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DekelOil To Partly Pay Local Supplier With Shares Issued At Premium (ALLISS)

22nd Jan 2016 07:44

LONDON (Alliance News) - Palm oil producer DekelOil Public Ltd on Friday said it has signed an agreement to take fresh fruit bunches from a local farmer in the Ivory Coast over a six month period, and said it will pay the supplier partly through the issue of shares.

DekelOil has its own plantations at the Ayenouan project in the Ivory Coast, but also takes fresh fruit bunches, from which palm oil is derived, from local landowners to feed its processing mill.

In the deal announced Friday, the local farmer will supply the company with fresh fruit bunches from a 1,000 hectare site over a six month period ending in June this year. Those fresh fruit bunches will be fed into the company's processing mill for the palm oil to be extracted, with the plant capable of processing 60 tonnes of fresh fruit bunches an hour.

DekelOil said the local smallholder has requested 50% of the fresh fruit bunches supplied are paid for through the issue of shares. The company has agreed to issue those shares to the supplier at a price of 1.52 pence per share - a 38% premium to the company's closing share price of 1.10p on Thursday.

Those shares will not be issued unless they are valued at a minimum of GBP117,000 in total, and the share payment has a cap of GBP225,000. The company did not provide any further details concerning the payment to the supplier.

"We view the smallholder's request to be partially paid in shares of DekelOil priced at a premium to the current market price as a strong endorsement of our company and its near term valuation potential, and we look forward to building a long-term relationship with the smallholder as a fellow shareholder and supply partner," said Executive Director Lincoln Moore.

The processing mill's capacity has grown lately and is currently able to process 35,770 tonnes per year. DekelOil is aiming to get that capacity up to 70,000 tonnes a year, meaning it can take more supply from local farmers.

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

Copyright 2016 Alliance News Limited. All Rights Reserved.


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