(Sharecast News) - West Africa-focussed agriculture company Dekel Agri-Vision announced a modification to its existing loan facility on Friday, in agreement with AgDevCo, a prominent impact investor in the African agriculture sector.
The AIM-traded firm said it had reached an agreement with AgDevCo to adjust the terms of the loan facility, after a repayment of €3.6m was made to AgDevCo on 16 August last year.
It said the payment significantly reduced the outstanding loan balance by around 50%, bringing it down from €7.2m to approximately €3.6m.
The loan facility, denominated in euros, initially had a variable interest rate, but due to the potential interest rate cap of 9% resulting from increases in rates, Dekel and AgDevCo agreed to fix the interest rate at 7% from 1 January 2023.
From 11 August to 31 December 2022, the interest rate would be further reduced to 6.75%, in consideration of reducing the loan's tenor by two years.
Under the modified terms of the loan, principal repayments would be made pro-rata from August 2024 to August 2027.
"This is an excellent outcome to fix the interest rate given the backdrop of significantly rising global interest rates and also reflects the current strong performance of the palm oil operation," said executive director Lincoln Moore.
"All our debt obligations are now fixed which positions us well to manage interest expense obligations whilst we commence our strategy to decrease our debt levels in 2023 and beyond from the positive cash flow being generated from the palm oil operation and also from the cashew operation as it ramps up production.
"We also look forward to continuing our excellent ongoing partnership with AgDevCo."
Reporting by Josh White for Sharecast.com.
Dekel Agri (DKL)