RNS Number : 9784X
Ncondezi Energy Limited
11 May 2016
News Release
Directors and Management Lead US$1.32 million Shareholder Loan to Finalise SEP JDA
11 May 2016: Further to the project and funding update on 6 May 2016, Ncondezi Energy Limited
("Ncondezi" or the "Company") (AIM: NCCL) is pleased to announce that it has signed a US$1.32 million
loan facility ("Shareholder Loan") with certain of Ncondezi's Directors, Management and long term shareholders (together the
"Lenders") to fund ongoing working capital requirements to finalise the Joint Development Agreement ("JDA") with Shanghai
Electric Power Co., Ltd ("SEP").
Key Highlights:
· US$1.32 million Shareholder Loan from Ncondezi
shareholders, directors and management
· Ncondezi fully funded until the end of Q3 2016
and the expected completion of the JDA with SEP
· No equity dilution to shareholders
Commenting on the announcement, Michael Haworth, Chairman of Ncondezi said:
"We are delighted that Directors and Management together with a number of long term shareholders have demonstrated
their continued financial support of the Company through the provision of a shareholder loan to assist the Company in delivering
the JDA with SEP, a subsidiary of one of the largest power generation groups in China with a total group installed capacity of
over 100,000 MW. The Company believes that the loan is the most attractive financial solution to bridge the funding gap to make
the JDA effective, particularly given that it will result in no equity dilution to existing shareholders ahead of a major
milestone event with SEP. Based on the timetables agreed, the Board believes that Ncondezi is now fully funded to make the JDA
effective."
Shareholder Loan
On 11 January 2016, the Company announced that it had signed a binding JDA with SEP to develop the
Ncondezi 300MW coal fired power project in Tete, Mozambique (the "Power Project" or the "Project"). The JDA becomes effective
once all the SEP Investment Conditions have been satisfied or waived by SEP. Once the JDA is effective, SEP will invest up to
US$25.5 million to fund the balance of the Power Project development costs to Financial Close in return for a 60% shareholding in
the Ncondezi Power Project. The Shareholder Loan is being made to provide the Company with additional funding for its corporate
overheads while it completes the SEP Investment Conditions. An update regarding progress made in
fulfilling these Investment Conditions was released by the Company on 6 May 2016.
Of the US$1.32 million Shareholder Loan, US$500,000 is being provided by a Trust of which
Non-Executive Chairman, Michael Haworth, is a potential beneficiary. US$108,000 is being provided by Executive Director and Chief
Operations Officer, Chris Schutte, $35,000 from Non-Executive Director, Estevão Pale, and US$147,000 from Ncondezi management.
The Shareholder Loan has a maturity of 12 months and, based upon management's latest cash flow forecasts, is expected to provide
sufficient funding until the end of Q3 2016. Following the completion of the SEP JDA, the Company will require additional funding
to cover certain corporate and mine development costs that will not be funded by SEP. The Company is exploring a number of
funding solutions and expects to be in a strong position to raise additional capital once the SEP JDA is effective.
As part of the JDA's key terms, Ncondezi will be refunded for certain agreed project costs
incurred from 1 January 2016 by SEP (the "SEP Refund"). Once the JDA has been made effective, repayment of the Shareholder
Loan will be on the earlier of either 12 months from the date of the Shareholder Loan agreement or 5 days from the date of the
receipt of the SEP Refund. The total amount drawn down prior to the SEP JDA effectiveness will attract a 1.5x multiple
(comprising 1.0x principal and 0.5x return). If the JDA has not been made effective within 6 months of the date of the
Shareholder Loan agreement, then the drawn down portion of the Shareholder Loan becomes immediately repayable at a 1.5x
multiple.
The Company believes that the Shareholder Loan represents the most attractive funding option for
all shareholders given that there is no equity dilution.
Other terms
In addition, the Lenders shall have the right to appoint an additional Board member to the
Ncondezi Board. A further announcement will be made in due course as and when the Lender's director is nominated and
appointed.
The Shareholder Loan is subject to customary termination rights and events of default, including
if the project is abandoned which, if triggered, will make the drawn down portion of the Shareholder Loan immediately repayable
at a 1.5x multiple. Lenders also have the option to request security over the assets and loans of the Company.
Related Party Transaction
The entry into the Shareholder Loan with the participation of certain directors constitutes a
related party transaction for the purposes of the AIM Rules for Companies. Accordingly, Aman Sachdeva and Jacek Glowacki
being the Company's Independent Directors in relation to the Shareholder Loan consider, having consulted with Liberum, the
Company's Nominated Adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are
concerned.
Enquiries
For further information please visit www.ncondezienergy.com or contact:
Ncondezi Energy:
|
Hanno Pengilly
|
+44 (0) 20 7183 5402
|
Liberum Capital Limited:
NOMAD & Broker
|
Neil Elliot / Christopher Britton
|
+44 (0) 20 3100 2000
|
Bell Pottinger:
|
Daniel Thöle
|
+44 (0) 20 3772 2555
|
Ncondezi Energy owns 100% of the Ncondezi Project which is
strategically located in the power generating hub of the country, the Tete Province in northern Mozambique. The Company is
developing an integrated thermal coal mine and power plant in phases of 300MW up to 1,800MW. The first 300MW phase is targeting
domestic consumption in Mozambique using reinforced existing transmission capacity to meet current demand.
This information is provided by RNS
The company news service from the London Stock Exchange
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