TIDMPAL
RNS Number : 6363E
Equatorial Palm Oil plc
11 April 2014
11 April 2014
EQUATORIAL PALM OIL plc
("EPO" or the "Company")
Joint Venture Agreement, up to $35.5m Funding &
Board Appointment
Equatorial Palm Oil plc (AIM: PAL), the AIM listed palm oil
development and production company with operations in Liberia, West
Africa announces today that it has entered into a joint venture
agreement ("JVA") with KLK Agro Plantations Pte Ltd ("KLK Agro"), a
wholly owned subsidiary of Kuala Lumpur Kepong Berhad ("KLK"), in
relation to the operations and funding for its 50 per cent. owned
joint venture company Liberian Palm Developments Limited
("LPD").
Funding
Under the terms of the JVA, LPD will receive up to $35,500,000
in cash and funding commitments. The cash is the issue of new
equity in LPD to KLK Agro and EPO (through its wholly owned
subsidiary Equatorial Biofuels (Guernsey) Limited ("EBGL")) who
will each subscribe for US$7,500,000 of new equity in LPD (the
"Initial Funding").
In addition to the Initial Funding, KLK Agro has agreed to
provide any further funding required by LPD up to a maximum of
US$20,500,000 (the "KLK Funding Commitment") which may, at the
discretion of KLK Agro, be provided by way of debt or preferential
equity finance which will incur interest or preferential dividend
(as appropriate) at USD LIBOR plus a maximum of 500 basis points.
LPD also has the option to obtain financing from parties other than
KLK irrespective of whether or not the KLK Funding Commitment has
been fully invested in LPD and provided that the terms of such
external financing are better than that of KLK's Funding
Commitment.
The Initial Funding and the KLK Funding Commitment has been
achieved with no further dilution for EPO shareholders.
Operations of LPD
LPD has entered into an agreement with Taiko Plantations Sdn.
Bhd. ("Taiko"), a wholly owned subsidiary of KLK (the "Management
Agreement"), under the terms of which Taiko has been appointed to
manage and conduct LPD's operations. The Management Agreement can
be terminated by either party giving three months' written notice
to the other party.
Under the terms of the Taiko Management Agreement, Taiko shall
be paid a management fee by LPD as follows:
i. US$1,000,000 per annum for the first four years from the date
of signing of the Management Agreement; and
ii. thereafter, a fee equivalent to 2.0 per cent. of the gross
sale proceeds of palm products achieved by LPD.
Under the JVA, it has been agreed that the board of directors of
LPD shall have four directors, with two from each of KLK Agro and
EBGL (the "EBGL Directors), and that KLK Agro shall be entitled to
appoint the Chairman.
Under the terms of the JVA, it has also been agreed that certain
matters can only be approved with the unanimous consent of the
shareholders of LPD or directors of LPD (as appropriate). The JVA
also sets out standard warranties and indemnities which EPO and
EBGL have been required to give to KLK Agro in relation to LPD's
business and assets.
EPO Board Changes
The Board of EPO is delighted to announce the appointment of Ms
Yap Miow Kien as a Non-Executive Director with immediate effect. Ms
Yap is the Company Secretary of KLK having joined in 2002. A short
biography of Ms Yap is set out below.
The founding Executive Chairman of EPO, Mr Michael Frayne, will
become the Non-Executive Chairman with Geoffrey Brown continuing as
the Executive Director on the Board of EPO.
Geoffrey Brown, Executive Director of EPO, commented:
"We are very pleased to have now signed the new Joint Venture
agreement with KLK Agro which has secured over $35m of funds for
the development of our oil palm estates in Liberia. KLK, as one of
the world's largest plantation companies, will bring their enormous
and varied experience to our estates and help us achieve the great
potential in order to drive value for all shareholders.
I would like to welcome Ms Yap Miow Kien to the Board who, given
her extensive experience in corporate and commercial matters, will
be of great benefit to the Company.
I would also like to acknowledge the enormous contribution made
by Michael Frayne to the Company as he transitions from Executive
to Non-Executive Chairman. It is a testament to the continued
progress of the Company that he is now in a position to do this and
we are very pleased he will continue on in the Chairman's
role."
Ms Yap Miow Kien, aged 45
Ms Yap Miow Kien joined KLK in 2002 and is currently its Company
Secretary and Senior General Manager (Legal and Secretariat). Prior
to joining KLK, Ms Yap was a partner in a law firm. She is an
Associate of the Malaysian Institute of Chartered Secretaries and
Administrators. She was called to the bar at Middle Temple and
completed a bachelor of law (Hons) at the University of Leeds. Her
current and past directorships are as follows:
Current directorships Past directorships within the
last 5 years
Austerfield Corporation Sdn Scope Energy Sdn Bhd
Bhd
Brecon Holdings Sdn Bhd KLK (Mauritius) International
Betatechnic Sdn Bhd Ltd (Dissolved on 9 February
2011)
Bornion Estate Sdn Bhd The Kuala Pertang Syndicate
Colville Holdings Sdn Bhd Limited (Dissolved on 2 December
2013)
KL-Kepong Country Homes Sdn The Shanghai Kelantan Rubber
Bhd Estates (1925) Limited (Dissolved
Bhd on 1 February 2013)
KLK Land Sdn Bhd (Formerly Verdant Plantations Ltd (Dissolved
known as KL-Kepong on 9 February 2011)
KL-Kepong Property Development
Sdn
Property Holdings Sdn Bhd)
KL-Kepong Complex Sdn Bhd
KL-Kepong Property Management
Sdn Bhd
KL-K Holiday Bungalows Sdn
Bhd
Kompleks Tanjong Malim Sdn
Bhd
Palermo Corporation Sdn Bhd
Selasih Ikhtisas Sdn Bhd
There is no further information required to be disclosed
pursuant to Schedule 2(g) of the AIM Rules.
Related Party Transactions
KLK (through its wholly owned subsidiary KL-Kepong International
Limited) currently holds ordinary shares in EPO representing
approximately 63.2 per cent. of the issued share capital of the
Company. In addition, KLK Agro also currently holds 50 per cent. of
the issued share capital of LPD. Accordingly, the JVA and the
Management Agreement are classified as related party transactions
under the AIM Rules for Companies. Michael Frayne and Geoffrey
Brown, being the non-related directors of EPO for the purposes of
these transactions, consider, having consulted with the Company's
nominated adviser, Strand Hanson Limited, that the terms of the JVA
and the Management Agreement are fair and reasonable insofar as the
Company's shareholders are concerned.
- END -
For further information, please visit www.epoil.co.uk or
contact:
Equatorial Palm Oil plc +44 (0) 20 7493
Geoffrey Brown (Executive Director) 7671
Strand Hanson Limited (Nominated Adviser) +44 (0) 20 7409
James Harris / Andrew Emmott / James Bellman 3494
Mirabaud Securities LLP (Broker) +44 (0) 20 7484
Peter Krens 3510
Notes to editors:
Equatorial Palm Oil plc is an AIM listed crude palm oil
developer and producer with palm oil estates in Liberia, West
Africa. The Company was founded in 2005 and is focused on becoming
a global, sustainable producer of high quality palm oil to regional
and international markets.
With a significant land position in Liberia through its
operating subsidiary Liberian Palm Developments Limited (LPD), the
Company is geographically well positioned to serve the
international and regional markets and is committed to making a
positive impact on the communities in which it operates through
investment in local schools, health clinics, housing and
infrastructure.
The Company's largest shareholder and 50:50 joint venture
partner in LPD is Kuala Lumpur Kepong Berhad ("KLK"). KLK is one of
the largest palm oil producers in the world and the Company will
greatly benefit from their many years of expertise in oil palm
development.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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