TIDMNCCL
RNS Number : 4806I
Ncondezi Energy Limited
31 August 2016
Up to US$3.0 million Loan Facility Agreed with Africa Finance
Corporation and Project Update
31 August 2016: Ncondezi Energy Limited ("Ncondezi" or the
"Company") (AIM: NCCL) is pleased to announce that Africa Finance
Corporation ("AFC") has joined the existing US$1.32 million loan
facility ("Existing Shareholder Loan") announced in May 2016 and
has committed an additional US$3.0 million to the Shareholder Loan
facility in two tranches ("New Shareholder Loan"). The additional
funding will be used to fund ongoing project development costs
including those that will not be covered by the Joint Development
Agreement ("JDA") with Shanghai Electric Power Co., Ltd
("SEP").
Key Highlights:
-- AFC Committing up to US$3.0 million in addition to the
Existing Shareholder Loan provided by other parties and announced
in May 2016 in two tranches:
o Tranche A for a total of US$1.0 million on the same terms as
the Existing Shareholder Loan to be repayable on 10 May 2017
o Tranche B is a conditional US$2.0 million loan with a 24 month
term from first drawdown subject to certain conditions, including
the completion of the JDA with SEP and Ncondezi providing an
appropriate security package
-- Repayment terms of the Existing Shareholder Loan amended to now be repayable on 10 May 2017
-- New Shareholder Loan provides conditional funding to reach
Financial Close on the mine and power plant following the expected
completion of the SEP JDA later this year
-- UAE holding company structure for the power plant completed
Commenting on the announcement, Michael Haworth, Chairman of
Ncondezi said:
"We are pleased to announce that AFC has joined the Existing
Shareholder Loan facility that was put in place in May 2016. As
Ncondezi's largest shareholder and one of Africa's leading
infrastructure development companies, AFC's participation is
further endorsement of the Ncondezi project's progress. The AFC
facility provides conditional financing for Ncondezi while the SEP
JDA is completed and we work to reach Financial Close. The Company
continues to make good progress in meeting the SEP Investment
Conditions and the UAE holding company structure is now in
place."
Commenting on the announcement, Oliver Andrews, Chief Investment
Officer of Africa Finance Corporation said:
"AFC is committed to developing infrastructure that will foster
economic growth and has high development impact. Lack of access to
power is one of the greatest constraints to growth in Africa.
Currently 620 million people, half of Africa's population, do not
have access to electricity. When completed and on-stream the
Ncondezi power plant will provide up to 300MW of new generation
capacity. With this new loan the AFC is pleased to be able to
support Ncondezi to reach Financial Close."
About Africa Finance Corporation
AFC is a dynamic, international investment grade multilateral
finance institution whose mission it is to help bridge Africa's
significant infrastructure gap whilst delivering competitive
financial returns, economic growth and high development impact.
Established in 2007 to be the catalyst for private sector
infrastructure investment across Africa, AFC is now the second
highest investment grade rated multilateral financial institution
in Africa with an A3/P2 (Stable outlook) rating from Moody's
Investors Service. A successful borrowing programme has raised more
than US$3.5 billion for AFC's activities. This includes the
Corporation's debut US$750 million Eurobond issue which was over 6
times oversubscribed.
AFC has invested more than US$4 billion in projects across 26
African countries to date.
AFC focuses on projects with a high development impact and high
profit potential, of which power forms a key sector. AFC's power
sector expertise includes recently reaching financial close on a
US$900m 350MW gas power project in Ghana, as well as financing 5
power projects to date with combined capacity of 800MW. AFC is
currently Ncondezi's largest shareholder with a 22% holding in the
Company.
AFC Loan
On 11 May 2016, the Company announced that it had signed a
US$1.32 million loan facility ("Existing Shareholder Loan") with
certain of Ncondezi's Directors, management and long-term
shareholders (together the "Lenders"). The Shareholder Loan was put
in place to provide sufficient funding until the end of Q3 2016,
the target timeframe for completion of the SEP JDA. The Company
requires additional funding to cover costs related to certain
corporate and mine development workstreams to Financial Close that
will not be funded following the completion of the SEP JDA directly
by SEP or by the refunded project costs from SEP as per the JDA
("SEP Refund").
AFC has agreed to accede to the existing Shareholder Loan and
its terms, advancing Ncondezi up to US$3.0 million, with an initial
tranche of $1.0 million ("Tranche A") and a further tranche of
US$2.0 million ("Tranche B") which is conditional amongst other
things upon the fulfilment of certain conditions precedent.
Tranche A
Tranche A will be drawn down alongside the existing Shareholder
Loan and in accordance with its terms (set out in the announcement
dated 11 May 2016), some of which have been amended as stated
below. A catch up advance of US$943,000 will be paid to Ncondezi as
an upfront payment, which is equivalent to AFC's pro rata payment
alongside the existing drawdown from Lenders. The balance of funds
from Tranche A and the Existing Shareholder Loan will be drawn down
in accordance with their terms and are now available for drawdown
until 31 December 2016.
Tranche A will be utilised to fund project development costs in
accordance with an agreed budget.
Repayment of Tranche A will be by no later than 10 May 2017. The
cost of the Tranche A loan is 1.5x the drawn down amount
(comprising 1.0x principal and 0.5x return). If repayment occurs
after 10 May 2017, the repayment multiple increases to 2.0x.
Tranche B
Tranche B will potentially provide a further advance of US$2.0
million to Ncondezi at Ncondezi's election, subject to the
conditions precedent being met, which include a revised budget for
the use of funds and agreeing certain terms and putting in place a
security package. The Company intends to update its budget to
Financial Close once the SEP JDA has been completed and will
explore the drawdown of Tranche B at that time along with other
potential financing options.
Repayment of Tranche B will be within 24 months of first
drawdown. The total amount drawn down will be repaid at a 2.5x
multiple (comprising 1.0x principal and 1.5x return). If repayment
occurs after 24 months of first drawdown, the repayment multiple
increases to 3.0x.
A commitment fee of 0.35% per annum, or US$7,000 per annum, will
be charged on the undrawn amount of Tranche B.
Key Amended Terms to the Shareholder Loan
The repayment terms of the Shareholder Loan have been amended,
with repayment now due on 10 May 2017 (12 months from date of the
Existing Shareholder Loan) and no longer due five days from the
date of the receipt of the SEP Refund. This provides the Company
with more time to progress the project, allocate proceeds from the
SEP Refund to critical project workstreams and better develop loan
repayment options.
If the Shareholder Loan repayment occurs after 10 May 2017, the
repayment multiple increases to 2.0x.
Related Party Transaction
The variation of the terms of the Existing Shareholder Loan
together with the drawdown of Tranche A of the New Shareholder Loan
(together the "Transaction") constitutes a related party
transaction for the purposes of the AIM Rules for Companies.
Accordingly Jacek Glowacki, being the Company's Independent
Director in relation to the Transaction considers, 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.
In the event that the Company fulfils the conditions precedent
to the Tranche B facility, agrees further terms and elects to draw
down Tranche B, the drawdown is also expected to constitute a
Related Party Transaction for the purposes of the AIM Rules for
Companies. The Independent Directors will review the terms of the
transaction, having consulted with the Company's Nominated adviser,
ahead of any drawdown taking place.
Joint Development Agreement with Shanghai Electric Power
The Company is pleased to provide the following update on the
SEP Investment Conditions:
-- The incorporation of the UAE holding company is now complete.
This was the last major Ncondezi deliverable and allows the final
audit report on Ncondezi's historic power plant development costs
to be finalised.
-- SEP and Ncondezi have submitted an updated power plant
financial model to Electricity de Mozambique ("EDM") that
incorporates the change to Pulverised Coal ("PC") boiler
technology. The Company believes that the financial model delivers
a power tariff that is within the previously agreed tariff envelope
and is now being reviewed by EDM.
The Company continues to target the completion of the SEP
Investment Conditions during Q3 2016 and will make further
announcements as appropriate.
Ncondezi mine
Ncondezi continues to progress the mine development alongside
the power plant and has completed the rescheduling of the pit
production profile to deliver the revised coal requirements to the
PC Boiler power plant. The Company plans to progress to a detailed
engineering and design phase for the mine which will allow for
updated contractor mining bids before the end of the year.
Enquiries
For further information please visit www.ncondezienergy.com or
contact:
+44 (0) 20 7183
Ncondezi Energy: Hanno Pengilly 5402
Liberum Capital
Limited: Neil Elliot / Christopher +44 (0) 20 3100
NOMAD & Broker Britton 2000
+44 (0) 20 3772
Bell Pottinger: Daniel Thöle 2555
Note:
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation ("MAR"). Upon the publication of this
announcement via Regulatory Information Service ("RIS"), this
inside information is now considered to be in the public
domain.
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
END
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August 31, 2016 02:01 ET (06:01 GMT)
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