TIDMPAL
RNS Number : 4474S
Equatorial Palm Oil plc
07 November 2013
7 November 2013
EQUATORIAL PALM OIL PLC
("EPO" or the "Company")
Funding arrangements and new joint venture partner and
significant shareholder
Funding arrangements
Equatorial Palm Oil PLC (AIM: PAL.L) is pleased to announce that
it has entered into various agreements relating to a loan and
liability assignment arrangement with Kuala Lumpur Kepong Berhad
("KLK") (the "Agreements"). In addition, KLK has today announced
that it has entered into various arrangements with Biopalm Energy
Limited ("BEL"), including the proposed acquisition of BEL's 50.0
percent shareholding in Liberian Palm Developments ("LPD") and
BEL's 20.1 per cent. interest in the issued ordinary share capital
of EPO at a price of 5 pence per ordinary share.
Under the terms of the Agreements, KLK will provide a loan of
$2,000,000 to EPO's 50 per cent. owned joint venture company, LPD
(the "KLK Loan").
In addition, for a consideration of $2,000,000 payable to the
Company, EPO has agreed to assign to KLK $6,000,000 of the
outstanding liabilities due to EPO from LPD (the "Assignment")
Simultaneously with the Company entering into the Agreements,
EPO has also agreed to provide a loan of $2,000,000 to LPD (the
"EPO Loan"). Subsequent to the Assignment and the EPO Loan, the
total liabilities owed to EPO by LPD amount to $5,100,000.
Both the KLK Loan and the EPO Loan will have a five year term
and will accrue interests at a rate of LIBOR + 4% or 8% per annum,
whichever is higher. In respect of both loans, interest will accrue
on the principal amount of the loan (including any accrued
interest) and is repayable in full at the end of the five year term
or earlier, at the discretion of LPD. The KLK Loan and up to
$2,000,000 of the Assignment will rank first in priority of payment
of the liabilities owed by LPD.
As a result of the EPO Loan and the KLK Loan, EPO and KLK will
provide, in aggregate, funds of $4,000,000 to LPD for the continued
development of its projects in Liberia. The directors of EPO are
pleased to report that this funding will allow LPD to return to
normal operations within the next two months.
About KLK
KLK began as a plantations company more than 100 years ago and
is now listed on the Main Market of Bursa Malaysia Securities
Berhad with a market capitalisation of approximately $7.78 billion
(GBP4.84 billion). Through various strategic acquisitions and sound
management, the group's plantation land bank now stands at almost
300,000 hectares, of which 200,000 hectares has been planted with
oil palm.
Michael Frayne, Executive Chairman of EPO, commented:
"We are pleased KLK is providing funds to LPD and that EPO has
raised additional capital as a result of these Agreements. This
funding will allow our team on the ground in Liberia to recommence
normal operations which have been on care and maintenance for the
last few months. EPO is totally committed to the development of its
Liberian oil palms concessions and enhancing the lives of the
communities in which we operate."
KLK agreement with BEL
Separately, KLK has today announced that it has entered into an
agreement with BEL for the sale and purchase of the following (the
"Proposed Acquisition").
(i) BEL's 50.0 per cent. equity interest in LPD;
(ii) BEL's 20.1 per cent. equity interest in EPO, equivalent to
40,260,991 ordinary shares of 1 pence each ("Ordinary Shares");
and
(iii) the assignment of BEL's loans to LPD totaling $608,000.
The total cash consideration for the Proposed Acquisition is
$21,258,000, which is payable as follows:
$
(i) 50.0 per cent. equity interest in LPD; 17,429,120
40,260,991 ordinary shares in EPO, representing
20.1 per cent. of the Company's issued share
capital. At a $/GBP exchange rate of 1.60,
this equates to 5 pence per ordinary share;
(ii) and 3,220,880
the assignment of BEL's loans to LPD totaling
(iii) $608,000.00 608,000
Total 21,258,000
The Proposed Acquisition is subject to the satisfaction of
certain conditions precedent, which include the corporate approvals
of BEL and KLK and the approvals of the relevant
governmental/regulatory authorities of Liberia and Mauritius (if
required).
KLK expects that the conditions precedent in relation to the
Proposed Acquisition will be satisfied within two weeks from
today's date.
Offer Update
On 15 October 2013, EPO announced that it was in early stage
discussions with KLK regarding the funding of EPO's joint venture,
LPD, which may or may not lead to an offer of funding for LPD and
which may or may not include an offer for all or part of the
Company. The discussions in relation to a potential offer for EPO
are ongoing and a further announcement, if required, will be made
in due course.
Related Party Transaction
On the basis that the Proposed Acquisition has not yet been
completed, BEL currently holds ordinary shares in EPO representing
approximately 20.1 per cent. of the issued ordinary share capital
of the Company. BEL currently holds 50 per cent. of the issued
share capital of LPD. Accordingly, the EPO Loan is classified as a
related party transaction under the AIM Rules for Companies. The
independent directors of EPO (being the Board of the Company with
the exception of Shankar Varadharajan, a BEL director consider,
having consulted with the Company's Nominated Adviser, Strand
Hanson Limited, that the terms of the EPO Loan are fair and
reasonable insofar as the shareholders of EPO are concerned.
Enquiries:
Equatorial Palm Oil PLC
Michael Frayne (Executive Chairman) +44 (0) 20 7493
www.epoil.co.uk 7671
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
James Harris / Andrew Emmott 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
Strand Hanson Limited, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting
exclusively for EPO and no one else in connection with the possible
offer and will not be responsible to anyone other than EPO for
providing the protections afforded to clients of Strand Hanson
Limited or for providing advice in relation to the possible offer
or any other matter referred to herein.
Website disclosure
In accordance with Rule 30.4 of the Code, a copy of this
announcement and associated documents will be available on EPO's
website at www.epoil.co.uk by no later than 12 noon on 8 November
2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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