Broadcourt Investments subscribes to new shares

RNS Number : 2403Y

Equatorial Palm Oil plc

20 February 2013

 



20 February 2013

EQUATORIAL PALM OIL plc

("EPO" or the "Company")

Broadcourt Investments subscribes to new shares in EPO

Equatorial Palm Oil is pleased to announce that Broadcourt Investments Ltd ("Broadcourt"), a company associated with EPO's largest shareholder BioPalm Energy Limited ("BioPalm Energy"), has today subscribed for 6,927,658 ordinary shares of 1 pence each in the Company ("Ordinary Shares") at a price of 12 pence per share (the "Subscription") for an aggregate consideration of £831,319.

The Subscription proceeds received by EPO will be used to provide a loan of $1.2m to EPO's joint venture ("JV") company, Liberian Palm Developments Limited ("LPD")(the "Loan"). The funds will provide short-term financing to support LPD's ongoing development of its oil palm projects in Liberia, West Africa, in advance of the anticipated funding from the African Export-Import Bank ("AFB") being raised for the Company. AFB was appointed as a corporate advisory partner to LPD as announced on 13 February 2013.The Loan will be provided to LPD on a short-term basis with interest payable at a fixed rate of 8 per cent per annum. The Loan is repayable on funding being received from AFB or 12 months from 19 February 2013, whichever is earlier, and is secured on the assets of LPD.

Following the Subscription, BioPalm Energy and Broadcourt will be interested in 40,260,991 Ordinary Shares representing 29.77 per cent of the Company's issued share capital post the Subscription. The Subscription price of 12p per share represents a premium of 18.58 per cent over EPO's closing share price on 19 February 2013.

The new Ordinary Shares have been issued and allotted utilising the Company's existing share allotment authorities. Application will be made as soon as practicable for the admission of the new shares to trading on AIM and admission is expected to take place on 26 February 2013.

Background to and reasons for the Subscription

Under the terms of the joint venture agreement between EPO and BioPalm Energy, entered into in  December 2010, EPO and BioPalm Energy contributed, in aggregate, $30 million into LPD, which is now largely invested.

LPD recently appointed AFB for the purpose of securing a proposed $140 million financing facility. This capital, if secured, will be used to fund the Palm Bay oil palm project located near the deepwater port of Buchanan in Liberia, West Africa. LPD is seeking to raise a first tranche of funding, amounting to $10m, by the end of Q1 2013. Of the debt finance to be raised by AFB for LPD, the first $30m drawn by LPD will be guaranteed by BioPalm Energy or one of its associated companies in accordance with the terms set out in the JV agreement.

Business Update

During 2012, new plantings progressed well, with 1,250 hectares of new planting completed. LPD currently has in excess of 8,000 ha of seedlings in its nurseries, which are expected to be planted during 2013 and 2014. Furthermore, LPD appointed Ore Search Civil Liberia Ltd ("OSC"), an international earth moving contractor, to assist in land preparation at both the Palm Bay and Butaw Estates. The appointment of OSC will be significant in helping the Company achieve its strategic objectives through expanding the nurseries and land preparation effortsin order to deliver on the large scale planting programme.

Michael Frayne, Chairman of EPO, commented:

"Our focus remains committed to moving forward with the large-scale planting programme at both Palm Bay and Butaw Estates through 2013 and beyond. The additional equity raised via Broadcourt will provide financial support to LPD while we finalise our longer term funding. It also signifies the strength and commitment of the joint venture partnership in working towards EPO's objective of becoming a leading West African palm oil producer."

Related Party Transactions

BioPalm Energy currently holds 33,333,333 Ordinary Shares in EPO representing approximately 25.98 per cent of the issued share capital of the Company. BioPalm Energy currently holds 50 per cent of the issued share capital of LPD. Accordingly, the Subscription and the Loan are related party transactions under the AIM Rules. The Independent Directors of EPO, being all the directors other than Shankar Varadharajan, a Biopalm Energy director, having consulted with Strand Hanson Limited, the Company's nominated adviser, consider the terms of the Subscription and the Loan to be fair and reasonable insofar as the Company's Shareholders are concerned.

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For further information, please visit www.epoil.co.uk or contact:

Equatorial Palm Oil plc Michael Frayne (Chairman)	[phone]
Strand Hanson Limited (Nominated Adviser) James Harris / James Bellman	[phone]

Mirabaud Securities LLP (Broker) Peter Krens	[phone]
Pelham Bell Pottinger (Financial / Corporate PR) Archie Berens / Joanna Boon	[phone]

Notes to editors:

Equatorial Palm Oil plc (EPO) is an AIM listed crude palm oil (CPO) producer with palm oil estates in Liberia, West Africa. The Company was founded in 2005 and is focused on becoming a global, sustainable producer of high quality palm oil to regional and international markets.

With significant land position in Liberia, EPO is geographically well positioned to serve the international and regional markets and is committed to making a positive impact on the community through investment in local schools, health clinics, housing and infrastructure. 

The Company's 50:50 joint venture partner in LPD is Biopalm Energy Ltd, a subsidiary of the Siva Group, which invests in oil palm projects around the world.

 

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