REG - Kibo Energy PLC - MAST New Funding Partner & Proventure Cancellation

Kibo EnergyAnnouncement

28/02/2024 07:00

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RNS Number : 6939E  Kibo Energy PLC  28 February 2024

Kibo Energy PLC (Incorporated in Ireland)

(Registration Number: 451931)

(External registration number: 2011/007371/10)

LEI Code: 635400WTCRIZB6TVGZ23

Share code on the JSE Limited: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

('Kibo' or 'the Company')

 

Dated: 28 February 2024

 

Kibo Energy PLC ('Kibo' or the 'Company')

 

Kibo Subsidiary Announces New Strategic Funding Partner & Funding
Agreement, New Capacity Market Contract, and Termination of Proventure JVA

 

Kibo Energy PLC (AIM: KIBO; AltX: KBO), the renewable energy-focused
development company, announces that its subsidiary Mast Energy Developments
PLC ('MED'), a UK-based multi-asset owner, developer and operator in the
rapidly growing flexible power market has announced a new strategic funding
partner & funding agreement, a new Capacity Market contract and
termination of the Proventure joint venture agreement.

 

Noting that the Funding Agreement described below is with f RiverFort Global
Opportunities PCC Limited ("RiverFort"), an 11.68% shareholder in Kibo and
MED, a subsidiary of Kibo, the Funding Agreement is a related party
transaction under the AIM Rules. Accordingly, the Directors, having consulted
with the Company's nominated adviser, Beaumont Cornish Limited, consider the
terms of the Funding Agreement to be fair and reasonable insofar as Kibo
shareholders are concerned. In forming this view the Directors note the
near-term funding requirements of MED and the financial benefits getting
Pyebridge back into operation should bring.

 

Further details can be found in the full MED announcement, which is available
below and at med.energy (https://med.energy/?page_id=3140) :

 

__________________________________________

 

Dated: 28 February 2024

 

Mast Energy Developments PLC ('MED' or 'the Company')

 

New Strategic Funding Partner & Funding Agreement, New Capacity Market
Contracts, and Termination of Proventure JVA

 

Mast Energy Developments PLC, the UK-based multi-asset owner, developer and
operator in the rapidly growing flexible power market, is pleased to announce
that it has signed a funding agreement ("Funding Agreement") with an initial
funding facility up to £4,000,000 with RiverFort Global Opportunities PCC
Limited ('RiverFort"). The Funding Agreement was arranged by Fortified
Securities and will see RiverFort joining MED as its strategic funding partner
to provide and facilitate funding to develop and construct MED's existing c.
30MW portfolio of assets and new acquisitions to achieve MED's strategic goal
of building an enlarged 300MW portfolio of flexible power assets.

 

New Funding Agreement Key Highlights

 

·    Funding Agreement between MED subsidiary Pyebridge Power Ltd
("Pyebridge"), MED and RiverFort by way of a secured facility (the
"Investment") for a commitment amount of up to £4m.

 

·    An initial advance of £450,000 following execution of the Funding
Agreement ("Initial Advance").

 

·    Further advances will be made by the Investor on the same terms as
the Initial Advance.

 

·    Use of proceeds of the Initial Advance:

 

o To lift MED's Pyebridge 9MW flexible power generation asset (the 'Site') out
of care and maintenance (see RNS dated 1 December 2023), by initiating first
phase of the overhaul work programme of the Site's reciprocal generation
engines in order to recommence production and trading revenue generation
during April 2024.

o General working capital purposes of Pyebridge and MED.

 

·    Further funding up to the commitment amount of up to £4m which will
predominantly be used to fund the Site's overhaul work programme in order to
achieve full generation, efficiency and profitability potential, as well as
the further development of MED's other existing sites and additional sites in
the future.

·    MED and RiverFort in renewed discussions with a number of debt
providers including Close Brothers to complement RiverFort's funding for MED's
projects' capex requirements. This is part of an approach to create a scalable
financing framework anchored by RiverFort.

 

·    Drawdowns under the Investment will have a term of 24 months and
attract an annual interest rate of 12% rolled up and paid at maturity.

 

·    Any outstanding balances are to be repaid in cash on the Maturity
Date (excluding any balances converted pursuant to the Equity Rights (as
described below)).

 

·    MED to act as guarantor to Pyebridge for the re-payment of drawdowns
under the Investment on an unsecured basis.

 

·    RiverFort will hold senior security over the assets of Pyebridge
while there remains an outstanding balance on the Investment, save to the
extent that this will be released by RiverFort to facilitate project finance
on a secured basis.

 

·    RiverFort will have the right to convert the outstanding balance on
the Investment to Preference Shares in Pyebridge once it exceeds £1million of
outstanding balance pursuant to the Investment. The conversion into Preference
Shares will represent 12.5% of the issued share capital (on a fully diluted
basis). This can be increased up to 20% of the issued share capital (on a
fully diluted basis) by the conversion of outstanding balances during the term
of the Investment up to £2,000,000 ("Equity Rights"). The Equity Rights will:

 

o Provide a preferential return on all income or capital distributions with
12.5% representing 50% of all distributions with the balance due to the
ordinary shares in Pyebridge, such percentage increasing with further
investment and transformation into Preference Shares;

o Provide a preferential return on capital risk representing the value of the
Investment converted into the Equity Rights prior to distribution to the
shareholders of Pyebridge;

o Provide a right to appoint up to 2 directors and an observer to the board of
Pyebridge;

o Include veto and consent rights customary with an investment of the nature
of the Investment (including approval of any material disposals or investments
by Pyebridge); and

o Not include any fixed returns, coupons or other guaranteed returns.

 

·    MED and RiverFort have agreed on an allocation budget for drawdown
funds and will cooperate on restructuring the liabilities of MED and Pyebridge
to ensure the on-going viability of the MED Group by reducing short term
creditors.

 

New Capacity Market Contracts

 

MED applied for and was successful in pre-qualification to bid for new CM
contracts for its Pyebridge Site, in addition to the Site's existing CM
contracts (see RNS dated 27 February 2023), being a T-1 CM contract and a T-4
CM contract. Following the preparation of a robust CM Auction bid strategy,
MED is pleased to announce that pursuant to the recent Capacity Market
Auctions and subsequent results, its T-1 bid cleared at £35.79/kW/annum,
which equates to an additional c. £183k of income to the Site, and its T-4
bid cleared at £65/kW/annum, which equates to an additional c. £322k of
income to the Site. The Site's existing and new CM contracts are all fixed
one-year contracts. The plan and intention is to apply for the maximum 15-year
term and capacity T-4 CM contract in due course once the Site's planned
overhaul work programme as referred to above has been completed, which is
expected to provide further enhanced and longer term guaranteed income to the
Site.

 

Termination of Proventure JVA

 

MED announces further to its previous RNS dated 8 January 2024, due to
Proventure failing to remedy its material breach of the JVA, and considering
the exhaustive correspondence and process by MED to accommodate and work
around the persistent and continuing delays by Proventure to fulfil its
overdue obligations under the JVA, after due and careful consideration the MED
Board has decided to terminate the JVA with Proventure with immediate effect.
MED will now consider pursuing its available options for legal recourse
against Proventure, its CEO, Mr. Srinivas Kona and other directors.

 

In consideration for MED previously granting an extension in respect of the
Interim Payment deadline, as set out in our announcement dated 13 November
2023, Proventure has incurred a default payment of £3,000 per calendar day
that the Interim Payment remained unpaid, calculated from the initial default
date of 11 November 2023, until such time as it is received by MED, in
addition to liquidated damages of 0.25% of the total investment balance due,
plus any additional costs and expenses incurred by MED in respect of the JV
projects, all of which are now due and payable by Proventure to MED. Under the
terms of the JVA, in addition to the foregoing payments, upon termination of
the JVA, Proventure shall pay to MED any reasonable costs and expenses
incurred by MED in connection with the JVA. All of the foregoing payments
exclude MED's right to claim further damages from Proventure as a result of
its material breach of the JVA and potential misrepresentation by Proventure
and its directors.

 

In conjunction with the above, MED will now also consider pursuing its
available options for legal recourse against the initial JV lead-investor,
Seira Capital and its directors, as previously announced in the RNS dated 22
September 2023.

 

Further, the Arrangement Fee with Mr. Ajay Saldanha, in relation to the
introduction, arrangement and consulting fees with regards to the JV
transaction that was due and payable upon completion of JV transaction, as
previously announced in the RNS dated 12 July 2023, will no longer be
applicable.

 

Pieter Krügel, MED CEO, commented: "The MED board is delighted to have
concluded the new funding agreement with RiverFort and we welcome such a key
institutional investor as a strategic funding partner to MED. We believe that
this new funding agreement will fast-track MED's growth plans and unlock value
for our shareholders.

 

"We are excited about the progress and developments that will result from this
new funding agreement, and look forward to updating our shareholders and the
market accordingly in due course."

 

ENDS

 

This announcement contains inside information for the purposes of the UK
version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ('UK MAR'). Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

For further information please visit www.med.energy (http://www.med.energy/)
or contact:

 Pieter Krügel   Info@med.energy (mailto:Info@med.energy)  Mast Energy Developments PLC  CEO
 Jon Belliss     +44 (0)20 7399 9425                       Novum Securities              Corporate Broker

 

________________________

 

**ENDS**

 

For further information please visit www.kibo.energy (http://www.kibo.energy/)
or contact:

 

 Louis Coetzee    info@kibo.energy (mailto:info@kibo.energy)  Kibo Energy PLC             Chief Executive Officer
 James Biddle     +44 207 628 3396                            Beaumont Cornish Limited    Nominated Adviser

 Roland Cornish
 Claire Noyce     +44 20 3764 2341                            Hybridan LLP                Joint Broker
 Damon Heath      +44 207 186 9952                            Shard Capital Partners LLP  Joint Broker

 

Beaumont Cornish Limited ('Beaumont Cornish') is the Company's Nominated
Adviser and is authorised and regulated by the FCA. Beaumont Cornish's
responsibilities as the Company's Nominated Adviser, including a
responsibility to advise and guide the Company on its responsibilities under
the AIM Rules for Companies and AIM Rules for Nominated Advisers, are owed
solely to the London Stock Exchange. Beaumont Cornish is not acting for and
will not be responsible to any other persons for providing protections
afforded to customers of Beaumont Cornish nor for advising them in relation to
the proposed arrangements described in this announcement or any matter
referred to in it.

 

Johannesburg

28 February 2024

Corporate and Designated Adviser

River Group

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