TIDMKRPZ
RNS Number : 2194G
Kropz PLC
14 November 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.
14 November 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 550 million ("New ZAR 550
Million Equity Facility") (approximately US$ 31.6 million), with
ARC Fund ("ARC"), the Company's major shareholder, in order to
progress the ramp-up of operations at the Company's Elandsfontein
phosphate project in South Africa. In addition, the funding would
also provide working capital to the Company for general corporate
purposes and further funding, of approximately US$ 1 million for
working capital and early site works, at the Hinda project in the
Republic of the Congo.
As previously announced, Kropz Elandsfontein (Pty) Ltd ("Kropz
Elandsfontein ") requires additional working capital due to delays
in the ramp-up of operations at the Elandsfontein project and
subsequent delays in first revenues.
The New ZAR 550 Million Equity Facility is in addition to
the:
-- ZAR 200 million conditional equity facility which ARC and the
Company announced on 29 September 2021 ("ZAR 200 Million Equity
Facility"). This facility is fully drawn and has not been converted
to new ordinary shares in the Company; and
-- ZAR 177 million conditional equity facility which ARC and the
Company announced on 11 May 2022 ("ZAR 177 Million Equity
Facility"). This facility is fully drawn and has not been converted
to new ordinary shares in the Company (collectively the "Existing
Equity Facilities").
As announced on 9 August 2022, Kropz, Kropz Elandsfontein and
ARC agreed to a ZAR 121.5 million (approximately US$ 7.3 million)
bridge loan facility (" Loan 1 ") to meet immediate cash
requirements at Elandsfontein. A draw down ZAR 60 million
(approximately US$ 3.6 million) of Loan 1 was made on 9 August
2022, ZAR 47 million (approximately US$ 360,000) on 1 September
2022 and the third and final draw down of ZAR 14.5 million
(approximately US$ 800,000) was made on 29 September 2022. Loan 1
is fully drawn at the date of this announcement.
As announced on 30 September 2022, Kropz, Kropz Elandsfontein
and ARC agreed to a further ZAR 126 million (approximately US$ 7
million) bridge loan facility (" Loan 2 ") to meet further funding
requirements at Elandsfontein due to further delays in the ramp-up
of operations at Elandsfontein. A drawdown of ZAR 60.5 million
(approximately US$ 3.4 million) was made on Loan 2 on 6 October
2022. The second and final drawdown of ZAR 65.5 million
(approximately US$ 3.6 million) on Loan 2 was made on 28 October
2022. Loan 2 is fully drawn at the date of this announcement.
Loan 1 and Loan 2 are both unsecured, repayable on demand, and
there are no fixed repayment terms. Both Loan 1 and Loan 2 are
repayable by Elandsfontein on no less than two business days'
notice. Interest is payable on both Loan 1 and Loan 2 at the South
African prime overdraft interest rate plus 6 per cent., nominal per
annum and compounded monthly.
New ZAR 550 Million Equity Facility Highlights
-- The New ZAR 550 Million Equity Facility comprises a total
commitment of up to ZAR 550 million provided by ARC, which can be
drawn down at the discretion of Kropz, as follows:
o Loan 1 and Loan 2 will be settled by way of a first advance
under the New ZAR 550 Million Equity Facility, once approved and
unconditional, leaving ZAR 302.5 million available for drawdown
over the term; and
o ZAR 302.5 million from the date that all the conditions to the
New ZAR 550 Million Equity Facility have been met (the "Effective
Date") and up to 15 December 2023, if approved by ARC in its sole
discretion;
-- At any time during the term of the New ZAR 550 Million Equity
Facility, repayment of the New ZAR 550 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 4.579 pence per Ordinary Share each,
representing the 30-day Volume Weighted Average Price ("VWAP") on
21 October 2022, and at fixed exchange rate of ZAR 1 = GBP 0.048824
("Conversion") ; or
o Payable in cash by the Company;
-- The first drawdown is expected on 1 December 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, a market operated by London Stock Exchange plc
("AIM");
-- The New ZAR 550 Million Equity Facility will bear interest at
the South African prime overdraft interest rate plus 6 per cent. ,
nominal per annum and compounded monthly ("Interest"). Interest
will be payable in cash to ARC by the Company;
-- The term of the New ZAR 550 Million Equity Facility will be
from the Effective Date, to the earlier of:
o 5 years from the Effective Date; or
o 2 years after the term loan facility provided by BNP Paribas
to Elandsfontein (in the amount not exceeding US$ 30 million), has
been repaid in full, or such later date as ARC may agree in
writing;
-- The New ZAR 550 Million Equity Facility will be available for
drawdown until 15 December 2023;
-- The New ZAR 550 Million Equity Facility will be secured by
the shares which Kropz holds in Cominco Resources Ltd ("Share
Charge"). The New ZAR 550 Million Equity Facility is conditional on
entering into the Share Charge, by way of a deed of confirmation
and amendment to the existing share charge granted by the Company
in favour of ARC, which will be entered into before the General
Meeting; and
-- The New ZAR 550 Million Equity Facility will be conditional on:
o approval from the South African Reserve Bank ("SARB"). The
SARB application was lodged on or about 3 November 2022 and the
approval, once received, will be announced via the Regulatory News
Service ("RNS"); and
o Kropz shareholder approval .
Notice of General Meeting and Irrevocable Undertakings
The New ZAR 550 Million Equity Facility is above the share
authorisation limits given at the last Annual General Meeting on 30
June 2022 and is conditional on shareholder approval which is being
sought from the Company's shareholders at a General Meeting to be
held in London at 12:00 p.m. on 30 November 2022 at the offices of
Memery Crystal, 165 Fleet Street, London, EC4A 2DY ("General
Meeting") .
The Company is proposing at the General Meeting, resolutions to
give the Company's directors authority to allot and issue , on a
non-pre-emptive basis, Ordinary Shares in the Company to meet the
full demand under the New ZAR 550 Million Equity Facility (this
authority is in addition to the authorities granted at the previous
Annual General Meeting).
Shareholders may attend the General Meeting to vote, or they may
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 12:00 p.m. on 28
November 2022.
A copy of the Notice of General Meeting and this announcement is
being posted to shareholders today and will shortly be available
for the purposes of AIM Rule 26 on the Company's website at
www.kropz.com/investors/general-meetings.
The Company has received irrevocable undertakings from a
director in respect of his holding 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 New ZAR 550 Million Equity Facility is a related party
transaction ("Transaction") pursuant to Rule 13 of the AIM Rules.
Gerrit Duminy 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 Duminy 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
Duminy 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 is expected to make the first draw
down request under the New ZAR 550 Million Equity Facility on or
around 1 December 2022.
Further details of these drawdowns and conversions 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 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 85.97 per
cent. of the Company (see footnote 3 below).
Maximum Interests in Ordinary Shares (1)
Maximum
no. of further
shares to Maximum
be issued shareholdings
pursuant following
to Existing Existing
Equity Facilities Equity Facilities
and New ZAR and New ZAR
Existing 550 Million 550 Million
Ordinary Equity Facility Equity Facility
Shares (1) (1)
No. % No. No. %
--------------------- ------------ ---- ------------------- ------------------- ----
ARC (2) 768,339,330 83.2 902,093,959 1,670,433,289 91.5
Kropz International
S.a.r.l (2)(3)(4) 54,933,474 5.9 - 54,933,474 3.0
Concert Party 823,272,804 89.1 902,093,959 1,725,366,763 94.5
(1) Assumes for illustrative purposes that the Existing Equity
Facilities and New ZAR 550 Million Equity Facility is fully drawn
and that all capital under the Existing Equity Facilities and New
ZAR 550 Million Equity Facility is converted into equity.
-- ZAR 200 Million Equity Facility - 219,272,938 ordinary shares (5)
-- ZAR 177 Million Equity Facility - 96,378,566 ordinary shares (5)
-- New ZAR 550 Million Equity Facility - 586,442,455 ordinary shares (5)
(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 25,793,909 of its Ordinary Shares. 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 200 Million Equity Facility - GBP 1 = ZAR 20.24
-- ZAR 177 Million Equity Facility - GBP 1 = ZAR 19.84
-- New ZAR 550 Million Equity Facility - GBP 1 = ZAR 20.48
For further information visit www.kropz.com or contact:
Kropz Plc Via Tavistock
+44 (0) 207 920
Mark Summers (CEO) 3150
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)
Nick Elwes +44 (0) 207 920
Jos Simson 3150
Emily Moss kropz@tavistock.co.uk
R&A Strategic Communications PR (South Africa)
Charmane Russell +27 (0) 11 880
3924
charmane@rasc.co.za
About Kropz Plc
Kropz is an emerging African producer and developer of plant
nutrient feed minerals with phosphate projects in South Africa and
in 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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