REG-R.E.A. Holdings plc R.E.A. Holdings plc: Proposals re 7.5 per cent dollar notes 2022

R E A HoldingsAnnouncement

08/02/2022 07:05

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   R.E.A. Holdings plc (RE.)
   R.E.A. Holdings plc: Proposals re 7.5 per cent dollar notes 2022

   08-Feb-2022 / 07:00 GMT/BST
   Dissemination of a Regulatory Announcement that contains inside
   information according to REGULATION (EU) No 596/2014 (MAR), transmitted by
   EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   R.E.A. Holdings plc (the "company")
   Proposal to extend the redemption date for the 7.5 per cent dollar notes
   2022 issued by the company from 30 June 2022 to 30 June 2026

   Introduction

   The company announced in its trading update published on 25 January 2022
   that, with the group's finances now on a firmer footing, the company
   expected shortly to seek the approval of the holders of its 7.5 per cent
   dollar notes 2022 (the "dollar notes") to extend the redemption date for
   the dollar notes by four years (the "proposal").

   The company now announces that it is today despatching a circular (the
   "circular") to the holders of the dollar notes ("noteholders") giving
   details of the proposal, and seeking the approval of noteholders (to be
   given by way of an extraordinary resolution to be proposed at a general
   meeting of noteholders convened for 3 March 2022) as regards such
   proposal.

   Background to and reasons for the proposed extension of the redemption
   date for the dollar notes

   2021 saw a considerable improvement in the group's trading performance
   with revenues benefitting from significantly higher CPO prices. This
   facilitated completion of longstanding negotiations with the group's
   Indonesian bankers, PT Bank Mandiri (Persero) Tbk ("Mandiri"), for the
   repayment of three existing loans made by Mandiri to subsidiaries of the
   company and their replacement with three new loans of longer tenor
   providing the group with increased funding at a reduced interest rate. In
   addition, the group has reached understandings with its principal
   customers on the continued availability of pre-sale advances at levels
   that the group regards as satisfactory.

   The group now wishes to address two other funding issues, namely the
   current obligation to redeem the dollar notes on 30 June 2022 and the
   accumulated arrears of dividend on the preference shares which stand at
   17p per share following the payment of 1p per share of arrears on 31
   December 2021.

   Whilst the improvements to the group's liquidity that have resulted from
   the 2021 trading performance and the successful reorganisation of the
   banking arrangements with Mandiri should permit the group to meet its
   liability to redeem the dollar notes on the due date, doing so would limit
   the group's ability to continue its development programme at the rate that
   it regards as desirable and would decrease the cash available for
   reduction of the arrears of preference dividend.

   Consent fee

   In consideration of and subject to noteholders sanctioning the proposed
   extension of the redemption date for the dollar notes, the company will
   pay each noteholder on the register of noteholders at 6.00 p.m. on 2 March
   2022 (whether or not such noteholder votes in favour of the extraordinary
   resolution sanctioning the proposal but only if the proposed extension of
   the redemption date for the dollar notes becomes effective) a consent fee
   in cash in an amount equal to 0.25 per cent of the nominal amount of
   dollar notes held by such holder.

   It is intended that, provided that the proposed extension of the
   redemption date for the dollar notes has become effective, the consent fee
   will be paid on 17 March 2022. The consent fee will be paid in dollars
   unless the relevant noteholder has already elected, in accordance with the
   terms and conditions attaching to the dollar notes, to receive interest in
   respect of the dollar notes in sterling, in which event the consent fee
   will be paid to that noteholder in sterling.   

   Sale facility

   The directors are aware that the market in the dollar notes can be
   limited, and that not all noteholders may be willing to have the monies
   represented by their holdings of dollar notes tied up beyond 30 June 2022.
   Accordingly, in conjunction with the proposal to extend the redemption
   date for the dollar notes, the company has put in place arrangements
   whereunder, conditional upon the proposed extension of the redemption date
   for the dollar notes becoming effective, any noteholder who wishes to
   realise their holding of dollar notes by the current redemption date of 30
   June 2022 is offered the opportunity so to do (the "sale facility").

   Any noteholder who wishes to take advantage of the sale facility (or any
   such noteholder's duly authorised representative) is invited to contact
   Guy Butler Limited ("Guy Butler") at any time on or after the date on
   which the proposed extension to the redemption date for the dollar notes
   becomes effective but by no later than 5.00 p.m. on 31 May 2022. To the
   extent that Guy Butler is or becomes aware of potential purchasers of
   dollar notes, Guy Butler will endeavour to arrange to purchase and resell
   the applicable dollar notes on terms acceptable to the divesting
   noteholder. Any such sale will be subject to the provisions as regards the
   transfer of dollar notes included at Condition 3 attaching to the dollar
   notes (that is, (i) any election to sell must be in respect of a minimum
   amount of $120,000 nominal of dollar notes and (ii) where the election is
   in respect of part only of a holding of dollar notes, the transfer of the
   same must not result in the transferor retaining a minimum holding of less
   than $120,000 nominal of dollar notes represented, in the case of dollar
   notes held in certificated form, by one certificate).

   To the extent that all relevant notes are not so sold by 21 June 2022, the
   company will procure that its wholly owned subsidiary R.E.A. Services
   Limited ("REA Services") offers to purchase the unsold balance of the
   relevant notes for cash at par for settlement on 30 June 2022 (that is,
   the current due date for redemption of the dollar notes), again subject
   always to the provisions as regards the transfer of dollar notes included
   at Condition 3 attaching to the dollar notes. All dollar notes sold to REA
   Services pursuant to the sale facility will be sold with full title
   guarantee free from any encumbrance and together with all accrued benefits
   and rights attached thereto, save for the right to the interest payable in
   respect of the dollar notes on 30 June 2022 (which interest will be paid
   to all holders of dollar notes on the register of noteholders at the close
   of business on the record date for the payment of such interest in the
   usual manner).

   Intentions of REA Services

   REA Services intends to seek to re-sell, over time, any dollar notes
   acquired by it pursuant to the sale facility. To the extent not so sold,
   REA Services intends to retain the dollar notes pending redemption of the
   same in accordance with their terms. There is no current intention that
   any dollar notes acquired by REA Services pursuant to the sale facility be
   surrendered for cancellation.

   Proposed updates to the trust deed

   In addition to sanctioning the proposed extension of the redemption date
   for the dollar notes, the extraordinary resolution to be proposed at the
   meeting of the note holders convened for 3 March 2022 includes provisions
   sanctioning amendments being made to the trust deed as follows:

     • to allow for such further and/or alternative regulations regarding the
       requisitioning and/or the holding of meetings of noteholders and
       attendance and voting thereat, including the holding of "virtual"
       meetings by way of conference call or videoconference, as, in the case
       of meetings convened by the Trustee (including on the requisition of
       noteholders), the Trustee may in its sole discretion think fit or, in
       the case of meetings convened by the Company, the Company and the
       Trustee may together think fit; and
     • to bring the record date for the payment of interest in respect of the
       dollar notes forward, from thirty days prior to the relevant interest
       payment date to ten business days prior to the relevant interest
       payment date.

   The first such amendment is to allow flexibility for the future,
   particularly given difficulties encountered in many companies over the
   last two years as a result of the Covid-19 pandemic. The full text of the
   proposed new provision is set out in the extraordinary resolution to be
   proposed at the meeting of noteholders convened for 3 March 2022.

   The second amendment is simply because it is felt that the current gap
   between the record date for the payment of interest and the interest
   payment date is unnecessarily long.

   Conditions

   The proposed extension of the redemption date for the dollar notes and
   other amendments to the trust deed as noted under "Proposed updates to the
   trust deed" above are conditional upon:

   i. the passing of the extraordinary resolution sanctioning such proposal
      set out in the notice of meeting of the holders of the dollar notes
      included at the end of this document; and
   ii. the execution of the supplemental trust deed referred to in such
       resolution

   in each case by 29 April 2022.

   The sale facility is conditional upon the proposed extension of the
   redemption date for the dollar notes becoming effective.

   Preference shares

   As at the date of this document, the issued share capital of the company
   comprises 43,950,529 ordinary shares (of which 132,500 are held as
   treasury shares) and 72,000,000 preference shares. As the dividend in
   respect of the preference shares is more than six months in arrears, each
   preference share currently confers upon the holder the right to vote at
   general meetings of the company. The voting rights attaching to shares of
   the company generally exercisable at general meetings of the company thus
   total 115,818,029 as at the date of this document, with a total of
   43,818,029 votes exercisable in respect of the ordinary shares and
   72,000,000 exercisable in respect of the preference shares. Holders of
   preference shares will retain their enhanced voting rights until the
   arrears of preference dividend are cleared.

   The company paid the preference dividend accruing in respect of the year
   ended 31 December 2022 (9p per preference share) together with 1p per
   share of arrears of dividend, thus reducing the aggregate arrears from
   £12,960,000 to £12,240,000. As previously announced, the directors intend
   that, in addition to paying the preference dividend accruing in respect of
   the current year ending 31 December 2022, the company will also pay not
   less than 10p per share (£7,200,000 in aggregate) of arrears of dividend
   during the course of the current year.

   Also as previously announced, the directors plan to increase this amount
   of 10p per preference share if (i) expectations regarding recovery of
   group loans to ATP are, as remains hoped, confirmed, (ii) the group's oil
   palm operations continue to perform satisfactorily, (iii) the proposed
   extension of the redemption date for the dollar notes becomes effective
   and (iv) sufficient of the outstanding dollar notes remain in (or, in the
   case of dollar notes purchased by REA Services pursuant to the sale
   facility, can be re-sold by REA Services into) public hands.

   Guy Butler

   In consideration of its services in relation to the proposed extension of
   the redemption date for the dollar notes and the sale facility,
   conditional upon the proposed extension of the redemption date for the
   dollar notes becoming effective, the company has agreed to pay to Guy
   Butler fees equal to (i) 0.5 per cent of the nominal amount of dollar
   notes held by each holder of dollar notes who (a) votes in favour of the
   extraordinary resolution to be proposed at the meeting of the holders of
   the dollar notes convened for 3 March 2022 and (b) does not elect to sell
   any dollar notes pursuant to the sale facility; (ii) 0.5 per cent of the
   nominal amount of dollar notes purchased by REA Services pursuant to the
   sale facility and subsequently re-sold to a person who is already, as at
   the close of business on 21 June 2022, a holder of dollar notes; and (iii)
   1.0 per cent of the nominal amount of dollar notes purchased by REA
   Services pursuant to the sale facility and subsequently re-sold by REA
   Services to a person who is not already, as at the close of business on 21
   June 2022, a holder of dollar notes where such person is introduced to REA
   Services by Guy Butler. The fee referred to at (i) above will be payable
   in June 2022; the fees referred to at (ii) and (iii) above will be payable
   following the relevant sale(s) by REA Services.

   Recommendation

   Each of the directors of the company is of the opinion that the proposed
   extension of the redemption date for the dollar notes, with the attendant
   sale facility, and the proposed updates to the trust deed are all in the
   best interests of the company, its shareholders and the holders of the
   group's debt securities (including the dollar notes) as a whole.

   However, none of the directors considers it appropriate to make a
   recommendation to noteholders as to whether or not noteholders should vote
   in favour of the resolution set out in the notice of meeting of the
   holders of the dollar notes convened for 3 March 2022 and/or as to whether
   or not noteholders should elect to sell dollar notes pursuant to the sale
   facility. A decision as to whether or not to vote in favour of the
   resolution and/or as to whether or not to elect to sell pursuant to the
   sale facility will depend on the personal circumstances of each
   noteholder. As stated on the cover of this document, holders of dollar
   notes who are in any doubt as to what action they should take are
   recommended to consult their appropriate independent financial adviser
   duly authorised, if the holder is resident in the United Kingdom, under
   the  1 Financial Services and Markets Act 2000 or, if the holder is not so
   resident, under the relevant applicable local law.

   Expected timetable

   A meeting of the holders of dollar notes has been convened for 3 March
   2022 to consider a resolution to sanction the proposed extension of the
   redemption date for the dollar notes and the updates to the trust deed
   constituting the dollar notes (the "trust deed") as noted above, and to
   authorise and request the trustee for the noteholders to enter into a
   supplemental trust deed for the purposes of effecting the necessary
   amendments to the trust deed.

   It is expected that the results of the meeting will be announced on 3
   March 2022 and that the proposals will become effective the same day.

   Enquiries:

   R.E.A Holdings plc
   Tel: 020 7436 7877

    

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   ISIN:          GB0002349065
   Category Code: CIR
   TIDM:          RE.
   LEI Code:      213800YXL94R94RYG150
   Sequence No.:  141447
   EQS News ID:   1277621


    
   End of Announcement EQS News Service

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