26th Feb 2013 11:30
Press Release | 26 February 2013 |
Sorbic International plc
("Sorbic" or the "Company")
Roll over of Loan Notes and funding update
Sorbic International plc (AIM:SORB), the third largest sorbates producer in China,announces that the required majority of holders of A and B Loan Notes have provisionally agreed, subject to additional funding as below, to amend the terms of the Loan Note Instrument ("LNI") such that the redemption date is now 31 August 2014.
Key proposed terms of new LNI
·; | Conversion price is set at price of new equity issuance - please see below |
·; | Interest remains at 10% p.a. compounded semi-annually and rolled up to redemption if not paid in cash. Interest may, at the discretion of the Loan Note holders, be paid through the issue of new ordinary shares |
·; | Redemption premium equal to 1.5% per month, from date of new LNI, if Company chooses to redeem early |
·; | Redemption date of 31 August 2014. |
In addition, the holders of the Loans Notes are entitled to a one-off fee of approximately £240,000, being 10% of the outstanding Loan Notes, as consideration for their agreeing to the new terms and extended redemption date. This fee is payable in new ordinary shares at the price of the new equity issuance.
Funding update
The core business continues to trade in line with management expectations and is anticipated to remain cash flow positive at the operating level. The Board remains focused on concluding negotiations regarding compensation in respect of the Inner Mongolia facility, and expects to be able to update shareholders within the next few months.
As highlighted in the preliminary results issued on 21 November 2012 the Company has considerable net cash resources in China and, as of 31 December 2012, the Company's net cash position was £4.3 million. However, in order to meet the ongoing costs of Sorbic International plc, the Company requires further funds. The Company remains in discussions with equity and Loan Note holders with regards to additional funding and will provide an update to the market shortly. In the meantime the Company continues to look to reduce its overheads whilst working towards repatriating funds from China to the UK. If a fundraising cannot be concluded or sufficient funds repatriated in the near term, Sorbic International plc will have to consider all other alternatives.
The Company anticipates that the new LNI will be formally signed by all Loan Note holders simultaneously with new funds being raised. It is anticipated that the funds will be raised through the issue of new Loan Notes and new ordinary shares.
- Ends -
For further information: | |
Sorbic International plc | Tel: +44 (0) 7768 031 454 |
John McLean, Chairman | www.sorbicinternational.com |
finnCap | |
Geoff Nash / Ben Thompson Simon Starr (broking) | Tel: +44 (0) 20 7600 1658 |
Media enquiries:
Abchurch Communications | |
Henry Harrison-Topham / Joanne Shears | Tel: +44 (0) 20 7398 7709 |
www.abchurch-group.com |
Notes to Editors: www.sorbicinternational.com
About Sorbic International plc
Sorbic International's principal activity is the production and sale of the food preservatives Sorbic Acid and Potassium Sorbate from its base in Linyi City, Shandong Province, Peoples Republic of China. Approximately half of Sorbic International's production is sold to overseas markets, across 46 countries and half into the Chinese domestic market.
Sorbic Acid is a naturally occurring organic compound that is used in all kinds of foods for its anti-decomposition and anti-fungus function and also in grains, medicines, cosmetics, toothpaste, tobacco, animal feed, latex, paper-manufacturing and pesticides. Potassium Sorbate is used to inhibit moulds and yeasts in many foods, such as cheese, wine, yogurt, dried meat, baked goods, cosmetics and pharmaceuticals.
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Sorbic International