Chagala Group Limited Update on Financial Position (7758L)

TIDMCGLO

RNS Number : 7758L

Chagala Group Limited

05 October 2016

Chagala Group Limited

5 October 2016

This announcement is not an offer of securities for sale, or an offer to buy or subscribe for, directly or indirectly, securities to any person in the United States or any other jurisdiction, including in or into Canada, Japan, South Africa, Switzerland and Australia or any other jurisdiction in which such offer or solicitation is unlawful. This announcement is an advertisement and not a prospectus (or prospectus equivalent document). Neither this announcement nor any part of it shall form the basis of or be relied on in connection with or act as an inducement to enter into any contract or commitment whatsoever.

Update on Financial Position

Further to the announcement by Chagala Group Limited (the "Company" or "Chagala") made on 29 September 2016, the Company makes the following announcement regarding its current financial position following the lapse and termination of its Placing and Open Offer of New Ordinary Shares and potential placing of Additional Placing Shares (the "Capital Raise").

Financing requirements. The Company had intended to use the proceeds from the Capital Raise toward the redemption of the Kazakh Tenge denominated bonds (the "KZT Bonds") issued by Caspi Limited LLP ("Caspi"), a wholly-owned subsidiary of the Company, which bonds mature on 1 December 2016. As a result of the termination of the Capital Raise, another source of financing is required to provide funds for such redemption. As of 30 September 2016, the amount of outstanding indebtedness under the KZT Bonds was equivalent to approximately US$6.7 million. Based on the current cash balances of the Company and its subsidiaries (together, the "Group") and the Company's cash flow projections, if the Group meets it budget targets the Group will be US$5.9 million short of being able to repay the KZT Bonds when they fall due on 1 December 2016. As a result, the Company estimates that the Group requires a minimum amount of US$5.9 million of new financing prior to 1 December 2016.

Al Hilal Credit Facility Agreement. Caspi has been informed by Al Hilal Bank ("Al Hilal") that Al Hilal considers that the legal proceedings to which the Company is a party in the British Virgin Islands could negatively affect Caspi's ability to fulfill its obligations under the master Murabaha credit facility agreement between Caspi and Al Hilal (the "Al Hilal Agreement"). Al Hilal has indicated that it intends to accelerate payment of the outstanding loans under the Al Hilal Agreement unless Caspi takes remedial measures. The Al Hilal Agreement includes as an acceleration event Caspi being or becoming unable to pay its debts as they fall due, suspending the making of payments on any of its debts or, by reason of actual or anticipated financial difficulties, commencing negotiations with one or more of its creditors with a view to rescheduling any of its indebtedness. As of 30 September 2016, the outstanding amount of Caspi's loans under the Al Hilal Agreement was approximately US$6.5 million, and the maturity date of the loans is in November 2019. As of 30 June 2016, Caspi's obligations under the Al Hilal Agreement were secured by a pledge of immovable properties with a carrying value of US$6.25 million and a guarantee issued by Chagala International Holding B.V. Caspi is in continuing discussions with Al Hilal regarding the potential acceleration and possible remedial actions that may be taken to avoid it.

BVI legal proceedings. The Company continues to be engaged in legal proceedings in the British Virgin Islands with TIPP Investments PCC ("TIPP"). On 5 September 2016, the Company and the individual members of the Board filed an application seeking to strike out TIPP's claim, to enter summary judgment against TIPP and to discharge the temporary injunction that was granted on 29 July 2016. A hearing is currently scheduled to take place on this application on 27 October 2016. Whilst these legal proceedings and/or the suspension of rights of TIPP and certain other shareholders are continuing, it may be difficult for the Group to obtain financing which is needed to redeem the KZT Bonds.

Possible sources of financing. In light of the termination of the Capital Raise, the Group is currently exploring all possible sources of financing which may include equity financing, debt financing or disposals of assets. To date the Group has not identified any financing option that would provide funds sufficient to enable the redemption of the KZT Bonds at their maturity. There can be no assurance that any of the foregoing possible sources of financing will be available to the Group.

A further announcement will be made in due course.

For more information:

 
Francisco Parrilla, Chief Executive 
Chagala Group Limited                 + 7 [phone] 
 

Chagala Group

Chagala is a service company focused on providing long and short term accommodation solutions to domestic and international oil and gas companies developing Kazakhstan's largest hydrocarbon discoveries. With the ownership of hotels, guest houses, serviced apartments, remote site facilities, restaurants and offices in its portfolio, Chagala is well positioned to capitalize on the oil and gas investment being made in Kazakhstan.

Important Notices

This announcement is not an offer of securities for sale in the United States, and is not for publication or distribution, directly or indirectly, in or into the United States of America. The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration under the Securities Act. No public offering of securities is being made in the United States.

This information is provided by RNS

The company news service from the London Stock Exchange

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October 05, 2016 07:11 ET (11:11 GMT)