TIDMKRPZ
RNS Number : 0807L
Kropz PLC
11 May 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under the retained EU
law version of the Market Abuse Regulation (EU) No. 596/2014 (the
"UK MAR") which is part of UK law by virtue of the European Union
(Withdrawal) Act 2018. The information is disclosed in accordance
with the Company's obligations under Article 17 of the UK MAR. Upon
the publication of this announcement, this inside information is
now considered to be in the public domain.
11 May 2022
Kropz Plc
("Kropz" or the "Company")
New Convertible Facility Agreement
and
General Meeting Notice
Kropz Plc (AIM: KRPZ), an emerging African phosphate producer
and developer, announces it has entered into a new conditional
convertible equity facility of up to ZAR 177 million (approximately
US$11 million) ("ZAR 177 Million Equity Facility"), with the ARC
Fund ("ARC"), the Company's major shareholder, to fund the
Company's Elandsfontein phosphate project to first revenues from
bulk concentrate sales.
As announced on 27 April 2022, Kropz and ARC entered into a ZAR
25 million (approximately US$ 1.60 million) bridge loan facility
(the " Loan " ) to meet cash requirements in April 2022. The Loan
will be set-off against the ZAR 177 Million Equity Facility, once
approved and unconditional, leaving ZAR 152 million available for
drawdown over the term.
As set out in the announcement on 27 April 2022, the Company
faces a funding shortfall of approximately US$ 11 million
(approximately ZAR 177 million) comprising the ZAR 25 million cash
requirement for April 2022 and an additional ZAR 152 million
required to deliver the Company's Elandsfontein phosphate project
to first revenues from bulk concentrate sales. The shortfall is due
to slower than expected progress in the ramp up of operations at
Kropz Elandsfontein (Pty) Ltd ( " Kropz Elandsfontein " ),
resulting in delays in the production of sufficient phosphate rock
concentrate required for the first bulk sales. Kropz Elandsfontein
is now expected to achieve its first significant revenues in late
Q2. The delay in commissioning was largely driven by the need to
re-engineer parts of the fine flotation circuit proposed by the
vendor, but further exacerbated by early unpredicted ore
variability and lack of operator experience.
The ZAR 177 Million Equity Facility is in addition to the ZAR
200 million facility, which ARC and the Company entered into in
February 2021 ("ZAR 200 Million Equity Facility"). The ZAR 200
Million Equity Facility has been fully drawn down, with the last
remaining ZAR 33 million drawn on 26 April 2022.
ZAR 177 Million Equity Facility Highlights
-- The ZAR 177 Million Equity Facility comprises a total
commitment of up to ZAR 177 million provided by ARC, which can be
drawn down following a written request from Kropz and at the
discretion of ARC;
-- At any time during the term of the ZAR 177 Million Equity
Facility, repayment of the ZAR 177 Million Equity Facility capital
amount will, at the election of ARC, either be:
o In the form of the conversion into ordinary shares of 0.1
pence ea ch ("Ordinary Shares") in the Company and issued to ARC,
at a conversion price of 9.256 pence per Ordinary Share each,
representing the 30-day Volume Weighted Average Price ("VWAP") on 4
May 2022, and at a fixed exchange rate of ZAR 1 = GBP 0.0504
("Conversion") ; or
o Payable in cash by the Company;
-- The first drawdown is expected on or around 30 May 2022;
-- Following a Conversion, the Company will apply for the newly
issued Ordinary Shares in the capital of the Company to be admitted
to trading on AIM;
-- The ZAR 177 Million Equity Facility will bear interest at 14
per cent. per annum and will be compounded monthly ("Interest").
Interest will be payable in cash to ARC by the Company;
-- The term of the ZAR 177 Million Equity Facility will be from
the Effective Date to the earlier of:
o Five years from the Effective Date; or
o One year after the term loan facility provided by BNP Paribas
to Kropz Elandsfontein (in the amount not exceeding US$ 30
million), has been repaid;
-- The ZAR 177 Million Equity Facility will be secured by the
shares that Kropz holds in Cominco Resources Ltd ("Share Charge")
and is conditional on entering into the Share Charge, which will be
entered into before the General Meeting; and
-- The ZAR 177 Million Equity Facility will be conditional on:
o approval from the South African Reserve Bank ("SARB"). The
SARB application will be lodged imminently and the approval, once
received, will be announced via the Regulatory News Service
("RNS"); and
o shareholder approval.
Notice of General Meeting and Irrevocable Undertakings
The ZAR 177 million Equity Facility is above the authorisation
limits given at the last Annual General Meeting in June 2021 and is
conditional on shareholder approval which is being sought from the
Company's shareholders at a General Meeting to be held in London on
30 May 2022 at the offices of Memery Crystal, 165 Fleet Street,
London, EC4A 2DY ("General Meeting") .
At the General Meeting, the Company is proposing resolutions to
give the Company's directors authority to issue and allot, on a
non-pre-emptive basis, shares in the Company to meet the full
demand under the ZAR 177 Million Equity Facility if converted (this
authority is in addition to the authorities granted at the previous
Annual General Meeting).
Shareholders may attend the General Meeting to vote or appoint a
proxy or vote online by following the instructions set out in the
Notice of General Meeting attached to this announcement. Proxy
votes must be received no later than 13:30 on 26 May 2022.
A copy of the Notice of General Meeting and this announcement is
being posted to shareholders today and will shortly be available
for AIM Rule 26 on the Company's website at
www.kropz.com/investors/general-meetings.
The Company has received irrevocable undertakings from the
directors in respect of their holdings of 0.3 per cent. of the
Company's issued share capital and from shareholders holding 83.65
per cent. of the Company's issued share capital to vote in favour
of the resolutions proposed.
Related Party Transaction
The ZAR 177 Million Equity Facility is a related party
transaction ("Transaction") pursuant to Rule 13 of the AIM Rules.
Machiel Reyneke is a director of the Company and the representative
of ARC. Further, as noted below, ARC and Kropz International are
treated as acting in concert for the purposes of the City Code on
Takeovers and Mergers (the "Code") and have individual and
aggregate interests in the Ordinary Shares as set out above. Mike
Nunn, a director of the Company, is the beneficial owner of Kropz
International. Accordingly, Mr Reyneke and Mr Nunn have not been
involved in the approval of the Transaction by the Company's
board.
The directors of the Company who are considered independent for
the purposes of the Transaction (being the directors excluding Mr
Reyneke and Mr Nunn), having consulted with the Company's Nominated
Adviser, consider the terms of the Transaction to be fair and
reasonable insofar as the Company's shareholders are concerned.
Draw Down
As noted above, the Company will be making the first draw down
request under the ZAR 177 Million Equity Facility on or around 30
May 2022.
Details of further drawdowns will be made in separate
announcements in due course.
Concert Parties and Impact on Shareholdings
As noted in the Company's AIM admission document, ARC and Kropz
International are treated as acting in concert for the purposes of
the Code and have individual and aggregate interests in the
Ordinary Shares as set out in the table below. It is noted that,
both before and after the closing of the Further Equity Facility,
on an aggregate basis, ARC and Kropz International hold and will
continue to hold more than 50 per cent. of the Ordinary Shares and
voting rights in the Company. On a standalone basis ARC, through
its option with Kropz International, currently has a fully diluted
interest of 86.2 per cent. of the Company (see footnote 3
below).
Maximum Interests in Ordinary Shares (1)
Maximum no.
of further
shares to
be issued Maximum shareholdings
pursuant to following
the ZAR 200 the ZAR 200
Million Equity Million Equity
Facility and Facility and
Existing the ZAR 177 the ZAR 177
ordinary Million Equity Million Equity
shares Facility (1) Facility (1)
No. % No. No. %
--------------------- ------------ ---- ---------------- ---------------------- ----
ARC (2) 768,339,330 83.2 315,651,504 1,083,990,834 87.5
Kropz International
S.a.r.l (2)(3) 54,933,474 5.9 0 54,933,474 4.4
Concert Party 823,272,804 89.1 315,651,504 1,138,924,308 91.9
(1) Assumes for illustrative purposes that the ZAR 177 Million
Equity Facility is fully drawn and that all capital under the ZAR
177 Million Equity Facility and ZAR 200 Million Equity Facility
(which is fully drawn) is converted into equity.
(2) ARC and Kropz International are deemed to be acting in
concert as defined in the Code.
(3) Kropz International and ARC have entered into an arrangement
pursuant to which Kropz International has granted to ARC a call
option over 50 per cent. of its shareholding. The call option over
Kropz International's Ordinary Shares can be exercised by ARC if
the value of ARC's shareholding on the third anniversary of
Admission is 20 per cent. lower than its value on IPO on 30
November 2018. The call option has an alternative settlement of
cash or assets, if the transfer of the Ordinary Shares would
require the transferee to make a Rule 9 offer for the Company
pursuant to the City Code.
(4) Mike Nunn, a director of Kropz, holds his beneficial
interest in Kropz through Kropz International.
(5) Exchange rates used are fixed at ZAR 1 = GBP 0.0504 for the
ZAR 177 Million Equity Facility.
For further information visit www.kropz.com or contact:
Kropz Plc
+27 (0) 79 744
Mark Summers (CEO) 8708
Grant Thornton UK LLP Nominated Adviser
Samantha Harrison
Harrison Clarke
George Grainger +44 (0) 20 7383
Ciara Donnelly 5100
Hannam & Partners Broker
Andrew Chubb +44 (0) 20 7907
Ernest Bell 8500
Tavistock Financial PR
& IR (UK)
N ick Elwes +44 (0) 207 920
Jos Simson 3150
Oliver Lamb kropz@tavistock.co.uk
R&A Strategic Communications PR (South Africa)
James Duncan +27 (0) 11 880
3924
james@rasc.co.za
About Kropz Plc
Kropz is an emerging African phosphate producer and developer
with projects in South Africa and the Republic of Congo. The vision
of the Group is to become a leading independent phosphate rock
producer and to develop into an integrated, mine-to-market plant
nutrient company focusing on sub-Saharan Africa.
-ENDS-
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END
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