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(Alliance News) - Dekeloil Public Ltd on Monday announced a new EUR7.2 million loan and equity fundraising for EUR2.5 million, as well as a rise in revenue for the first half of the year on higher crude palm oil volumes.
The ten-year senior secured loan for EUR7.2 million is with AgDevCo Ltd, which invests in the African agricultural sector, and has a four-year capital repayment holiday.
EUR6.2 million of this loan will replace an existing bank loan and EUR1.0 million will be used for environmental, social, and governance activities plus general working capital.
The four-year holiday is expected to produce an estimated EUR5.8 million in cash savings once interests and transaction fees are accounted for.
Drawdown under the loan is, however, conditional upon AdDevCo subscribing for new Dekeloil shares, raising EUR1.5 million gross from 41.2 million shares at 3.27 pence per share.
Moreover, the EUR1.5 million placing and the loan depend on Dekeloil raising no less than EUR950,000 from an equity issue. Dekeloil is therefore planning to raise no less than GBP850,000 or EUR950,000 via an accelerated bookbuild plus a direct equity subscription for new shares.
The bookbuild and subscription will be priced at 3.0 pence per share, excluding directors investing at the higher AgDevCo subscription price.
Dekeloil Chief Executive Youval Rasin and Executive Director Lincoln Moore will subscribe for 2.5 million and 274,593 new shares for GBP81,000 and GBP9,000 respectively.
The fundraising proceeds are to strengthen the palm oil producer's balance sheet and support growth initiatives.
Moore said: "The AgDevCo loan's four-year interest-only period will significantly strengthen the company's balance sheet during this period of growth and investment and places us in a stronger position to support various growth initiatives. At the end of that four-year period, DekelOil will have at least two operational projects in [the Ivory Coast], each we believe will be generating significant levels of cash flow which will be used to further grow the company."
In the six months to June 30, Dekeloil's revenue is expected to be no less than EUR14.5 million, up from EUR14.1 million, driven by a rise in crude palm oil sales volumes. These increased volumes were, however, offset by weaker crude palm oil prices.
Earnings before interest, depreciation, taxation, and amortisation for the half half is forecast to be "materially higher" than the year before figure of EUR1.1 million.
Accounting for financing costs and tax, Dekeloil is predicting "an an approximate breakeven result in line with management expectations".
Net debt fell to EUR16.8 million on June 30 from EUR17.7 million at the end of 2018.
Shares in Dekeloil were up 1.3% at 3.04 pence on Monday at mid day.