TIDMCZA
RNS Number : 5925B
Coal of Africa Limited
05 April 2017
ANNOUNCEMENT 5 April 2017
FINANCE FACILITIES
Coal of Africa Limited ("CoAL" or "the Company") is pleased to
announce that the Company has entered into a loan agreement (the
"Loan Agreement") with the Industrial Development Corporation of
South Africa* ("IDC") and Baobab Mining and Exploration Proprietary
Limited ("Baobab"), a subsidiary of CoAL and owner of the mining
right for the Makhado Project, in terms of which the IDC shall
advance loan funding up to R240 million (two hundred and forty
million rand) (approximately US$17.6million) to Baobab for use in
the Makhado Project ("Loan Funding"). The Loan Funding will be used
to advance the operations and implementation of the Makhado
Project, CoAL's flagship project.
Salient Features
-- The IDC will advance to Baobab in two equal tranches of R120
million (one hundred and twenty million rand) (approximately
US$8.8million) upon written request from Baobab;
-- Upon the third anniversary of each advance from IDC to
Baobab, Baobab will be required to repay to IDC the amount advanced
to it plus the amount equal to a real after tax internal rate of
return equal to 16% of the amount of each advance to Baobab
(collectively the "Required Amount");
-- Baobab shall be permitted to request of IDC that it prepay
some or all of the Required Amount before the scheduled repayment
date;
-- Subject to the provisions of the Loan Agreement CoAL shall
stand as surety for Baobab's obligations to make payment of the
Required Amount in instances in which Baobab defaults on such
payments;
-- CoAL shall issue IDC with warrants (in respect of CoAL
shares) pursuant to each advance date as soon as the relevant
shareholder approval for the issue of such warrants occurs, in
accordance with the following salient terms:
A. Following advance of the first tranche of the Loan Funding,
the Company shall issue to IDC warrants over ordinary shares
equating to 2.5% of the entire issued share capital of CoAL as at 5
December 2016;
B. Following advance of the second tranche of the Loan Funding,
the number of warrants to be issued to IDC shall be equal to 2.5%
of the entire issued share capital of CoAL as at the date of the
second advance;
C. The price at which IDC shall be entitled to purchase the CoAL
shares (in terms of which the warrants shall be 'converted' into
ordinary shares in the issued share capital of Coal of Africa),
shall be an amount equal to a 30% (thirty percent) premium to the
30 day Volume Weighted Average Price of the CoAL shares as traded
on the JSE as at 5 December 2016, equating to R0.60 per share;
and
D. IDC shall be entitled to exercise the warrants for a period
of 5 years from the date of their issue (as contemplated in (A) and
(B) above).
-- Upon each advance date, Baobab shall be required to, issue
new ordinary shares in Baobab to IDC which shall be equivalent to
5% of the entire issued share capital of Baobab at such time; and
such CoAL's shareholding in Baobab will be diluted accordingly.
Notwithstanding such dilution, CoAL will retain a majority
shareholding in Baobab;
-- If the second advance of R120million is not required by
Baobab, and therefore not advanced by the IDC, the IDC may elect to
exercise one of the following rights:
A. Baobab shall issue new ordinary shares in Baobab equivalent
to 5% of the entire issued share capital of Baobab to IDC for an
aggregate subscription price of R60million (sixty million rand)
(approximately US$4.4million); or,
B. Baobab shall issue ordinary shares in Baobab equivalent to 1%
of the entire issued share capital of Baobab to IDC for an
aggregate subscription price of R1 (one rand); or,
C. a penalty fee of R12 million (twelve million rand)
(approximately US$880k)shall be paid to the IDC;
-- If some or all of the repayment amount is not paid by Baobab
to the IDC when due, IDC may elect to exercise one of the following
rights, in full discharge of its right to receive the then
outstanding portion of the Required Amount:
A. IDC may be issued further shares in Baobab (and CoAL's shareholding in Baobab shall be diluted accordingly); or,
B. IDC may exercise its rights against CoAL under a suretyship agreement;
-- Baobab and CoAL will provide IDC with warranties,
representations and undertakings which are customary in a loan
funding agreement of this nature; and
-- For so long as the Required Amount is payable to the IDC, IDC
shall be entitled to nominate 1 (one) person for appointment to the
board of directors of Baobab and to be a member of the project
steering committee of the Makhado Project.
David Brown, Chief Executive Officer of CoAL, commented:
"Whilst final agreements have now been executed, the transaction
with the IDC was initially agreed in December 2016, and is
reflective of the Company's position at that time. The funding of
pre-project activities at Makhado is welcomed as we progress the
project towards a construction start subject to regulatory and
funding requirements. We continue to focus on the upliftment and
dismissal of the appeal against the Integrated Water Use Licence
and securing the remaining surface rights of the project. This is a
defining step towards the bringing the project to reality. We
welcome the IDC as a supportive shareholder in the Makhado project
who will work with CoAL to promote future success."
*The IDC is a national development finance institution set up to
promote economic growth and industrial development. They are owned
by the South African government under the supervision of the
Economic Development Department
For more information contact:
Chief Executive +27 10 003
David Brown Officer Coal of Africa 8000
Chief Financial +27 10 003
De Wet Schutte Officer Coal of Africa 8000
+27 10 003
Celeste van Tonder Investor Relations Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Matthew Armitt/Ross Nominated Adviser Peel Hunt +44 20
Allister and Broker LLP 7418 8900
Jos Simson/Emily Financial PR +44 20
Fenton (United Kingdom) Tavistock 7920 3150
Charmane Russell/Olwen Financial PR Russell & +27 11
Auret (South Africa) Associates 880 3924
or
+27 82
372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and
mining company operating in South Africa. CoAL's key projects
include the Vele Colliery (coking and thermal coal), the Greater
Soutpansberg Project /MbeuYashu, including CoAL's Makhado Project
(coking and thermal coal).
This announcement is inside information for the purposes of
article 7 of EU Regulation 596/2014.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCBRGDSSDGBGRS
(END) Dow Jones Newswires
April 05, 2017 03:00 ET (07:00 GMT)
Coal of Africa (LSE:CZA)
Historical Stock Chart
From Jun 2024 to Jul 2024
Coal of Africa (LSE:CZA)
Historical Stock Chart
From Jul 2023 to Jul 2024
