11th Apr 2014 10:11
LONDON (Alliance News) - Equatorial Palm Oil PLC Friday said it has an agreement with KLK Agro Plantations Pte Ltd which will provide up to USD35.5 million in funding for their Liberian Palm Developments Ltd joint venture.
The AIM-listed palm oil development and production company with operations in Liberia, West Africa, said that as part of the deal, the Liberian Palm Developments Ltd joint venture will receive cash and funding commitments from KLK Agro, a subsidiary of Kuala Lumpur Kepong Berhad.
The initial cash part of the deal will be done by issuing new equity in Liberian Palm Developments to KLK Agro and to Equatorial Palm Oil subsidiary Equatorial Biofuels Guernsey Ltd. Both will subscribe for USD7.5 million worth of new shares.
Equatorial Palm Oil said that KLK Agro has also agreed to provide further funding up to a maximum of USD20.5 million by way of debt or equity finance if required by the joint venture.
The company said that Liberian Palm Developments Ltd also now has the option to obtain financing from parties other than KLK, based on certain conditions.
In November, KLK agreed to pay USD21.3 million to buy a 20.1% stake in Equatorial Palm Oil and a 50% stake in Liberian Palm Developments Ltd.
Equatorial Palm Oil also said that Liberian Palm Developments has entered into an agreement with Taiko Plantations Sdn Bhd, a subsidiary of KLK, to manage and conduct the joint venture's operations.
The company said Taiko will be paid USD1 million per year for the first four years and thereafter a fee equivalent to 2.0% of the gross sale proceeds of palm products on site.
Equatorial Palm Oil shares were up 28% to 11.590 pence, putting it top of the AIM risers Friday.
By Tom McIvor; [email protected]; @TomMcIvor1
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