(Alliance News) - Atlas Mara Ltd said Tuesday it has signed a new secured facility agreement with a fund entity managed by UBS O'Connor LLC and has entered into a standstill agreement with some creditors in respect of the its and ABC Holdings Ltd's financing arrangements.
Shares in the sub-Saharan Africa bank investor were 6.9% higher in London on Tuesday morning at 0.39 pence each. Shares in Atlas are down 65% so far in 2020.
Atlas Mara was founded by former Barclays PLC chief executive officer Bob Diamond. Diamond stepped down as chair last year to take up a non-executive director position.
The facility is for a new investment of about USD25.8 million for a duration of 18 months, secured against shares and other assets owned by Atlas Mara and its subsidiaries. It will carry a 15% annual interest rate.
Atlas said the new financing will be used to fund near-term operating expenses and working capital requirements. It also will be used to buy back from the lender 26.4 million shares at USD0.40 per share. The repurchased shares will be held in treasury by the company.
Executive Chair Michael Wilkerson said: "Amid the current challenging operating environment, we are pleased to have secured new funding and obtained such high levels of support from our convertible bondholders and bilateral lenders.
"The new facility and standstill will provide the time and stability necessary to enable the company to continue to pursue its strategic options, including further asset sales, as well as a broader debt restructuring to realign the balance sheet to prospects for value."
Atlas noted currency depreciation in Africa in 2020 has resulted in a USD150 million reduction in the US dollar value of its assets and thus a reduction in its debt-carrying capacity.
"We thank our convertible bondholders, bilateral lenders, and other stakeholders for their support and flexibility through this phase. As we weather the challenges of the pandemic, we are pursuing a comprehensive solution for our balance sheet for the benefit of all of our stakeholders," Wilkerson said.
Atlas expects to generate additional liquidity from asset disposals to support medium-term operations, subject to discussions with its creditors. These disposals come from a 2019 strategic review, which focussed on the firm's scale and returning to profitability.
"While the company has made significant progress in asset disposals as previously announced, and continues to explore other potential transactions, the economic challenges related to the Covid-19 pandemic resulted in delays in the strategic fundraising initiative, which was paused as a result of tightening global liquidity," Atlas said.
The company also noted it remains in discussion with some creditors not currently part of the standstill in an attempt to obtain their support.
"The agreements will support near-term stability to enable the company to continue engagement with creditors, to achieve a comprehensive recapitalisation or restructuring of debt, to enable long-term stability and growth. The company continues to carry out its cost reduction program, and remains on track with its strategic repositioning, including asset disposals and other transactions," Atlas added.
By Paul McGowan; paulmcgowan@alliancenews.com
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