REG - Kropz PLC - Restructuring, Fundraising, Notice of GM

KropzAnnouncement

03/09/2024 07:00

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RNS Number : 6787C  Kropz PLC  03 September 2024

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF
REGULATION (EU) NO 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF
16 APRIL 2014 ON MARKET ABUSE (MARKET ABUSE REGULATION) AS RETAINED AS PART OF
UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED.

UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.

3 September 2024

Kropz Plc

("Kropz" or the "Company")

 

Restructuring, Fundraising,

Notice of General Meeting
and

Notice of Annual General Meeting

 

Kropz (AIM: KRPZ), an emerging African phosphate producer and developer,
announces it is conducting a restructuring of its group's financing
arrangements (the "Restructuring"). As part of the restructuring exercise,
intercompany debt and certain loans between the Company and its subsidiaries
(the "Group") and the ARC Fund ("ARC") are being simplified and new
convertible loan notes issued (the "Convertible Loan Notes" or "CLNs").

In addition, the Company is undertaking a fundraising to provide Kropz
Elandsfontein (Pty) Ltd ("Kropz Elandsfontein") with additional funds to
progress the ramp-up of operations at the Company's Elandsfontein phosphate
project in South Africa ("Elandsfontein Project"), further funding to Cominco
SA which owns the Hinda project in the Republic of the Congo ("Hinda
Project"), financing the remaining repayment of the BNP Facility, partial
repayment of accumulated accrued interest on the CLN by Kropz as well as
working capital for the Company for general corporate purposes. The
fundraising will be conducted at an issue price of 1.387 pence per new
ordinary share in the Company ("Issue Price") by way of a conditional
subscription with ARC (the "Subscription") and a retail offer ("REX Retail
Offer") via the REX platform ("REX Platform") to raise in aggregate £8.9
million, before expenses (together, the "Fundraising").

The REX Retail Offer is intended to provide minority shareholders in the
Company with the opportunity to participate in the fundraising, on the same
economic terms and at the same price as ARC.

ARC has agreed to subscribe for a minimum of 515,098,414 new ordinary shares
(the "Subscription Shares") and has agreed to underwrite, pursuant to an
underwriting agreement entered into with the Company (the "Underwriting
Agreement"), an amount equal to the REX Retail Offer to ensure that the entire
amount of the Fundraising will equate to approximately £8.9 million (before
expenses). Therefore, ARC will subscribe pursuant to the Subscription for an
amount equal to the REX Retail Offer not taken up by other shareholders,
increasing the number of Subscription Shares subscribed for by ARC
proportionately. The Restructuring, the issue of the CLNs, the Subscription
and the REX Retail Offer are conditional on shareholder approval of certain
resolutions to be proposed at a general meeting ("Resolutions"). Consequently,
the Company will hold a general meeting at the offices of Memery Crystal at
165 Fleet Street, London, EC4A 2DY on 20 September 2024 at 12.30 p.m.
("General Meeting").

The Restructuring, the issue of the CLNs, and the Fundraising are also
conditional on approval from the South African Reserve Bank ("Exchange Control
Approval") under the South African Exchange Control Regulations, 1961.

Subject to, inter alia, the necessary Resolutions relating to the Fundraising
("Fundraising Resolutions") being passed at the General Meeting and Exchange
Control Approval being granted, 643,873,018 new ordinary shares in the capital
of the Company ("Ordinary Shares") are to be allotted and issued pursuant to
the Fundraising, representing approximately 41 per cent. of the enlarged
issued share capital of the Company immediately following completion of the
Fundraising.

Additionally, the Company will hold its Annual General Meeting ("AGM") at the
offices of Memery Crystal at 165 Fleet Street, London, EC4A 2DY on 27
September 2024 at 12.00 noon. It should, however, be noted that completion of
the audit of the 31 March 2024 Financial Statements and Annual Report (the
"2024 Accounts") is currently in progress and it has not been possible to
publish these prior to the issue of notice of AGM and therefore no resolution
to receive and adopt the 2024 Accounts is being proposed. The Company expects
to publish its 2024 Accounts by 30 September 2024. Following the publication
of the 2024 Accounts, a separate meeting will be held at which such a
resolution will be proposed.

The full notices of the General Meeting and the AGM and will be posted to
shareholders by no later than 4 September 2024.

Background to and reasons for the Restructuring and Fundraising

Due to a number of resource and processing issues that have been articulated
to the market, the Company has required significantly more capital than was
originally anticipated at the time of the Company's admission to AIM and its
major shareholder, ARC, has been forthcoming with funding to bring
Elandsfontein into production and to progress the feasibility study at Hinda.
However, Kropz's management anticipated that the bridge loans advanced by ARC
to Kropz Elandsfontein would be re-financed by third parties through a group
re-financing once the Elandsfontein Project achieved steady state production
at or towards its nameplate capacity. As announced by the Company, Kropz has
been in discussions with parties to re-finance the Company's loan facility
with BNP (£2.8 million outstanding, (US$ 3.8 million, ZAR 66.5 million)) and
to provide additional working capital funding to the Group. Due to the delays
in ramp-up and consequently the stage of development of Elandsfontein, the
refinancing proved to be premature and unsuccessful. Kropz Elandsfontein
managed, however, to repay much of the BNP outstanding loan through direct
support from ARC. At 30 August 2024, the bridge loans owed to ARC in Kropz
Elandsfontein totalled £47.6 million (US$ 62.9 million, ZAR 1.1 billion),
with only £2.8 million still owed to BNP (US$ 3.8 million, ZAR 66.5
million). The final payment to BNP is due at the end of September 2024, which
will clear the remaining balance owed.

Kropz Elandsfontein achieved production of 88,319 tonnes of phosphate
concentrate and sales of 71,948 tonnes of phosphate concentrate during Q2
2024. This brings production to 162,308 tonnes and sales to 152,685 tonnes for
H1 2024.

The Elandsfontein Project continues facing challenges in ramping-up
operations, largely driven by higher-than-expected ore variability. Mining
rates and associated delivery of ore to the plant were compromised due to the
presence of competent banks of hard material ("hardbank"), "pink ore" and high
slimes contents within the orebody, that were previously unknown.

Management is intently focused on addressing the various challenges.

Management believes that most of the issues related to the high slimes content
ore will be addressed through the recently installed centrifuge unit. The
hardbank and "pink ore" solutions are currently in its testing phase. Pilot
scale milling and classification equipment is being deployed as part of
ongoing tests to address the ore variability and to provide insight into the
level of modifications required to the internal plant components.

From June 2023 to August 2023, the Western Cape experienced unprecedented rain
which resulted in wet mining conditions at Elandsfontein, which additionally
hindered ore delivery to the plant and concentrate production. Elandsfontein
aimed to address this through increased in-pit drainage and intermediate ore
stockpiling. These measures have yielded good results so far.

The majority of recent funding had been provided by ARC to Kropz Elandsfontein
via demand loans in order to mitigate regulatory complexity and foreign
exchange movements and ensure a timely provision of additional capital as and
when it was needed. However, the build-up of debt at Kropz Elandsfontein to
both ARC (as the Broad-based black economic empowerment ("BBBEE") partner in
Kropz Elandsfontein) and other Kropz group companies, as well as the
accumulation of preference share capital owned by Kropz, is now a hindrance to
Kropz Elandsfontein. On a stand-alone basis, Kropz Elandsfontein's balance
sheet has become unsustainable and over-indebted. The current debt and
preference share structures have resulted in undue complexity and negatively
impact the Group's ability to attract third-party investment. The intercompany
loan balances between Kropz and its South African subsidiaries have also
resulted in unintended tax leakage within the Group through the high levels of
cross-border interest charges in line with transfer pricing and exchange
control requirements.

Furthermore, Kropz Elandsfontein was 'grandfathered' into the new Mining
Charter (2017) which raised the black ownership threshold for mining firms to
30 per cent. from 26 per cent. Kropz has to date complied through indirect
holding of at least 30 per cent. with the new Mining Charter. ARC's direct
holding in Kropz Elandsfontein currently sits at 26 per cent. The Group
therefore relies on ARC's indirect shareholding through Kropz Plc to comply
with the full 30 per cent. requirement.

The Company is proposing a process of debt capitalisation / repayments and new
share issues by the South African subsidiary legal entities which will result
in ARC becoming at least a 30 per cent. direct shareholder in each subsidiary,
ensuring compliance by the Group with the new Mining Charter.

In light of the urgent need to simplify the capital structure of the Company,
inject vital short-term working capital to maintain the positive production
momentum and to meet the BBBEE requirements, management believes that the
Restructuring is the most viable option for the Group. The purpose of the
Restructuring, which is outlined in detail below, is anticipated to make the
Group more attractive to financing and strategic partners, as it seeks to
stabilise and grow production at Elandsfontein and ultimately to move towards
development at its Hinda project.

In order to fund the remaining capital needs of the Group, and to enable all
shareholders to participate in the fundraising process, Kropz is raising £8.9
million, before expenses, through the Fundraising. ARC has agreed to
underwrite an amount equal to the REX Retail Offer pursuant to the
Underwriting Agreement entered into on the date of this Announcement ensuring
that the entire capital raising will equate to approximately £8.9 million
(before expenses). ARC has agreed to subscribe for a minimum of 515,098,414
Subscription Shares in order to retain its right, pursuant to the Underwriting
Agreement, to maintain at least 80 per cent. of the enlarged issued share
capital of the Company immediately following completion of the Fundraising.
Details of the constituent elements of the Fundraising are outlined below.

 

 

Current trading and prospects

Group

                4 months ended 31 July 2024  15 months ended 31 March 2024  Year ended 31 December 2022

                US$'000                      US$'000                        US$'000
 Revenue        12,895                       40,087                         -
 EBITDA         (7,165)                      (16,520)                       (4,866)
 Cash balances  1,970                        968                            2,120

 

Elandsfontein Project

                   4 months ended 31 July 2024    15 months ended 31 March 2024   Year ended 31 December 2022

                  US$'000                        US$'000                          US$'000
 Revenue          12,895                         40,087                           -
 EBITDA           (7,118)                        (16,744)                         (3,466)
 Cash balances    1 873                          383                              1 645
                   4 months ended 31 July 2024    15 months ended 31 March 2024   Year ended 31 December 2022

                  Units                          Units                            Units
 Tonnes Produced  107,312                        324,695                          37,680
 Tonnes Sold      112,752                        343,366                          -

 

Hinda Project

                 4 months ended 31 July 2024    15 months ended 31 March 2024   Year ended 31 December 2022

                US$'000                        US$'000                          US$'000
 Revenue        -                              -                                -
 EBITDA         (97)                           (235)                            (215)
 Cash balances  13                             10                               17

 

Details of the Restructuring

The Company proposes to undergo a restructuring to simplify the intra-group
arrangements. In order to achieve this, the Company intends to:

·      cancel all non-redeemable preference shares between Kropz and its
subsidiary, Kropz Elandsfontein. Given the accumulated losses and debt burden
in Kropz Elandsfontein, these have no value;

·      convert £28.2 million (US$ 37.2 million, ZAR 659.3 million) of
debt held by ARC in Kropz Elandsfontein and other South African subsidiaries
to equity;

·      convert all existing intercompany debt between Kropz Plc, Kropz
Elandsfontein, Kropz SA and Elandsfontein Land Holdings to equity; and

·      settle £35.1 million (US$ 46.3 million, ZAR 821.3 million) of
the debt from Kropz Elandsfontein and other South African subsidiaries to ARC
through the issue of new CLNs by Kropz.

 

Subject to entry into various Restructuring documents, these steps will
eliminate all the debt accumulated within the subsidiaries and simplify the
Group's corporate structure. The Company has commissioned an independent third
party to produce an independent valuation of both Kropz Elandsfontein and
Elandsfontein Land Holdings (Pty) Ltd ("Elandsfontein Land") (together, the
"Elandsfontein Subsidiaries") for the purposes of the Restructuring (the
"Independent Valuation") to ensure that the restructuring is implemented at
arm's length using fair value estimates for the Elandsfontein Subsidiaries.

Kropz Elandsfontein needs to fund the abovementioned repayment of £35.1
million. In order to provide Kropz Elandsfontein with these funds, and subject
to shareholder authority at the General Meeting, Kropz intends to issue new
Convertible Loan Notes to ARC, and the proceeds will be provided to Kropz
Elandsfontein by way of a subscription from Kropz. Therefore, any debt owed to
ARC will be held via Kropz and not at the subsidiary level.

Currently, the structure of the Group is as below:

 

Following the Restructuring, it is expected that the structure of the Group
will be as follows:

 

The Restructuring will result in Kropz's direct and indirect holding moving to
70 per cent. in Kropz Elandsfontein and 66 per cent. in Elandsfontein Land
respectively, with ARC having a direct holding in each of the South African
subsidiaries, for compliance with the South African Black Economic Empowerment
requirements.

For the avoidance of doubt, the Company's ownership of Hinda is not affected
by Restructuring and remains at 100 per cent (the Company's effective interest
being 90 per cent., after taking into account the dilutionary interest of the
government of the Republic of Congo).

 

Detailed Steps of the Restructuring

1.   Cancellation of non-redeemable preference shares

The Group will cancel all of the non-redeemable preference shares held by
Kropz in Kropz Elandsfontein. These are valued at nil and will be fully
written down in the accounts of Kropz.

2.   Debt for equity swap between Kropz and the Elandsfontein Subsidiaries

The Elandsfontein Subsidiaries will issue new shares to Kropz in proportion to
current debt balances owed. The cumulative debt balance owed by the
Elandsfontein Subsidiaries to Kropz is £29.2 million (US$ 38.6 million, ZAR
683.7 million).

Kropz will subscribe for new shares in Kropz Elandsfontein for a total of
£28.5 million (US$ 37.7 million, ZAR 667.7 million) and in Elandsfontein Land
for a total of £0.7 million (US$0.9 million ZAR 16 million) The subscriptions
will be done at a subscription price based on the Independent Valuation of
each of the Elandsfontein Subsidiaries. The Elandsfontein Subsidiaries will
then utilize the proceeds from the new share issue to repay the total debt
balances owed to Kropz.

The resultant balance of intercompany debt between Kropz and the Elandsfontein
Subsidiaries will be £nil (US$ nil ZAR nil).

3.   Debt for equity swap between Kropz and Kropz SA

Kropz will subscribe for shares in Kropz SA for £2.1 million (US$ 2.7
million, ZAR 48.5 million), the proceeds of which Kropz SA will utilize to
repay £2.1 million (US$ 2.7, million ZAR 48.5 million) of debt owed to Kropz.
The resultant balance of intercompany debt between Kropz and Kropz SA will be
nil.

4.   Debt for equity swap between ARC and the Elandsfontein Subsidiaries

The Elandsfontein Subsidiaries will issue new shares to ARC. The cumulative
debt balance owed by the Elandsfontein Subsidiaries to ARC is £63.3 million
(US$ 83.5 million, ZAR 1.5 billion). ARC will subscribe for new shares in
Kropz Elandsfontein for a total of £27.4 million (US$ 36.2 million, ZAR 641.1
million) and in Elandsfontein Land for a total of £0.8 million (US$ 1.0
million, ZAR 18.2 million). The subscriptions will be done at a subscription
price based on the Independent Valuation of each of the Elandsfontein
Subsidiaries. The Elandsfontein Subsidiaries will then utilize the proceeds
from the new share issue to repay £28.2 million (US$ 37.2 million, ZAR 659.3
million) of the debt balance owed to ARC.

The resultant balance of debt between ARC and the Elandsfontein Subsidiaries
will be £35.1 million (US$ 46.3 million, ZAR 821.3 million).

Kropz also has a remaining approximately £54.9 million (US$ 72.5 million, ZAR
1.3 billion) of existing convertible debt (the "Existing Equity Facilities")
with ARC (including accumulated interest) which is not being settled as part
of these arrangements. These are being amended to extend the repayment terms
from being 1 year after repayment of the BNP loan facility (which will occur
by no later than 30 September 2024) to being 3 years from the date of issue of
the new CLN, or such later date as confirmed by ARC in writing.

5.   New Convertible Loan Note issue

To raise the capital required to settle the remaining balance of the
unconverted bridge loans for the Restructuring, and subject to shareholder
authority at the General Meeting, Kropz intends to issue a CLN instrument to
ARC for £35.1 million (US$ 46.3 million ZAR 821.3 million). The terms of the
CLN are:

·      the loan will be repayable after 5 years or such later date as
confirmed by ARC in writing;

·      interest rate will be the South African prime rate plus 6% (six
percent);

·    the loan will be convertible to additional Kropz shares at the
prevailing 30-day volume weighted average price (VWAP) of 1.46 pence as at 23
August 2024 (being the latest practicable date prior to the date of this
Announcement); and

·      conversion to equity is at the lender's absolute discretion.

 

 

Kropz will utilise the proceeds of the CLN to subscribe for new ordinary
shares in Kropz Elandsfontein. Kropz Elandsfontein will in turn apply the
proceeds from the share subscription to repay the outstanding portion of the
bridge loans to ARC, being £35.1 million (US$ 46.3 million, ZAR 821.3
million), resulting in these being reduced to nil.

 

Each of these steps remains subject to entry into various Restructuring
documents. As a result of the Restructuring, Elandsfontein Subsidiaries will
not have any debt obligations to ARC post the transaction date. Kropz will
have convertible debt of £88.9 million (including accumulated interest)
outstanding with ARC, being the aggregate of the new CLN and the Existing
Equity Facilities. Details of the potential maximum effect of conversion are
set out below.

Of the steps outlined above, the following arrangements with ARC (the "ARC
Arrangements") constitute related party transactions pursuant to Rule 13 of
the AIM Rules:

·      the debt for equity swap with Kropz Elandsfontein;

·      the debt for equity swap with Elandsfontein Land;

·      the new CLN issue;

·      the repayment of the outstanding bridge loans; and

·     the amendment of the Existing Equity Facility extending the
repayment terms to 3 years from the date of issue of the new CLN, or such
later date as confirmed by ARC in writing.

 

Detail of the Fundraising

Kropz proposes to raise £8.9 million from ARC and other shareholders before
expenses through the Fundraising at an Issue Price of 1.387 pence per new
Ordinary Share in the capital of the Company. The Issue Price represents a
discount of approximately 5 per cent. to the 30-day volume weighted average
share price per existing Ordinary Share to 23 August 2024 (being the latest
practicable date prior to the date of this Announcement).

Subject to, inter alia, the necessary Fundraising Resolutions being passed at
the General Meeting (as outlined below), in aggregate, 643,873,018 new
Ordinary Shares ("New Ordinary Shares") are to be allotted and issued pursuant
to the Fundraising.

The 643,873,018 New Ordinary Shares to be issued pursuant to the Fundraising
represent approximately 41 per cent. of the enlarged issued share capital of
the Company immediately following admittance of all of the New Ordinary Shares
to trading on AIM ("Admission") and 13 per cent of the fully diluted share
capital of the Company.

The New Ordinary Shares will rank pari passu in all other respects with the
existing Ordinary Shares.

Existing Shareholders will be given the opportunity to subscribe for, in
aggregate, up to 128,774,604 New Ordinary Shares via the REX Platform (the
"REX Retail Offer Shares") at the Issue Price by way of a retail offer to
raise up to approximately £1.8 million (before expenses). A separate
announcement will be made regarding the Retail Offer and its terms.

ARC has agreed, pursuant to the Underwriting Agreement, to underwrite an
amount equal to the REX Retail Offer ensuring that the entire capital raising
will equate to approximately £8.9 million (before expenses). Therefore, ARC
will subscribe pursuant to the Subscription for an amount equal to the REX
Retail Offer not taken up by other shareholders, increasing the number of
Subscription Shares subscribed for by ARC proportionately.

The Subscription and the REX Retail Offer are conditional on approval of the
Fundraising Resolutions by shareholders at the General Meeting.

 

Admission and Total Voting Rights

An application will be made for Admission of the 643,873,018 New Ordinary
Shares and dealings in respect of the New Ordinary Shares is expected to
commence at 8.00 a.m. on 27 September 2024. Following Admission of the New
Ordinary Shares, the Company's issued share capital will be 1,567,591,241
Ordinary Shares. This figure of 1,567,591,241 may then be used by shareholders
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 Company under the FCA's Disclosure Guidance and Transparency Rules.

 

Related Party Transaction

The ARC Arrangements, the Fundraising and entry into the Underwriting
Agreement are related party transactions pursuant to Rule 13 of the AIM Rules.
Gerrit Duminy, a director of the Company, is the representative of ARC. Mike
Nunn, a director of the Company, is the beneficial owner of Kropz
International SARL ("Kropz International"). ARC and Kropz International are
treated as acting in concert for the purposes of the City Code on Takeovers
and Mergers. Accordingly, neither has been involved in the approval of these
arrangements by the Company's board.

 

The remaining directors of the Company, who are considered independent for the
purposes of the arrangements, having consulted with the Company's nominated
adviser, consider the terms of the arrangements to be fair and reasonable
insofar as the Company's shareholders are concerned.

 

Concert Parties and Impact on Shareholdings

As noted in the Company's AIM admission document, ARC and Kropz International
are treated as acting in concert for the purposes of the Code and have
individual and aggregate interests in the Ordinary Shares as set out in the
table below.  It is noted that, both before and after the Restructuring and
Fundraising, on an aggregate basis, ARC and Kropz International hold and will
continue to hold more than 50 per cent. of the Ordinary Shares and voting
rights in the Company. On a standalone basis ARC, through its option with
Kropz International, currently has a fully diluted interest of 97.3 per cent.
of the Company (see footnote 5 below).

Maximum Interests in Ordinary Shares

                                  Existing Ordinary Shares      Maximum no. of further shares to be issued pursuant to the Fundraising ((1))  Maximum no. of further shares to be issued pursuant to the Existing Equity  Maximum no. of further shares to be issued pursuant to the new Convertible  Maximum shareholdings following Existing Equity Facilities, the Fundraising

                                                                                                                                            Facilities ((2))                                                            Loan Note ((3))                                                             and new Convertible Loan Note

                                  No.            %              No.                                                                           No.                                                                         No.                                                                         No.                                     %
 ARC ((2) (3))                    768,339,330    83.2           643,873,018                                                                   902,093,959                                                                 2,403 549 091                                                               4,717,855,398                           96.8
 Kropz International ((4)(5)(6))  54,933,474     5.9            0                                                                             0                                                                           0                                                                           54,933,474                              1.1
 Concert Party                    823,272,804    89.1           643,873,018                                                                   902,093,959                                                                 2,403 549 091                                                               4,772,788,872                           97.9

(1)   Assumes for illustrative purposes that there is no uptake of the REX
Retail Offer and the New Ordinary Shares are allotted in full to ARC and
consequently ARC is issued 643,873,018 New Ordinary Shares.

(2)   Assumes for illustrative purposes that the fully drawn Existing Equity
Facilities are converted into equity.

·      ZAR 200 Million Equity Facility - 219,272,938 ordinary shares
((7))

·      ZAR 177 Million Equity Facility - 96,378,566 ordinary shares
((7))

·      ZAR 550 Million Equity Facility - 586,442,455 ordinary shares
((7))

 

(3)   Assumes for illustrative purposes that the Convertible Loan Note is
converted into equity:

·      £35.1 million Convertible Loan Note - 2,403,549,091 ordinary
shares

(4)   ARC and Kropz International are deemed to be acting in concert as
defined in the Code.

(5)   Kropz International and ARC have entered into an arrangement pursuant
to which Kropz International has granted to ARC a call option over 25,793,909
of its Ordinary Shares. The call option over Kropz International's Ordinary
Shares can be exercised by ARC if the value of ARC's shareholding on the third
anniversary of Admission is 20 per cent. lower than its value on IPO on 30
November 2018. The call option has an alternative settlement of cash or
assets, if the transfer of the Ordinary Shares would require the transferee to
make a Rule 9 offer for the Company pursuant to the City Code.

(6)   Mike Nunn, a director of Kropz, holds his beneficial interest in Kropz
through Kropz International.

(7)   Exchange rates used are fixed at:

·      ZAR 200 Million Equity Facility - GBP 1 = ZAR 20.24

·      ZAR 177 Million Equity Facility - GBP 1 = ZAR 19.84

·      ZAR 550 Million Equity Facility - GBP 1 = ZAR 20.48

 

Notice of General Meeting

A General Meeting will be held to consider certain matters in connection with
the Restructuring and issue of New Ordinary Shares including, but not limited
to, the Directors' authority to allot shares and the disapplication of
pre-emption rights in respect of New Ordinary Shares to be allotted in
connection with the Fundraising conditional on the passing of the Fundraising
Resolutions at the General Meeting, and to authorise the issue of such new
Ordinary Shares as would be required pursuant to the Convertible Loan Notes.

The General Meeting will be held at the offices of Memery Crystal, 165 Fleet
Street, London, EC4A 2DY on 20 September 2024 at 12.30 p.m. (London time).
Shareholders may attend the General Meeting to vote, or they may appoint a
proxy or vote online by following the instructions set out in the Notice of
General Meeting.  Proxy votes must be received no later than 12.30 p.m. on 18
September 2024 (London time).

A copy of the Notice of General Meeting will be posted to shareholders no
later than 4 September 2024 and be available for the purposes of AIM Rule 26
on the Company's website shortly thereafter at:

www.kropz.com/investors/general-meetings.

Board Recommendation and Irrevocable Commitments

The board believes the resolutions to be proposed at the General Meeting are
in the best interests of the Company and its Shareholders as a whole.
Accordingly, the board unanimously recommends that Shareholders vote in favour
of the Resolutions. The Company has received irrevocable undertakings from
shareholders holding in aggregate 83.21 per cent. of the Company's issued
share capital to vote in favour of the resolutions.

Notice of Annual General Meeting

The Annual General Meeting will be held at the offices of Memery Crystal, 165
Fleet Street, London, EC4A 2DY on 27 September 2024 at 12.00 noon (London
time). Shareholders may attend the AGM to vote, or they may appoint a proxy or
vote online by following the instructions set out in the Notice of AGM.
Proxy votes must be received no later than 12.00 noon (London time) on 25
September 2024.

A copy of the Notice of AGM will be posted to shareholders no later than 4
September 2024 and be available for the purposes of AIM Rule 26 on the
Company's website shortly thereafter at:

www.kropz.com/investors/general-meetings.

 

For further information visit www.kropz.com (http://www.kropz.com/)  or
contact:

 

 Kropz Plc                           Via Tavistock
 Louis Loubser (CEO)                 +44 (0) 207 920 3150

 Grant Thornton UK LLP               Nominated Adviser
 Samantha Harrison                   +44 (0) 20 7383 5100

 Harrison Clarke

 Ciara Donnelly

 Hannam & Partners                   Broker
 Andrew Chubb                        +44 (0) 20 7907 8500

 Ernest Bell

 Tavistock                           Financial PR & IR (UK)
 Nick Elwes                          +44 (0) 207 920 3150

 Jos Simson                          kropz@tavistock.co.uk

 R&A Strategic Communications        PR (South Africa)
 Charmane Russell                    +27 (0) 11 880 3924

 Marion Brower                       charmane@rasc.co.za 

                                     marion@rasc.co.za

 

About Kropz Plc

Kropz is an emerging African producer and developer of plant nutrient feed
minerals with phosphate projects in South Africa and in the Republic of Congo.
The vision of the Group is to become a leading independent phosphate rock
producer and to develop into an integrated, mine-to-market plant nutrient
company focusing on sub-Saharan Africa.

 

 

This Announcement should be read in its entirety. In particular, the
information in the "Important Notices" section of the announcement should be
read and understood.

IMPORTANT NOTICES

 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO OR FROM THE UNITED STATES (INCLUDING ITS TERRITORIES
AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA
(THE "UNITED STATES" OR "US")), AUSTRALIA, CANADA, JAPAN OR SOUTH AFRICA,  OR
ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION
WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY
AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

This Announcement or any part of it does not constitute or form part of any
offer to issue or sell, or the solicitation of an offer to acquire, purchase
or subscribe for, any securities in the United States, Canada, Australia,
Japan or South Africa or any other jurisdiction in which the same would be
unlawful. No public offering of the securities is being made in any such
jurisdiction.

No prospectus, offering memorandum, offering document or admission document
has been or will be made available in connection with the matters contained in
this Announcement and no such prospectus is required to be published (in
accordance with Regulation (EU) No 2017/1129 (as amended) (the "EU Prospectus
Regulation") or the EU Prospectus Regulation as it is assimilated into UK
domestic law by virtue of the European Union (Withdrawal) Act 2018 ("EUWA"),
as amended (the "UK Prospectus Regulation")). Persons needing advice should
consult a qualified independent legal adviser, business adviser, financial
adviser or tax adviser for legal, business, financial or tax advice.

The securities referred to herein have not been and will not be registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), or with any securities regulatory authority of any State or other
jurisdiction of the United States, and may not be offered, sold or
transferred, directly or indirectly, in or into the United States except
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance with the
securities laws of any State or any other jurisdiction of the United States.
Accordingly, the Subscription Shares will be offered and sold outside of the
United States only in "offshore transactions" (as such term is defined in
Regulation S under the Securities Act ("Regulation S")) pursuant to Regulation
S and otherwise in accordance with applicable laws pursuant to an exemption
from, or in a transaction not subject to, registration under the Securities
Act. No public offering of the New Ordinary Shares will be made in the United
States or elsewhere, other than the REX Retail Offer Shares under the REX
Retail Offer which is being made in the United Kingdom only.

The proposed Fundraising has not been approved or disapproved by the United
States Securities and Exchange Commission, any state securities commission in
the United States or any US regulatory authority, nor have any of the
foregoing authorities passed upon or endorsed the merits of the proposed
Fundraising, or the accuracy or adequacy of this Announcement. Any
representation to the contrary is a criminal offence in the United States.

This Announcement has not been approved by the London Stock Exchange.

The relevant clearances have not been, nor will they be, obtained from the
securities commission of any province or territory of Canada, no prospectus
has been lodged with, or registered by, the Australian Securities and
Investments Commission or the Japanese Ministry of Finance; the relevant
clearances have not been, and will not be, obtained for the South Africa
Reserve Bank or any other applicable body in South Africa in relation to the
New Ordinary Shares and the New Ordinary Shares have not been, nor will they
be, registered under or offered in compliance with the securities laws of any
state, province or territory of Australia, Canada, Japan or South Africa.
Accordingly, the New Ordinary Shares may not (unless an exemption under the
relevant securities laws is applicable) be offered, sold, resold or delivered,
directly or indirectly, in or into Australia, Canada, Japan or South Africa or
any other jurisdiction in which such activities would be unlawful.

Certain statements contained in this Announcement constitute "forward-looking
statements" with respect to the financial condition, results of operations and
businesses and plans of the Group. Words such as "believes", "anticipates",
"estimates", "expects", "intends", "plans", "aims", "potential", "will",
"would", "could", "considered", "likely", "estimate" and variations of these
words and similar future or conditional expressions, are intended to identify
forward-looking statements and forecasts but are not the exclusive means of
identifying such statements. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon future circumstances
that have not occurred. There are a number of factors that could cause actual
results or developments to differ materially from those expressed or implied
by these forward-looking statements and forecasts. As a result, the Group's
actual financial condition, results of operations and business and plans may
differ materially from the plans, goals and expectations expressed or implied
by these forward-looking statements and forecasts. No representation or
warranty is made as to the achievement or reasonableness of, and no reliance
should be placed on, such forward-looking statements and forecasts. The
forward-looking statements and (if any) forecasts contained in this
announcement speak only as of the date of this announcement. The Company, its
directors, Peel Hunt or their respective affiliates and any person acting on
its or their behalf each expressly disclaim any obligation or undertaking to
update or revise publicly any forward-looking statements and forecasts,
whether as a result of new information, future events or otherwise, unless
required to do so by applicable law or regulation or the London Stock
Exchange.

This Announcement does not constitute a recommendation concerning any
investor's investment decision with respect to the proposed Fundraising. Any
indication in this Announcement of the price at which Shares have been bought
or sold in the past cannot be relied upon as a guide to future performance.
The price of shares and any income expected from them may go down as well as
up and investors may not get back the full amount invested upon disposal of
the shares. Past performance is no guide to future performance. This
Announcement does not identify or suggest, or purport to identify or suggest,
the risks (direct or indirect) that may be associated with an investment in
the New Ordinary Shares. The contents of this Announcement are not to be
construed as legal, business, financial or tax advice. Each investor or
prospective investor should consult their or its own legal adviser, business
adviser, financial adviser or tax adviser for legal, business, financial or
tax advice.

No statement in this Announcement is intended to be a profit forecast or
profit estimate for any period, and no statement in this Announcement should
be interpreted to mean that earnings, earnings per share or income, cash flow
from operations or free cash flow for the Company for the current or future
financial years would necessarily match or exceed the historical published
earnings, earnings per share or income, cash flow from operations or free cash
flow for the Company.

All offers of the New Ordinary Shares will be made pursuant to one or more
exemptions under the UK Prospectus Regulation from the requirement to produce
a prospectus. This Announcement is being distributed and communicated to
persons in the UK only in circumstances to which section 21(1) of the FSMA
does not require approval of the communication by an authorised person.

The New Ordinary Shares to be issued or sold pursuant to the proposed
Fundraising will not be admitted to trading on any stock exchange other than
the AIM market of the London Stock Exchange.

Persons (including, without limitation, nominees and trustees) who have a
contractual or other legal obligation to forward a copy of this Announcement
should seek appropriate advice before taking any action.

Neither the content of the Company's website (or any other website) nor the
content of any website accessible from hyperlinks on the Company's website (or
any other website) is incorporated into or forms part of this Announcement.

This Announcement has been prepared for the purposes of complying with
applicable law and regulation in the United Kingdom and the information
disclosed may not be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws and regulations of
any jurisdiction outside the United Kingdom.

 

 

-ENDS-

 

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