TIDMAGTA
RNS Number : 7133J
Agriterra Ltd
18 August 2023
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
18 August 2023
Agriterra Limited ('Agriterra' or the 'Company')
Agriterra Limited / Ticker: AGTA / Index: AIM / Sector:
Agriculture
New Trade Finance Package, Operational Restructure and Related
Party Transaction
Agriterra Limited, the AIM-quoted African agricultural company,
is pleased to announce that it has concluded a trade finance
package with Magister Investments Limited ("Magister"), the
Company's 50.58 per cent. shareholder, which will:
-- significantly reduce the finance costs associated with maize
purchasing in Mozambique by the Company's wholly owned subsidiary,
Desenvolvemento E Comercializacao Agricola, Limitada ("DECA");
-- facilitate the purchase by DECA of various capital equipment
which will be employed by its operations in Mozambique to drive
growth through accessing new revenue streams and improving
operational efficiencies; and
-- enable the group to replace the external finance provided by
First Capital Bank, S.A. announced on 14 June 2023 .
In addition, the Company announces that it has implemented a
significant operational cost savings restructure within its
Mozambique subsidiaries DECA, Compagri, Limitada and Mozbife,
Limitada (together the "OpCos") .
Caroline Havers, Executive Chair, said: "The purchasing aspect
of our maize treatment and processing operations in DECA have
typically been financed by local external lending. By securing
finance from Magister to purchase maize, we will significantly
reduce our purchasing costs and position DECA to generate strong
revenues from its maize meal sales, during the selling season. In
addition, the new financing will assist in the acquisition of new
capital equipment by DECA and will support ongoing efforts to
diversify our product and revenue streams. This will allow us to
access local informal markets, as we seek to solidify our base of
operations. We thank Magister for their continued support in
providing this new financing, which demonstrates their ongoing
commitment to our business and shareholder base.
After a period of assessment we have implemented a strategic
restructuring to reduce expenses, maximise efficiencies and improve
profitability at our operations in Mozambique. We are disappointed
to have had to reduce our local workforce so dramatically, but felt
that this was the only responsible way to move forwards in the
current economic conditions. We have ensured that all of those
whose employment has ceased have received their full terminal
benefits, in accordance with Mozambique law and thank everyone for
their hard work to date. "
Summary of Key Terms
Agriterra has today secured new debt funding from its majority
shareholder, Magister, in an aggregate amount of US$2.9m together
with an extension to the US$1.8m convertible loan facility provided
by Magister (the "2022 CLA") as announced on 29 July 2022 (together
the "Trade Finance Package").
The Trade Finance Package comprises:
Ø an unsecured facility of US$2m to facilitate onward funding to
DECA to finance grain purchasing in Mozambique without relying on
local bank overdraft facilities, which are typically more expensive
(the "Maize Facility");
Ø an unsecured facility of US$900k to facilitate the acquisition
by DECA of capital equipment ( the "Asset Facility", including an
automatic biscuit making & baking plant, 1kg & 5kg packing
machines, a vertical packing machine for sugar/salt/rice/beans and
a FAW 28.380FT truck & 13.5m Tri-Axle Tautliner semi-trailer,
the "Financed Equipment"); and
Ø amendments to the 2022 CLA to extend the term and update the
interest provisions (the "CLA Amendment").
Agriterra has also carried out a significant operational cost
saving exercise, resulting in a 39% reduction in OpCos staffing,
along with new operational strategies designed to ensure no
significant loss in productivity (the "Mozambique
Restructure").
Management anticipates that the Mozambique Restructure and the
Trade Finance Package will favourably position DECA to buy maize at
competitive prices and improve maize meal production during the
next trading period. Further, the Financed Equipment will provide
access to additional revenue streams and improve operational
efficiencies .
The material terms of the Trade Finance Package are as
follows:
Maize Facility
-- Duration of 12 (twelve) months , with principal and interest
(as described below) due at the end of the term, to the extent not
converted (as described below), subject to extension by a further
12 (twelve) months (on one or more occasions) by notice in writing
provided by Magister to the Company at any time prior to the
maturity.
-- Magister will have the right on one or more occasions to
convert all or part of the loan then outstanding (plus a pro-rated
amount of accrued interest) into new ordinary shares in the capital
of the Company at the prevailing 10-day VWAP on the date on which
notice of exercise of conversion rights is given to AGTA, subject
to all applicable laws and regulations.
-- Interest will be charged on this facility at the rate of SOFR
(at the start of each 12 (twelve) month period, if applicable) + 6%
per annum (or part thereof, if applicable), on a daily basis, be
compounded quarterly and paid in full on the maturity date.
-- No arrangement fees are payable.
-- Upon the occurrence of an event of default, Magister may (the "Magister Recovery Rights"):
Ø declare that the loan (and all accrued interest and all other
amounts accrued or outstanding) is immediately due and payable;
and/or
Ø at its election, require the Company, using its best
endeavours to ensure that any/all necessary approvals, waivers,
consents or similar/equivalent are obtained, to take all steps
necessary to issue new ordinary shares in the capital of the
Company to Magister, equal in value to the loan then outstanding
plus interest calculated at 12% per annum from the date of the Loan
at the 5 day VWAP over the 5 (five) trading days prior to the
occurrence of the event of default.
Asset Facility
-- Maturity date of 31 March 2026 (subject to extension by a
further 12 (twelve) months (on one or more occasions) by notice in
writing provided by Magister to the Company at any time prior to
the maturity)
-- After a grace period up to 31 March 2024, the Asset Facility
will be repaid in equal quarterly tranches ensuring repayment in
full on or before maturity.
-- Interest will be charged on this facility at the rate of SOFR
(at the start of each 12 (twelve) month period, if applicable) + 6%
per annum (or part thereof, if applicable), on a daily basis, be
compounded quarterly and paid in full on or before the maturity
date.
-- No arrangement fees are payable.
-- Upon the occurrence of an event of default Magister will be
entitled to exercise the Magister Recovery Rights.
CLA Amendment
Magister and the Company agree to various amendments to the 2022
CLA as follows:
-- A change to the definition of the "maturity date" to extend
the term for a further 12 (twelve) months and to provide for
extension by a further 12 (twelve) months (on one or more
occasions) by notice in writing provided by Magister to the Company
at any time prior to the maturity.
-- Changes to the interest charging provisions to the effect
that the interest rate is re-set upon each extension to the
prevailing SOFR at extension, + 6 % per annum.
-- Changes to the "restitution amount" (i.e. applicable upon an
event of default) so that the interest rate applied in such
circumstances is increased to 12%, so as to reflect the prevailing
worldwide economic conditions and increased interest costs.
The material aspects of the Mozambique Restructure are as
follows:
-- A broad restructuring plan has been implemented to improve
profitability of the OpCos generally.
-- Reduction in the total number of staff as well as certain other operating expenses.
-- A total of 123 out of 312 employees have been retrenched, the
financial impact of which is a reduction of:
Ø payroll costs of US$44k (approx.) per month; and
Ø other operating expenses of US$19k (approx.) per month.
-- Overall anticipated reduction in operating expenses of OpCos
by US$625k (approx.) per year (net of retrenchment costs of US$131k
(approx.) which are planned to be paid over 4-6 months).
Related Party Transaction
Entering into the Trade Finance Package, along with the CLA
Amendment constitutes a related party transaction under Rule 13 of
AIM Rules. In this context, Caroline Havers, Neil Clayton and
Sergio Zandamela (being the Directors on the Board who are
considered to be independent of Magister) consider, having
consulted with the Company's Nominated Adviser, Strand Hanson
Limited, that the terms of the Trade Finance Package are fair and
reasonable insofar as its shareholders are concerned.
Agriterra Limited Caroline Havers
caroline@agriterra-ltd.com
=============================== ===============================
Strand Hanson Limited Ritchie Balmer / James Spinney
Nominated & Financial Adviser +44 (0) 207 409 3494
=============================== ===============================
Peterhouse Capital Limited Duncan Vasey / Eran Zucker
Broker +44 (0) 207 469 0930
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