REG - Obtala Limited - Capital raise, board, name change,strategic update

WoodboisAnnouncement

30/10/2018 08:05

RNS Number : 6821F
Obtala Limited
30 October 2018
 


THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.
THIS ANNOUNCEMENT IS FOR INFORMATIONAL PURPOSES ONLY, AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION TO SELL OR ISSUE, OR ANY SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE FOR, ANY SECURITIES OF OBTALA LIMITED.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO, OR TO ANY PERSON LOCATED OR RESIDENT IN, ANY JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.
 
30 October 2018
Obtala Limited
("Obtala", the "Group" or the "Company")
(AIM: OBT)
 
Capital raise, proposed board changes and name change and strategic update
 
 
·     Company raising £2.7 million ($3.5 million) in new share capital to fund business growth
·     WoodBois principals Hadi Ghossein, Zahid Abbas and Jacob Hansen to join the main board of directors. Martin Collins to step down
·     Company name change from Obtala Limited to Woodbois Limited
·     Board decision to seek strategic partner, or to spin out, the agriculture business
 
Fundraising
 
Obtala Limited (AIM: OBT), the African focused forestry company, is pleased to announce, an intended subscription by new and existing investors to raise £2.7m ($3.5m) through the issue of 49,735,883 new ordinary shares of £0.01 each in the Company ("New Ordinary Shares") at an issue price of 5.5 pence per New Ordinary Share, being a discount of 5.17 per cent to the closing mid-price on 29 October 2018. 
 
The funds raised will be applied to develop further and grow the Company's forestry and timber trading activities, which today are centered in Gabon, the Ivory Coast and Denmark. The new capital will be utilised in bolstering funds available for trade finance, for additional capital investment in production capacity in Gabon, and for working capital. 
 
Certain directors of the Company have agreed to subscribe for New Ordinary Shares as set out below:
 



Miles Pelham


Chairman


1,872,246


£ 102,974




Paul Dolan


CEO


1,400,000


£ 77,000



 
Due to the amounts subscribed for, the participation of the directors as set out above is classified as a related party transaction for the purposes of the AIM Rules for Companies. The independent directors, having consulted with Northland Capital Partners Limited, the Company's nominated adviser, consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.
 
The New Ordinary Shares will be issued free of all liens, charges and encumbrances and will, when issued and fully paid, rank pari passu in all respects with the Company's existing Ordinary Shares.
 
CEO Paul Dolan observed, "It is clear from all the negotiations we have had to date, that the preference for trade finance providers is to provide a factoring service against receivables. Cash on hand can neatly dovetail such provision, by allowing our trading team the flexibility to secure additional exclusivity agreements through making pre-payments to our established network of high quality and sustainably harvested wood". The Board is unanimous in recommending that raising permanent equity capital to develop the business, will be in the long-term interests of shareholders. "We feel that the boost provided to trading income should in turn help to attract credible, long term trade finance partners to take the business to the next level".
 
Proposed board changes and name change
 
The Board is proposing to change the Company name to Woodbois Limited and will send a circular to shareholders in due course to give notice of a General Meeting to approve the change. The strength of the WoodBois brand has become increasingly apparent to the board since making the acquisition fifteen months ago. Since being established in 2005, WoodBois has developed a solid and substantial reputation within the industry. With our strategy now specifically focused on building a best in class forestry and timber trading platform, the decision to rename the group under the banner of the stronger and more recognised of our two brands is obvious. The change of name is in tandem with the proposed elevation of Hadi Ghossein, Zahid Abbas and Jacob Hansen, the principals of the Woodbois business, to the main board as Deputy Chairman, Head of Trading and COO respectively. These appointments will be formalised following completion of appropriate formalities by the nominated adviser under the AIM Rules.
 
Hadi Ghossein - Deputy Chairman.
With 25 years' experience managing forestry operations in Gabon, including as an owner of his own forestry business, Hadi has been responsible for WoodBois' forestry production division since inception in 2016. Prior to working in forestry, Hadi served as a diplomat, traveling extensively across Africa, as well as owning various trading and real estate companies. Hadi is fluent in French, Portuguese, Arabic and English and holds Gabonese citizenship.
 
Zahid Abbas - Head of Trading Division
Zahid has more than 20 years timber trading experience, formerly working for DLH Group in roles spanning procurement in Africa, sourcing Brazilian hardwood for French manufacturers. Based in Copenhagen, Zahid is responsible for expanding the trading business as well as implementing and reinforcing the Group's environmental policy. Zahid is fluent in 7 languages and is a Danish citizen.
 
Jacob Hansen - Chief Operating Officer
Jacob has more than 30 years' experience in the timber industry. Prior to co-founding WoodBois International in 2005 Jacob worked for DLH Group, where he held various international sales and procurement roles based in France, the Middle East and Africa (Gabon and Cameroon) selling lumber produced in West Africa. Earlier in his career Jacob operated sawmills in Sweden, Canada and the UK and has also worked in hardwood procurement in the Philippines.
 
Martin Collins
Having joined the Board to help the company through the transition from the Obtala legacy activities, to the now streamlined forestry and timber trading operations based in West Africa, Martin Collins will step down from the Board.
 
Chairman Miles Pelham said "The company would like to put on record how grateful we are to Martin for his tremendous dedication and impact during his executive tenure. Martin has spent a significant amount of time on the ground in Tanzania over the last 18 months in his efforts to find the best solution for the development of our agricultural assets. He also applied his 25 years of trading experience to the development of in-house tools to monitor and measure performance within the trading division".
 
Strategic Update
 
East Africa Operations
A comprehensive review of the legacy businesses in East Africa has been completed. The substantial growth of Group revenues in the last 12 months has been exclusively from timber operations, accounting for more than 98% of turnover so far in 2018. Whichever direction the agricultural business may take, it simply cannot match the rapid growth potential of the forestry and timber trading divisions in the short or medium term. Capturing the potential long-term annuity income of the farms in Tanzania requires the commitment of patient capital, precisely at a time when our timber business is gathering momentum and the application of further funding would have significant positive impact. The Board has therefore taken the decision to seek a strategic partner or to fully spin out the agriculture business.
 
Our assets in Mozambique have been underutilised this year for reasons clearly communicated previously. These assets do however fit within the portfolio of the overall timber business. We will therefore continue to cultivate a domestic market within Mozambique to allow the concessions and sawmill to 'tick over', at minimum cost, while waiting for clear signals from the Mozambique authorities with regard to export regulation. Given the losses sustained by both the East African operations in 2018, these decisions are essential if we are to achieve our next critical key objective, which is for the Group to become cash-flow positive.
 
Chairman Miles Pelham commented "While being sources of a high-quality natural commodity, with exceptional utility in construction, and aesthetic value in design and finished goods, tropical hardwood forestry concessions are precious natural resources and reservoirs of bio-diversity. Yet, compared to plantation forestry assets around the world, natural tropical hardwood concessions in West and Central Africa are significantly under-valued. In 2017 we were proud to be named Social Stock Exchange Impact Company of the Year (Annual Small Cap Awards, June 2017), and in keeping with that ethos, WoodBois intends to demonstrate leadership in the competent and ethical management of our resources for positive environmental, social and economic gain. The new equity capital we have raised, and the transformation we are undertaking of the business, are both intended to progress these objectives."
 
 
 



Obtala Limited
Miles Pelham - Chairman

Paul Dolan - CEO
Martin Collins - Deputy Chairman
www.obtala.com


+44 (0)20 7099 1940














Northland Capital Partners Ltd (Nomad and Broker)
Tom Price
Jamie Spotswood


+44 (0)20 3861 6625



 




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