24th Mar 2014 09:33
LONDON (Alliance News) - Ferrex PLC Monday said it has agreed to issue GBP1.7 million worth of shares in order to continue the development of its African iron ore and manganese assets, as well as for working capital purposes.
The AIM-quoted iron ore and manganese development company in Africa said it has agreed to issue 92.5 million shares at 1.8 pence each. Ferrex shares were Monday morning quoted at 1.75p, down 10%, after opening at 1.9p.
Some 94% of those shares, or 86.5 million shares, were issued to YA Global Master SPV Ltd, which has agreed hold onto the new shares for at least two months, with the remaining 6.0 million shares placed separately.
According to Ferrex, YA Global Master SPV has agreed to place 36.5 million of these shares with a selected syndicate, retaining 50.0 million, or 5.4% of Ferrex's issued share capital.
On top of that, Ferrex said it has entered into an equity swap agreement over the 50.0 million shares being retained by YA Global Master SPV.
Under the terms of the equity swap agreement, Ferrex will pay YA Global Master SPV GBP450,000. Over the following 12 months, YA Global Master SPV will pay Ferrex back a monthly amount based on a formula related to the difference between the prevailing market price of Ferrex's shares and a benchmark price. That figure has been set at 10% more than the 1.8 pence subscription price, meaning the benchmark is 1.98 pence.
The agreement puts the amount received by Ferrex in correlation with the performance of its shares over the next year. YA Global Master SPV has agreed that it and its affiliates will not hold any net short position over Ferrex's shares until the equity swap agreement expires or is terminated. The fund and its affiliates have also agreed to restrictions on the volume of shares they can trade until that point.
Ferrex said YA Global Master will be able to terminate the equity swap agreement and accelerate the payments due under "certain" circumstances. The circumstances were not outlined in the statement.
YA Global Master SPV is a fund managed by Yorkville Advisors LLC, which was founded in January 2001 and provides debt and equity financing to publicly listed companies.
Ferrex Managing Director Dave Reeves said the additional capital will provide valuable support to the company.
"The funding will allow us to complete the DFS at our Nayega manganese project in Togo, continue operations at the Mebaga iron ore project in Gabon until the proposed funding transaction has completed and pay for the ongoing feasibility study costs at the Malelane iron ore project, in South Africa. With the anticipated near term completion of various of these milestones, the company looks forward to providing further updates on each of the projects shortly thereby benefiting from the equity swap arrangements," Reeves said in a statement.
By Samuel Agini; [email protected]; @samuelagini
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