Feronia said Friday that it has closed a $25 million private placement. CDC, the UK Government’s Development Finance Institution, was the lead investor. According to details of the transaction, CDC bought 151,496,000 shares of Feronia at a price of CAD $0.10 per share for $14.5 million. Another investor, the African Agriculture Fund, which is managed by Phatisa and holds the largest stake in Feronia, acquired 78,360,000 shares at a price of $7.5 million. In addition to the private placement, Feronia has named Keith Alexander to its board of directors. Alexander will be replacing Philip Condon who is departing as a director of the company. Based in the Democratic Republic of the Congo, Feronia is a commercial farmland and plantation operator.
TORONTO, ONTARIO–(Marketwired – Nov. 8, 2013) – Feronia Inc. (“Feronia” or the “Company”) (TSX VENTURE:FRN) is pleased to announce that it has completed the first tranche of a $25 million financing led by CDC Group plc (“CDC”), the UK Government’s Development Finance Institution (“DFI”). All amounts in this release are expressed in US dollars unless otherwise indicated.
CDC has acquired 151,496,000 common shares of the Company at a purchase price of CAD$0.10 per share for an aggregate purchase price of $14.5 million pursuant to the terms of a subscription agreement entered into with the Company. Also in connection with the financing, the African Agriculture Fund (“AAF”), which is the Company’s largest shareholder, acquired 78,360,000 common shares through its subsidiary Golden Oil Holdings Limited for an aggregate purchase price of $7.5 million. The AAF is a $243m African private equity fund managed by Phatisa, which has a portfolio of investments across Africa in the agriculture and food sectors.
Concurrently with the investments from CDC and the AAF, Feronia’s Executive Chairman, Mr. Ravi Sood, acquired 1,562,250 common shares for an aggregate purchase price of $150,000. A number of other qualifying investors have also subscribed for an aggregate of 29,685,000 common shares in the financing, for an aggregate purchase price of approximately $2.85 million, of which approximately $1.38 million was completed in connection with the first tranche. The remaining subscriber is expected to close in the coming days. The purchase price of all shares issued in connection with the private placement will be CAD$0.10 per share. The common shares issued pursuant to the first tranche of the private placement are subject to a statutory hold period which expires on March 8, 2014.
Proceeds from the financing will be used primarily to fund the Company’s existing and future oil palm replanting programme.
Following completion of the financing, CDC will directly hold approximately 27.5% of the Company’s issued and outstanding common shares. The AAF will hold an aggregate of 179,188,774 common shares representing approximately 32.5% of the common shares. Completion of the investment by the remaining subscriber is subject to customary terms and conditions as set out in the subscription agreement with such investor.
CDC, which has net assets of approximately £2.8bn, is wholly owned by the UK Government’s Department for International Development and uses its own balance sheet to invest in the developing countries of Africa and South Asia. CDC’s mission is to support the building of businesses in Africa and South Asia, creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places.
The Company has appointed one CDC nominee, Mr. Keith Alexander, to the Company’s Board of Directors. CDC also has the right to appoint a second nominee to the Board of Directors. Mr. Alexander will serve on the Procurement Committee and Chair a newly formed Environmental, Social, and Governance Committee of the Board. Mr. Alexander has been involved with businesses operating in Africa for over 25 years and most recently he was a director at Actis LLP where he was a member of the management team of the Actis Africa Agribusiness Fund. Prior to Actis, Mr. Alexander was employed by CDC where he focused on agribusiness investments in emerging markets. Mr. Alexander will replace Mr. Philip Condon who has stepped down as a director of the Company. The Company thanks Mr. Condon for his service to Feronia during his tenure as a director.
The Company and CDC have also entered into a convertible loan agreement, pursuant to which CDC will make available an unsecured non-revolving term loan (the “Facility”) up to a maximum amount of $3.6 million at an interest rate of 12% for a term of five years. The funds available under the Facility are required to be used by the Company to support the implementation of an Environmental and Social Action Plan (“ESAP”) developed jointly with CDC. The principal under the Facility will be convertible into common shares of the Company on the maturity date and in certain other circumstances at a rate of CAD$0.24 per common share (subject to customary adjustment provisions). Subject to the approval of the TSX Venture Exchange (the “TSXV”), the interest payable under the Facility will be convertible into common shares at a rate equal to the greater of CAD$0.24 and the Discounted Market Price (as defined in TSXV policy) at the time of conversion. Assuming that the maximum amount under the Facility is advanced to the Company for the full term of five years, the outstanding principal and interest would be convertible into up to approximately 26,500,000 common shares, subject to the Discounted Market Price and the exchange rate at the time of conversion. For more information regarding the Facility, please see the Company’s news release dated November 8 entitled “Feronia Inc. Enters into Loan Facility With CDC to Advance ‘Environmental and Social Action Plan'”.
Commenting, Ravi Sood, Chairman of Feronia said: “We are very pleased to close this financing with CDC, the AAF and other participating investors, and wish to thank our shareholders for their continued support.
“We have worked closely with CDC over the past few months to conclude this investment, building on their experience and knowledge as a leading development finance institution. To have the UK’s DFI as a substantial investor in Feronia is, we believe, confirmation of the potential of what we are doing and the positive impact Feronia can have on the DRC. CDC’s long-term investment will allow us to build on what we have already achieved, generating and sustaining new growth, jobs and investment in the DRC.”
Commenting, Dolika Banda, CDC’s Regional Director for Africa, said: “This is an important investment in DRC for CDC. Feronia’s plantations are at the heart of their communities and it is a highly respected company within the country. One of our key reasons for investing is the depth of experience in both the workforce and senior management team, which is a testament to its 100-year history in DRC. The company has already made significant progress in rehabilitating plantations which were in a state of distress and we believe that the business has substantial potential to be a major contributor to growth and jobs in DRC.
“We will work closely with Feronia to ensure it has access to the long-term capital and support it needs. We will also focus on building the company’s value by strengthening its environmental, social and governance standards, and supporting it to move towards international standards in the palm oil industry.”
About Feronia Inc.
Feronia Inc. is a large-scale commercial farmland and plantation operator in the Democratic Republic of the Congo (“DRC”).
The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division.
Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce.
Feronia’s management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets.
Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities.
For more information please see www.feronia.com.
CDC is the UK government-owned development finance institution that uses its own balance sheet to invest in the developing countries of South Asia and Africa. It has net assets of £2.8bn. CDC’s mission is to support the building of businesses in the poorest countries, creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places. Under its recent business strategy, announced in September 2012, CDC provides debt and direct investment to businesses as well as acting as a fund-of-funds investor. CDC also now only makes new investment commitments in Africa and South Asia. www.cdcgroup.com.
Phatisa is a private equity fund manager, operating across sub-Saharan Africa, operating from offices in Port Louis, Johannesburg, Lusaka, Nairobi, Accra and London. Phatisa comprises a team with a significant track record of managing private equity funds and agricultural businesses throughout the continent. The Phatisa team is located in Africa and spends a considerable amount of time developing relationships with strategic partners in all countries where funds under management are active. This ensures that funds have reliable networks and information in the countries in which they invest. Team members have a reputation built up over the last decade, which can be seen in their track records, on-the-ground network, and access to agricultural players and facilities on the continent. Phatisa provides the experience necessary to invest, manage and successfully exit what will be one of Africa’s most pioneering agricultural private equity funds. www.phatisa.com.