13th May 2020 17:10
(Alliance News) - Kropz PLC on Wednesday said it intends to raise USD7 million through a placing and open offer, adding that it has entered a conditional convertible equity facility of up to USD40 million with major shareholder ARC Fund.
The phosphate explorer announced a placing and open offer to raise up to USD7 million with an issue price of 6.75 pence per share. The stock closed 16% lower at 8.00 pence each on Wednesday in London.
ARC intends to subscribe for USD2 million under the open offer.
Kropz said that the repayment of the USD40 million equity facility will be in the form of conversion into shares issued to ARC Fund at the same price as the above fundraise. The company expects to make the first quarterly drawdown of USD8 million on June 10 with conversion into shares expected to occur immediately after.
Under the agreement, ARC will also provide a bank guarantee from one of its banks for up to USD40 million to Kropz Elandsfontein Pty Ltd, a company in which Kropz holds a 74% stake. Kropz will reimburse the ARC Fund for the costs of the guarantee through the issue of shares also at 6.75p each to be issued at the same time as the quarterly drawdown and conversion of the equity facility.
Kropz stated that any cash raised above USD40 million will be used to advance the new feasibility study for the Hinda phosphate project in the Republic of Congo and for general working capital. It noted that it expects commercial production at Elandsfontein to commence in the fourth quarter of 2021.
"I am pleased to report today's equity facility made available by the ARC Fund, our major shareholder, and the proposed placing and open offer. The proceeds raised, alongside the Equity Facility, will be used to bring Elandsfontein into production and advance the new feasibility study at Hinda," said Kropz Interim Chief Executive Mark Summers.
Separately, the company said that Kropz Elandsfontein and BNP Paribas SA are currently in talks to extend the repayment date of a fully drawn down USD30 million credit facility to the third quarter of 2024 with capital repayments expected to begin in the fourth quarter of 2022 at an interest rate of 6.5% US plus LIBOR, up to project completion and 4.5% US plus LIBOR following completion.
By Ife Taiwo; [email protected]
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