REG - Mustang Energy PLC - VRFB-H Investment Update

Mustang EnergyAnnouncement

19/01/2022 07:05

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RNS Number : 9288Y  Mustang Energy PLC  19 January 2022

Wednesday 19 January, 2022

 

Mustang Energy PLC

VRFB-H Investment Update

 

Mustang Energy PLC (the "Company"), the special purpose acquisition company,
provides the following update on its investment in VRFB Holdings Limited
("VRFB-H").

As announced on 27 April 2021, the Company acquired a 22.1% interest in
VRFB-H, a joint venture partner in Enerox Holdings Limited ("EHL"), for a
consideration of US$7,524,000 (the "Investment Agreement"). The investment was
financed through the issue of US$8,000,000 Convertible Loan Notes ("CLNs")
bearing 10% interest per annum, with surplus funds being used to pay costs
associated with the investment and working capital.

Soon after the Investment Agreement was signed and announced, Garnet Commerce
Limited, the other joint venture partner in EHL, objected to the Company's
investment. In July 2021, a claim form was issued in the High Court of
Justice: Business and Property Courts of England and Wales (Chancery Division)
by Garnet against VRFB-H and EHL, as more fully detailed in the announcement
made by Bushveld Minerals Ltd ("BMN") on 14 July 2021 (the "High Court
proceedings"). The matter is scheduled for trial commencing on 19 January
2022.

Whilst the Company is not a party to the High Court proceedings, the ongoing
uncertainty precludes the Company from issuing a prospectus, which is a
precursor for the Company's shares to be reinstated to trading.

A condition of the CLNs is that if the Company's shares were not reinstated to
trading by no later than 31 December 2021 ("Maturity Date"), the Company shall
have the right, by serving written notice on BMN within 5 business days
thereafter, to require that BMN shall, in return for the Company transferring
to Bushveld Energy Limited (a 84% owned subsidiary of BMN) ("BEL") all its
shares in VRFB-H ("Backstop") and payment of a 'backstop fee' to BMN, issue to
each CLN holder by 28 January 2022, such number of new shares in BMN at a
price equal to the 20 day volume weighted average price of a BMN share prior
to the date of issue, as is equivalent to the value of each holder's CLNs
together with accrued and unpaid interest thereon.  BEL holds a 50.5%
interest in VRFB-H.  Acacia Resources Limited, which has a 24.03% interest in
the Company, owns the remaining 27.4% interest of VRFB-H.

The parties to the Investment Agreement, including the Company, have agreed to
extend the Maturity Date until the 28 February 2022 to allow some visibility
as to the outcome of the High Court proceedings.

Additionally, the Company has agreed with BMN the following:

1.    A reduction of the backstop fee from 5.0% to 2.0% of any CLN amount
converted to BMN shares as per the provisions of the Investment Agreement. The
backstop fee can, at the election of the Company, be satisfied by the issue of
Mustang shares at an issue price of 20 pence each. The backstop fee will be
reinstated to 5.0% if the Company's shares are relisted and has an interest in
VRFB-H.

2.    An interest free working capital loan (the "Loan") of US$220,000 to
be used by the Company to fund the additional expenses that arise as a result
of the extension of the Maturity Date.  If VRFB-H is successful in the High
Court proceedings, the Loan is repayable on the earlier of the Company
completing a capital raising of £1 million or  31 December 2023.  The Loan
is not repayable by the Company if VRFB-H is unsuccessful in the High Court
proceedings.  The Loan can, at the election of the Company, be repaid by the
issue of Mustang shares at an issue price of 20 pence each.

3.    If the Backstop is triggered and VRFB-H is subsequently successful in
the High Court proceedings the Company has been granted a call option to
acquire a the VRFB-H shares it transferred to BEL under the Backstop at the
same entry price as paid by the Company pursuant to the Investment Agreement.
The call option needs to be exercised within one month of finalisation of the
High Court proceedings.

4.    The Company has granted BMN a put option that can be exercised if the
Company does not exercise the call option, to sell the VRFB-H shares the
Company transferred to BEL under the Backstop at the same entry price as paid
by the Company pursuant to the Investment Agreement. The put option needs to
be exercised within one month of the expiry of the call option described
above.

The Company notes that Primorus Investments Plc has elected to sell all its
CLNs, comprising a principal amount of US$2,500,000 and accrued and unpaid
interest thereon (the "PRIM CLNs"). The purchasers of the PRIM CLNs were
comprised of a consortium of other existing CLN holders and BMN.

 

ENQUIRIES

For further information, please visit www.mustangplc.com
(http://www.mustangplc.com) , follow us on Twitter @Mustang_Plc
(https://twitter.com/Mustang_Plc) , or contact:

 Mustang Energy PLC

 Dean Gallegos, Managing Director

 dg@mustangplc.com

 +61 416 220 007

 

 

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