REG - Tungsten West PLC - Convertible Loan Notes Documentation
19/05/2023 07:00
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RNS Number : 9607Z Tungsten West PLC 19 May 2023
19 May 2023
Tungsten West Plc
("Tungsten West", the "Company" or the "Group")
Convertible Loan Notes Documentation
Launch of Open Offer
Posting of Circular and Notice of General Meeting
Tungsten West (AIM:TUN), the mining company focussed on restarting production
at the Hemerdon tungsten and tin mine ("Hemerdon" or the "Project") in Devon
in the UK, is pleased to announce that further to the announcement released on
6 April 2023, it has executed definitive documentation in respect of the
convertible loan notes.
Overview of the Convertible Loan Notes
· The Company has raised a total of up to £6.95 million (before
expenses) by way of convertible loan notes ("CLNs"), in two tranches as
follows:
(a) an initial tranche of £3.975 million to be issued at completion and
following the satisfaction of the conditions precedent in the Note Purchase
Agreement ("Tranche A Notes"). Such amount comprises a maximum commitment of
up to £2 million from funds managed by Lansdowne and up to £1.975 million
from other note purchasers; and
(b) an additional tranche ("Tranche B Notes") of £2.975 million
(comprising a maximum commitment of £1 million from funds managed by
Lansdowne and up to £1.975 million from the other note purchasers) following
the satisfaction of certain conditions precedent with the consent of the
majority holders of the CLNs (such consent not to be unreasonably withheld or
delayed);
· In addition, the Company may offer up to a further tranche of £2
million aggregate principal CLNs ("Tranche C Notes") to a third party procured
by Lansdowne, failing which the CLNs may be offered to the existing Note
Purchasers pro rata to their holdings of CLNs at the time of calculation, in
each case with the consent of the Purchasers of the CLNs (effectively
comprising those Note Purchasers who hold 75 per cent. of the outstanding
aggregate principal amount under the CLNs at the time of the calculation and
with such consent not be unreasonably withheld or delayed). Should the Tranche
C Notes not be taken up by such parties then the Company may, in the
alternative, offer the Tranche C Notes to any other third party it may procure
by itself or through the Joint Brokers.
· The CLNs will accrue interest with an effective rate of 20 per
cent. per annum compounding every six months with such interest rounded to the
end of the relevant six-month period. All accrued interest will be payable
on Conversion or the Final Termination Date.
· The maturity date of the CLNs is 364 days from the date of the
issue of the Tranche A Notes.
· The Noteholders may convert their CLNs into new Ordinary
Shares:
o upon an Equity Raise, at the lesser of 3 pence per share or, where
applicable, a 50 per cent. discount to the offer price of an Equity Raise; or
o at 3 pence per share upon the occurrence of (i) a Change of Control, or
(ii) the sale of all or substantially all of the assets of the Group in one or
a series of transactions
· On the Final Termination Date, the CLNs (including any PIK to be
paid on such notes) will convert into new Ordinary Shares at the lesser of 3
pence per share or, where applicable, a 50 per cent. discount to the offer
price of an Equity Raise
· The conversion of CLNs held by any Note Purchaser into new
Ordinary Shares shall be subject at all times to a cap of 29.9 per cent.
(including existing shareholders) of the Company's issued share capital.
· Upon the occurrence of (i) a Change of Control, or (ii) the sale
of all or substantially all of the assets of the Group, each Note Purchaser
shall be entitled to require the repayment, redemption or repurchase of all or
part of the outstanding CLNs held by them. Upon redemption, the Company is
obliged to pay a sum equal to two times the principal amount of the relevant
tranche of the CLNs (excluding PIK). The Company does not have a right to
early redemption.
· The Tranche A Notes are secured with a First Ranking Debenture
over certain assets of the Group.
The above represents an overview of the Convertible Loan Notes. Further
information relating to the CLNs can be found in Part II of the Circular to be
published on the Company's Website later today.
Related Party Transaction
Baker Steel is a substantial shareholder of the Company (as defined in the AIM
Rules) and it has conditionally agreed to purchase an aggregate amount of
£1.2 million of the CLNs pursuant to the terms of the Note Purchase Agreement
on the same terms as the other Note Purchasers. Baker Steel's participation
comprises the principal amount of £600K for the Tranche A Notes and the
principal amount of £600K for the Tranche B Notes. Accordingly, their
participation in the Conditional Placing is a related party transaction
pursuant to rule 13 of the AIM Rules.
The Directors consider, having consulted with the Company's nominated adviser,
Strand Hanson, that the terms of subscription for Convertible Loan Notes by
Baker Steel are fair and reasonable in so far as the Shareholders are
concerned.
Launch of Open Offer
Further to the announcement on 6 April 2023, the Company is offering all
qualifying shareholders the opportunity to participate in the Open Offer from
today. The Open Offer will raise up to £2 million (assuming full take up of
the Open Offer) at an issue price of 3 pence per new Ordinary Share. Pursuant
to the Open Offer, up to 66,666,666 new Ordinary Shares will be offered to
existing shareholders at the Issue Price on the basis of:
1 Open Offer Share for every 2.7 Ordinary Shares held
The Open Offer will not be underwritten, and any demand not taken up by
qualifying shareholders may be offered in whole or in part to other interested
investors. Any interested party should contact VSA Capital or Hannam &
Partners at the contact details set out below.
Posting of Circular and Notice General Meeting
The Company is pleased to confirm that a Circular setting out principal
details of the Convertible Loan Notes and Open Offer, will today be posted.
The Circular contains Notice of the General Meeting which is to be held at
10.00 a.m. on 8 June 2023. The purpose of the General Meeting is to grant the
Directors sufficient authorities to allot and issue Ordinary Shares in
connection with the Fundraising.
Copies of the Circular and Notice of General Meeting are available from the
Company's website: https://www.tungstenwest.com/.
The Board considers that the resolutions set out in the Notice of General
Meeting are in the best interests of the Company and of its shareholders as a
whole and unanimously recommends shareholders to vote in favour of it.
David Cather, Chairman of Tungsten West, commented:
"The £6,950,000 fundraise and beginning of the Open Offer period marks a
promising step for the Company in its progress towards restarting the Hemerdon
mine. The intended use of the funds is to meet near term contractual
liabilities and annual expenditure, as well as financing planning and
permitting activities.
"We continue to work with stakeholders, governmental departments and
organisations, and the local community to ensure funding, permitting and
licensing is in place to develop Hemerdon in sustainable and cost-effective
manner. We look forward to updating the market on the General Meeting, the
closing of funding, and further updates from Hemerdon in due course."
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Announcement of the Conditional Placing 6 April 2023
Announcement of the launch of Open Offer 19 May 2023
Record Date for entitlements under the Open Offer 6.00 p.m. on 7 May 2023
Posting of this Document, Proxy Form and, to Qualifying Non-Crest 19 May 2023
Shareholders, the Application Form
Ex-entitlement date of the Open Offer 8.00 a.m. on 19 May 2023
Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to as soon as practicable after 8.00 a.m. on 22 May 2023
stock accounts in CREST of Qualifying CREST Shareholders
Latest recommended time and date for requesting withdrawal of CREST Open Offer 4.30 p.m. on 1 June 2023
Entitlements and Excess CREST Open Offer Entitlements
Latest time and date for depositing CREST Open Offer Entitlements and Excess 3.00 p.m. on 2 June 2023
CREST Open Offer Entitlements
Latest time and date for splitting of Application Forms under the Open Offer 3.00 p.m. on 5 June 2023
(to satisfy bona fide market claims only)
Latest time and date for receipt of Forms of Proxy and CREST voting 10.00 a.m. on 6 June 2023
instructions
Latest time and date for receipt of completed Application Forms and payment in 10.00 a.m. on 6 June 2023
full under the Open Offer and settlement of relevant CREST instructions (as
appropriate)
General Meeting 10.00 a.m. on 8 June 2023
Results of Open Offer and General Meeting announced 8 June 2023
Admission and dealings in the Open Offer Shares expected to commence on AIM 8.00 a.m. on 9 June 2023
Where applicable, expected date for CREST accounts to be credited in respect as soon as possible on 9 June 2023
of the Open Offer Shares
Receipt of funds from Tranche A Notes 13 June 2023
Where applicable, expected date for despatch of definitive share certificates within 14 days of Admission
for Open Offer Shares in certificated form
Notes:
(1) References to times in this Document are to London time, England
(unless otherwise stated). The timing of the events in the above timetable and
in the rest of this Document is indicative only and may be subject to change.
(2) If any of the above times or dates should change, the revised times
and/or dates will be notified by an announcement through an RIS.
(3) The timetable above assumes that all the Resolutions in the Notice of
General Meeting are duly passed.
Ends
For further information, please contact:
Enquiries
Tungsten West Strand Hanson
Neil Gawthorpe/ Nigel Widdowson (Nominated Adviser and Financial Adviser)
Tel: +44 (0) 1752 278500 James Spinney / James Dance / Abigail Wennington
Tel: +44 (0) 207 409 3494
BlytheRay VSA Capital Limited
(Financial PR) (Financial Adviser and Joint Broker)
Tim Blythe / Megan Ray Andrew Raca / Andrew Monk
Tel: +44(0) 20 7138 3204 +44 (0)20 3005 5000
Email: tungstenwest@blytheray.com (mailto:tungstenwest@blytheray.com)
Hannam & Partners
(Joint Broker)
Andrew Chubb / Matt Hasson / Jay Ashfield
+44 (0)20 7907 8500
Follow us on twitter @TungstenWest
APPENDIX
Definitions
"acting in concert" a group of persons who, pursuant to an agreement or understanding (whether
formal or informal), actively co-operate, through the acquisition and/or
ownership of voting shares in the Company, to obtain or consolidate control
(directly or indirectly) of the Issuer provided that the persons voting in the
same or consistent manner at any general meeting of the Company will not be
considered to be acting in concert by virtue only of exercising their votes in
such manner
"AIM" the AIM Market operated by the London Stock Exchange
"AIM Rules" the AIM Rules for Companies published by the London Stock Exchange from time
to time
"Baker Steel" Baker Steel Resources Trust Limited
"Change of Control" (a) any transaction not approved by the Noteholders' Representative (acting on
the instructions of all Note Purchasers), resulting in a party or one or
more parties acting in concert to (i) have the power to remove all or the
majority of the directors of the Company; (ii) have the power to give
directions with respect to the operating and financial policies of the
Company; (iii) hold all or substantially all of the assets of the Company; or
(iv) hold more than fifty percent. of the voting rights attaching to the
Company's issued share capital; or (b) any merger or similar reorganisation of
the Company which is not approved by the Noteholders' Representative (acting
on the instructions of all Note Purchasers) resulting in a party or one or
more parties acting in concert to: (i) have the power to remove all or the
majority of the directors of the Company; (ii) having the power to give
directions with respect to the operating and financial policies of the
Company; (iii) holding all or substantially all of the assets of the Company;
or (iv) holding more than fifty percent. of the voting rights attaching to the
Company's issued share capital
"Circular" the circular dated 19 May 2023 (including the Notice of General Meeting and
Open Offer) to be sent to Shareholders
"Company" or "Tungsten West" Tungsten West Plc, a public limited company incorporated in England and Wales
with registered number 11310159
"Conditional Placing" the secured financing of the Company through the proposed issue of the
Convertible Loan Notes pursuant to the terms of the Note Purchase Agreement
placed by the Joint Brokers
"Convertible Loan Notes" the convertible loan notes in the aggregate principal amount of up to £8.95
million to be issued by the Company pursuant to the Note Purchase Agreement
or "CLNs"
"Equity Raise" any issuance by the Company or any member of the Group of any equity interests
"Final Termination Date" date falling three hundred and sixty-four (364) days after the issue of the
Tranche A Notes.
"First Ranking Debenture" a debenture to be entered between the Company, Aggregates West Limited,
Drakelands Restoration Limited, Tungsten West Services Limited and the
Security Agent, pursuant to which a debenture will be granted over certain
assets of the Group
"Fundraising" the Conditional Placing and the Open Offer
"General Meeting" the general meeting of the Company to be held at the offices of Shakespeare
Martineau LLP, 60 Gracechurch Street, London EC3V 0HR at 10.00 a.m. on 8 June
2023, notice of which is set out at the end of this Document
"Group" the Company and its subsidiaries from time to time
"H & P" H & P Advisory Limited, incorporated and registered in England and Wales
with company number 11120795
"Issue Price" 3 pence per Ordinary Share
"Joint Brokers" H & P and VSA Capital
"Lansdowne" Lansdowne Partners (UK) LLP, acting for and on behalf of Lansdowne Developed
Markets Master Fund Limited
"Note Purchase Agreement" the note purchase agreement dated 19 May 2023 entered into, inter alia,
between the Company and the Note Purchasers, pursuant to which the Note
Purchasers agree to purchase the Convertible Loan Notes on the terms and
conditions set out therein
"Note Purchasers" Lansdowne, Baker Steel and certain other parties to the Note Purchase
Agreement
"Noteholders" the holders of the Convertible Loan Notes for the time being
"Notice of General Meeting" or "Notice" the notice convening the General Meeting which is set out at the end of this
Document
"Open Offer" the conditional invitation by the Company made to Qualifying Shareholders to
apply to subscribe for the Open Offer Shares at the Issue Price on the terms
and subject to the terms and conditions set out in Part II of this Document
and in the Application Form
"Open Offer Shares" the 66,666,666 new Ordinary Shares which Qualifying Shareholders will be
invited to subscribe for pursuant to the Open Offer
"Ordinary Shares" ordinary shares of £0.01 each in the capital of the Company
"PIK" an amount calculated at the rate of 20 per cent. per annum on the principal
amount outstanding under the relevant tranche of the CLN, compounded every six
months and rounded to the end of the relevant six month period
"Resolutions" the resolutions to be proposed at the General Meeting as set out in the Notice
of General Meeting
"Registrar" Neville Registrars Limited of Neville House, Steelpark Road, Halesowen, West
Midlands, United Kingdom, B62 8HD
"Shareholders" the registered holders of Ordinary Shares
"Strand Hanson" Strand Hanson Limited, incorporated and registered in England and Wales with
company number 02780163, acting as the Company's nominated adviser
"Tranche A Notes" the convertible loan notes for an initial principal amount of £3.975 million
to be issued at completion and following the satisfaction of the conditions
precedent in the Note Purchase Agreement
"Tranche B Notes" the convertible loan notes for an additional principal amount of £2.975
million to be issued after the issue of the Tranche A Notes and following the
satisfaction of certain conditions precedent in the Note Purchase Agreement
with the consent of the majority Noteholders
"Tranche C Notes" the convertible loan notes for the issue of up to a further aggregate
principal amount of £2 million pursuant to the terms of the Note Purchase
Agreement following the issue of Tranche A Notes and Tranche B Notes
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