Agriterra Ltd US$6.1m refinancing and Related Party Transaction (4044F)

TIDMAGTA

RNS Number : 4044F

Agriterra Ltd

15 July 2021

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

15 July 2021

Agriterra Limited ('Agriterra' or the 'Company')

Agriterra Limited / Ticker: AGTA / Index: AIM / Sector: Agriculture

US$6.1 million refinancing and Related Party Transaction

Agriterra Limited, the AIM-quoted African agricultural company, is pleased to announce that its wholly-owned subsidiary, Desenvolvemento E Comercializacao Agricola Limitada ("DECA") has secured a renewal, and extension in quantum to US$6.1m, of its working capital facility (the "Facility") from First Capital Bank, S.A. (the "Bank") to enable it to finance and secure the purchase of up to 39,000 tonnes of raw maize during the period July 2021 to April 2022 (the "Financed Maize"). The Financed Maize will then be processed and sold by DECA from its facilities in Chimoio, Mozambique into the local wholesale, retail and NGO markets.

The material terms of the Facility from the Bank are as follows:

-- Revolving overdraft facility equivalent to US$6.1 million (in Mozambican Metical) until 31 May 2022;

-- Interest rate set at the prime lending rate (Mozambique Central Bank) less 3.75%. Prime lending rate is currently at 17.90%. The Bank has the right to revise the interest rate if the prime lending rate decreases to 16% in consultation with DECA;

   --    Arrangement fees of 0.5% of the approved limit. 

As a condition to providing the Facility, and following the same procedure as announced on 26 May 2020, the Bank required that the Company provide a cash backed guarantee as security (the "Bank Security"). In order to satisfy this condition, the Company has entered into an agreement with Magister Investments Limited ("Magister"), the Company's 50.01 per cent. shareholder, pursuant to which Magister has agreed to provide the necessary security (the "Magister Guarantee").

The material terms of the Magister Guarantee are as follows:

-- Agriterra will be liable to pay Magister a fee of 1.75% of the amount drawn under the Facility (the "Guarantee Fee"), being a maximum amount of US$106,750, which will be invoiced by Magister as the Facility is drawn down.

-- Provision of the Magister Guarantee is subject to the prior and ongoing satisfaction of the certain revenue account segregation and reporting conditions with which DECA and AGTA agree to comply.

-- In the event that the Bank take action to enforce the Bank Security or in the event of a breach of the Magister Guarantee by Agriterra or by DECA (as applicable), in order to recover the equivalent amount called upon by the Bank plus interest calculated at 8% per annum (the "Restitution Amount"), Magister shall be entitled by notice in writing to exercise one of the following rights in the following order:

Ø to require Agriterra to issue new ordinary shares in the capital of AGTA to Magister, equal in value to the Restitution Amount (at the par value of Agriterra's ordinary shares, provided that the prevailing Agriterra share price at such time is no less than the par value per share);

Ø if compliance with the foregoing is not possible, to require Agriterra to create and issue to Magister new "8% preference convertible" shares in the capital of Agriterra (convertible into ordinary shares in Agriterra at a price equal to the par value per share), equal in value to the Restitution Amount;

Ø if compliance with the foregoing is not possible, to require the Agriterra group to dispose of fixed asset(s) owned with a value equal to the Restitution Amount (after transaction costs), determined by independent valuation, to a 3rd party and to then pay such sale proceeds to Magister; and

Ø if compliance with the foregoing is not possible, to the extent legally permitted, to require AGTA to take such steps as are necessary to require the transfer by a subsidiary of Agriterra of asset(s) with a value equal to the Restitution Amount, determined by independent valuation, to Magister;

-- subject to certain conditions, the Magister Guarantee shall be renewed and/or extended automatically to reflect any future renewals, amendments and/or extensions to the terms of the Facility (assuming a guarantee remains required).

Related Party Transaction

Entering into the Magister Guarantee constitutes a related party transaction under Rule 13 of AIM Rules. In this context, Caroline Havers, Neil Clayton, Rui Sant'ana Afonso and Sergio Zandamela (being the Directors on the Board who are considered to be independent of Magister) consider, having consulted with the Company's nominated adviser, Strand Hanson Limited, that the terms of the Magister Guarantee are fair and reasonable insofar as its shareholders are concerned.

Caroline Havers, Executive Chair, said: "We are delighted to have refinanced and extended this significant facility which should enable us to benefit from a strengthened purchasing position and set up our maize operations for a successful trading, processing and sales season. Again, we thank our majority shareholder, Magister Investments Limited, for their support in providing the cash backed guarantee which secures the facility, which demonstrates their ongoing commitment to and faith in our operational plans and management team."

** ENDS **

For further information please visit www.agriterra-ltd.com or contact:

 
 Agriterra Limited                           Strand Hanson Limited 
                                (Nominated & Financial Adviser and 
                                                           Broker) 
============================  ==================================== 
 Caroline Havers                    James Spinney / Ritchie Balmer 
 [e-mail]                   [phone] 
 

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July 15, 2021 08:45 ET (12:45 GMT)