LONDON (Alliance News) - Dekeloil PLC on Thursday said it has received a EUR1 million investment from Concordia Corp Ltd into its large-scale raw cashew nut processing plant located in Tiebissou, Ivory Coast.
The investment, made by private equity firm Concordia, was made into Dekeloil investee company Pearlside Holdings Ltd. Pearlside owns the raw cashew nut business and will use the funds to help develop the processing plant.
Concordia's investment is based on a EUR6 million implied pre-money valuation of Pearlside, using the valuation of Pearlside undertaken by Dekeloil in December 2018.
"Today's EUR1 million investment by Concordia into Pearlside provides further endorsement of the attractive economics of an initial 10,000 [tonne per annum] cashew processing plant at Tiebissou," said Dekeloil Executive Director Lincoln Moore.
In settlement of the Concordia investment and the brokering fees associated with it, Concordia has been issued 717 new shares in Pearlside, representing a 15% enlarged stake and taking Concordia's holding to 33%.
In addition, Dekeloil has opted to receive a EUR320,000 short term bridge loan payment advanced to Pearlside in the form of EUR238,000 in cash plus EUR82,000 of new Pearlside shares, based on a EUR6 million Pearlside valuation. Dekeloil now holds a 38% interest in Pearlside.
Dekeloil's option to acquire a controlling Pearlside interest remains and currently stands at 17% of shares in issue.
The construction phase at Tiebissou has begun and production is due to start in 12 months. Once the plant is in operation, Tiebissou will be Dekeloil's second producing project in the Ivory Coast, the other being its Ayenouan palm oil project.
The total cost of the 10,000 tonne per annum plant is thought to be USD15 million, consisting of USD6 million for working capital and USD9 million for the processing plant itself.
As well as the Concordia investment, the debt structure has been advanced and so Pearlside can now obtain a 2-year principal grace period on its key development loans.
These consist of a 7-year USD7.5 million plant development loan with a 8.5% rate and 2-year principal grace period, plus a 7-year local bank loan for USD1.7 million with an 8% interest rate and 2-year principal grace period. The other key loan is a USD7.5 million reverse convertible note stock financing loan with an 8.7% interest rate.
"By providing the funds needed for the drawdown of the development loans, the Concordia investment enables the commencement of construction work at the site, which in turn puts the project firmly on track for first production in time for 2020's cashew harvesting season. At this point, Dekeloil will have been transformed into a multi-project, multi-commodity agriculture company, generating revenues that are not only far larger in terms of scale, but also diversified in terms of end markets," Moore said.
Shares in Dekeloil were untraded on Thursday afternoon at 3.00 pence.
Dekel Agri (DKL)