams.

When we listed on AIM, we had no choice but to engage a contractor to help us
with this advancement, however as we now look to exceed the initial monthly
production target of 40,000 and move towards our target of circa 70,000 -
80,000 tons per month, as previously announced, it is important that we own
the equipment fleet so that we are able to keep at least two highwall miners
operational simultaneously.

As a Company we already own the equipment fleet that operators use
underground, and post listing we acquired one highwall miner. This complements
the initial highwall miner supplied by Mega Highwall Mining and the soon to be
mobilised second highwall miner to be supplied by them, under our existing
contractor model.

Since 10 August 2022, the effective date of the EU ban on Russian Coal
imports, we have seen a $20 per ton increase in the HvB price from $241 to
$261 as of yesterday and we are hopeful that these increases will be sustained
now that Russia is no longer able to dump its supply onto the market.

This is absolutely the right time, in the Company's opinion, for it to be
increasing its production, and owning most of the equipment it uses to mine.

Since the remediation of both the railway line and wash plant, we are now able
to handle and ship increased volumes."

Details of the Fundraise

Under the Fundraise, the Company has raised £6,000,000 (before expenses)
through a placing and subscription of 20,000,000 new Ordinary Shares at the
Issue Price with institutional and other investors. The Company has entered
into a placing agreement with W H Ireland Limited and Novum Securities Limited
(the "Placing Agents") under which the Placing Agents have agreed to use their
reasonable endeavours to procure placees for the Placing Shares at the Issue
Price. The Placing has not been underwritten. The Placing and Subscription are
conditional, inter alia, on admission of the Placing Shares and Subscription
Shares to trading on AIM ("Admission") becoming effective.

The Placing Shares and Subscription Shares will represent approximately 5.34
per cent. of the enlarged share capital of the Company following Admission.

As part of the Placing, a total of 300,000 warrants to subscribe for new
Ordinary Shares at the Issue Price have been issued to the Placing Agents,
exercisable for a period of 3 years from Admission.

The Placing Shares and Subscription Shares will be issued credited as fully
paid and will rank pari passu in all respects with the Company's existing
Ordinary Shares, including the right to receive dividends and other
distributions declared on or after the date on which they are issued.

It is expected that CREST accounts will be credited on the relevant day of
Admission and that share certificates (where applicable) will be despatched
within five working days of Admission.

Related Party Transactions

MBU is a substantial shareholder of the Company and is therefore considered to
be a "related party" as defined under the AIM Rules for Companies ("AIM
Rules"). Furthermore, Mohammed Iqbal is the ultimate beneficial owner of MBU.
Accordingly, the participations of MBU and Mohammed Iqbal in the Subscription
constitute related party transactions for the purposes of Rule 13 of the AIM
Rules.

The Directors independent of MBU, being Robin Fryer (Non-Executive Chairman)
and David Harris (Non-Executive Director), consider, having consulted with the
Company's Nominated Adviser, that the terms of MBU and Mohammed Iqbal's
participations in the Subscription are fair and reasonable insofar as the
Company's shareholders are concerned.

Admission to trading and total voting rights

Application will be made shortly to the London Stock Exchange for the Placing
Shares and Subscription Shares to be admitted to trading on AIM. It is
expected that Admission will become effective and that dealings in the Placing
Shares and Subscription Shares on AIM will commence on or around 30 August
2022.

On Admission, the Company's issued ordinary share capital will consist of
374,400,000 ordinary shares of 0.1p each, with one vote per share. The Company
does not hold any ordinary shares in treasury.  Therefore, on Admission, the
total number of ordinary shares and voting rights in the Company will be
374,400,000.  With effect from Admission, this figure may be used by
shareholders in the Company as the denominator for the calculations by which
they will determine if they are required to notify their interest in, or a
change to their interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.

Notice to Distributors

Solely for the purposes of the temporary product intervention rules made under
sections S137D and 138M of the Financial Services and Markets Act 2000 and the
FCA Product Intervention and Product Governance Sourcebook (together, the
"Product Governance Requirements"), and disclaiming all and any liability,
whether arising in tort, contract or otherwise, which any "manufacturer" (for
the purposes of the Product Governance Requirements) may otherwise have with
respect thereto, the Placing Shares have been subject to a product approval
process, which has determined that the Placing Shares are: (i) compatible with
an end target market of retail investors and investors who meet the criteria
of professional clients and eligible counterparties, as defined under the FCA
Conduct of Business Sourcebook COBS 3 Client categorisation, and are eligible
for distribution through all distribution channels as are permitted by the FCA
Product Intervention and Product Governance Sourcebook (the "Target Market
Assessment").

Notwithstanding the Target Market Assessment, distributors should note that:
the price of the Placing Shares may decline and investors could lose all or
part of their investment; the Placing offer no guaranteed income and no
capital protection; and an investment in the Placing is compatible only with
investors who do not need a guaranteed income or capital protection, who
(either alone or in conjunction with an appropriate financial or other
adviser) are capable of evaluating the merits and risks of such an investment
and who have sufficient resources to be able to bear any losses that may
result therefrom. The Target Market Assessment is without prejudice to the
requirements of any contractual, legal or regulatory selling restrictions in
relation to the Placing. Furthermore, it is noted that, notwithstanding the
Target Market Assessment, W H Ireland Limited and Novum Securities Limited
will only procure investors who meet the criteria of professional clients and
eligible counterparties. For the avoidance of doubt, the Target Market
Assessment does not constitute: (a) an assessment of suitability or
appropriateness for the purposes of the FCA Conduct of Business Sourcebook
COBS 9A and 10A respectively; or (b) a recommendation to any investor or group
of investors to invest in, or purchase, or take any other action whatsoever
with respect to the Placing Shares.

Each distributor is responsible for undertaking its own target market
assessment in respect of the Placing Shares and determining appropriate
distribution channels.

 

For further information please contact:

 Bens Creek Group plc                                            +44 (0) 204 558 2300

 Adam Wilson, CEO

 Raju Haldankar, Executive Director

 Murat Erden, CFO

 Allenby Capital Limited (Nominated Adviser and Joint Broker)    +44 (0) 203 328 5656

 Nick Athanas / Nick Naylor / George Payne (Corporate Finance)

 Kelly Gardiner (Sales and Corporate Broking)

 W H Ireland Limited (Placing Agent)                             +44 (0) 203 328 5656

 Harry Ansell / Katy Mitchell / Megan Liddell

 Novum Securities (Placing Agent)                                +44 (0) 207 399 9400

 Jon Belliss

 Optiva Securities Limited (Joint Broker)                        +44 (0) 203 137 1902

 Christian Dennis / Mariela Jaho / Daniel Ingram

 

 

Important Notices

This Announcement includes "forward-looking statements" which includes all
statements other than statements of historical fact, including, without
limitation, those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations, or any
statements preceded by, followed by or that include the words "targets",
"believes", "expects", "aims", "intends", "will", "may", "anticipates",
"would", "could" or similar expressions or negatives thereof. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors beyond the Company's control that could cause the
actual results, performance or achievements of the Group to be materially
different from future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
are based on numerous assumptions regarding the Company's present and future
business strategies and the environment in which the Company will operate in
the future. These forward-looking statements speak only as at the date of this
Announcement. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements
contained herein to reflect any change in the Company's expectations with
regard thereto or any change in events, conditions or circumstances on which
any such statements are based unless required to do so by applicable law or
the AIM Rules for Companies.

No statement in this Announcement is intended to be a profit forecast and no
statement in this Announcement should be interpreted to mean that earnings per
share of the Company for the current or future financial years would
necessarily match or exceed the historical published earnings per share of the
Company.

 

 

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