TIDMPAL
RNS Number : 1791P
Equatorial Palm Oil plc
30 September 2013
30 September 2013
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Interim Results for the six months ended 30 June 2013
Equatorial Palm Oil plc, (AIM: PAL), the AIM listed palm oil
development company with operations in Liberia, announces its
unaudited interim results for the six months ended 30 June 2013
("the Period").
Chairman's Statement
During the first half of 2013, the Company focussed on further
progress of its oil palm assets in Liberia, West Africa, and
setting the foundations for its large scale development. EPO has a
50:50 joint venture ("JV") share with Biopalm Energy Limited
("Biopalm") in all the oil palm assets held by Liberian Palm
Developments Limited ("LPD"), the JV company that EPO manages on
behalf of the JV partners.
Liberian Palm Developments Limited - Operational Review
In the first half of 2013, LPD planted 926 ha at Palm Bay Estate
and 393 ha at Butaw Estate. A further 1,448 ha at Palm Bay and 444
ha at Butaw have been prepared ready for planting. Based on the
planting completed this year and infrastructure in place, LPD
believes that it is capable of planting 3,000 ha per annum from
2014 onwards, subject to availability of funding, as referred to
below, on a timely basis.
During the Period, LPD appointed African Export-Import Bank
("Afreximbank") as a corporate advisory partner for the purpose of
securing a US$140m financing facility (the "Facility") which is
expected to be sufficient to fund the Palm Bay oil palm project
located near the deepwater port of Buchanan in Liberia, West
Africa.
In June 2013, final Environmental, Social, Impact Assessments
("ESIA") reports for Palm Bay Estate were submitted to LPD by
independent environmental consultants, Coastal and Environmental
Services. This is a key milestone for the Company, being the
culmination of over two years of work. The environmental studies
concluded, inter alia, that the oil palm development at the Palm
Bay Estate is acceptable from an environmental and social
perspective, and will result in sustainable benefits to the
area.
These ESIA reports are a key requirement for the development
funding institutions ("DFIs") from which the Company is seeking to
secure debt funding. Work continued with Afreximbank who have been
appointed by LPD to work with DFIs in order to secure funding for
our projects in Liberia.
Funding of LPD
In December 2010, the Company entered into and announced a joint
venture with Biopalm. As agreed under the terms of the joint
venture agreement, dated 10 December 2010, entered into between
Biopalm and EPO (the "Investment Agreement"), EPO, in February
2011, transferred its oil palm assets in Liberia together with
US$7.5m to LPD, and Biopalm transferred US$22.5m to LPD. Under the
Investment Agreement, Biopalm is required to arrange and/or
contribute, either directly or through any member of its group, any
external funding required by LPD (up to a maximum of US$30m) (the
"Commitment").
On 8 July 2013, the Company announced that it had issued a
written notice to Biopalm setting out that Biopalm is in material
breach of its obligations under the Investment Agreement having
failed to provide the Commitment.
On 14 August 2013, the Company announced that no resolution of
the dispute had taken place and that the next step for dispute
resolution is to seek resolution by arbitration.
As a result, EPO, since formation of the JV, has advanced $8.0m
to LPD to date (in addition to $7.5m on inception of the JV in
February 2011) in anticipation of the provision of the External
Funding by Biopalm.
EPO continues to negotiate and work with Biopalm regarding the
Commitment with a view to an amicable solution being reached, but
has reserved all rights to take action against Biopalm under the
Investment Agreement.
Until the long term funding of LPD is secured, the operations of
LPD will be managed predominantly on a care and maintenance basis.
LPD has the foundations, infrastructure and team in place to ramp
up planting again quickly upon this funding being in place.
Financial review
The loss of the Group for the six months ended 30 June 2013 of
US$1,656,000 (2012: US$1,570,000) was in line with expectations.
Cash held by the Group as at 30 June 2013 was US$9,000 (2012:
US$1,734,000).
In July 2013, the Company announced certain fund raising efforts
had been concluded which included equity and loans.
On 16 July 2013, the Company announced it had entered into short
term loan agreements with Adelise Services Limited ("Adelise"), a
company associated with Michael Frayne, Executive Chairman of EPO,
for the advance of GBP29,745 and US$425,000 to the Company (the
"Adelise Loans").
On 24 July 2013, the Company announced the placement to existing
and new shareholders of 37,637,000 ordinary shares for an aggregate
consideration of GBP2,258,220 (US$3,465,239) ("the Placing"). At
the same time, the Company announced that a loan of US$400,000 was
made by the Company's joint venture partner Biopalm to LPD ("the
Biopalm Loan").
On 29 July 2013, the Company announced an increase in the size
of the placing announced on 24 July 2013 by a further 3,728,762
ordinary shares for an additional aggregate consideration of
GBP223,726 (US$343,307). As part of the placing announced on 29
July 2013, Adelise converted GBP108,900 of the Adelise Loans into
ordinary shares. The Company also announced on 29 July 2013 that
Adelise had granted a US$500,000 revolving loan facility to the
Company for the purpose of the Company's general working capital
("the Adelise Facility").
The placings announced on 24 July 2013 and 29 July 2013, the
Biopalm Loan, the Adelise Facility and other loan facilities
provided funds, in aggregate, of US$4,828,546 (the "July
Raise").
The proceeds received by EPO from the placings announced on 24
July 2013 and 29 July 2013, were used to advance a loan of US$2.2m
(the "Loan") to LPD. The Loan has been provided on a short-term
basis and the interest accrued on the Loan is payable at a fixed
rate of 8 per cent. per annum. The Loan is repayable on demand and
is secured against the assets of LPD. The Loan provides short-term
financing to support LPD's ongoing development of its oil palm
projects in Liberia, West Africa, in advance of the resolution of
Biopalm's External Funding obligation and the anticipated long term
debt funding being sourced for LPD by Afreximbank.
The July Raise allowed the Company to clear the majority of
creditors, including full repayment of the balance of the loan
provided by Adelise announced 16 July 2013, and will allow the
Company to continue to fund JV operations on a care and maintenance
basis for approximately two months from today.
There a number of short term facilities and funding solutions
currently at an advanced stage of negotiations but not yet
finalised. Whilst there can be no certainty over the level of funds
to be raised or that these funding sources will formally complete,
the Directors remain confident in being able to raise further funds
to finance future working capital requirements of the Group for the
next twelve months of operations.
Once the short term funding position is secured, the Directors
plan to work with Biopalm and Afreximbank to find a longer term
funding solution such that it returns planting levels of oil palms
to those originally planned. It is too early at this stage to
indicate what form this longer term funding solution may take.
Summary and Outlook
The Company continues to hold a constructive dialogue with
Biopalm regarding the Commitment LPD has reduced its workforce and
is currently operating on a care and maintenance basis.
The key objective for LPD is to secure funding to reactivate
planting and ramp up the planting rate year on year with a forward
combined target of planting over 100,000 hectares by 2021. LPD is
positioned to produce its first commercial production in 2014 from
the oil palms planted in 2011. The Board believes that with our
experienced management team, robust project economics and strong
investment case, EPO can procure the funding necessary to deliver
significant value and growth to shareholders.
Michael Frayne
Executive Chairman
30 September 2013
Enquiries:
Equatorial Palm Oil plc
Michael Frayne (Chairman) +44 (0) 7552 497
www.epoil.co.uk 241
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
James Harris / James Bellman 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
EQUATORIAL PALM OIL PLC
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2013
Period ended Period ended Year ended
30 June 2013 30 June 2012 31 December
2012
Note (unaudited) (unaudited) (audited)
$'000 $'000 $'000
Revenue 35 210 420
Administrative expenses (898) (1,306) (2,316)
Share options expense 6 (97) - (38)
Operating loss (959) (1,096) (1,934)
--------------- --------------- --------------
Interest income 108 - -
Share of operating loss
of joint venture 4 (805) (474) (1,880)
Loss for the Period before
and after taxation (1,656) (1,570) (3,814)
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