LONDON (Alliance News) - DekelOil Public Ltd on Tuesday said it has increased its stake in its main palm oil project in the Ivory Coast, which will help the company to accelerate its strategy of becoming a leading producer in West Africa.
The company is conducting a share placing to fund the GBP10.8 million deal to increase its stake in the joint venture company that holds the Ayenouan project, CS DekelOil Siva Ltd.
DekelOil is increasing its stake in the joint venture to 81.5% from 51% previously, meaning it will be entitled to more earnings and cashflow from the operation.
Ayenouan experienced its first full year of operations last year, producing 35,000 tonnes of crude palm oil to generate revenue of EUR23.4 million and earnings before interest, tax, depreciation and amortisation of EUR3.7 million net to DekelOil.
DekelOil's partner on the Ayenouan project is Biopalm Energy Ltd, and the London-listed company has an option to acquire the remainder of the project, meaning it could end up owning the whole joint venture company and the project.
"By securing a greater proportion of Ayenouan's growing revenues and cash flows, the acquisition has the potential to accelerate the roll out of the Company's strategy to build a leading West African palm oil producer," said the company.
Ayenouan has the potential to double production to 70,000 tonnes of crude palm oil per year.
The placing will be comprised of 812.1 million shares priced at 1.325 pence each, a 1.9% premium to the closing share price on Monday, to raise a total of GBP10.8 million. DekelOil shares were up 6.9% to 1.39 pence per share on Tuesday morning.
An additional 22.6 million existing shares are being sold by Chief Financial Officer Yehoshua Shai Koi as part of the placing. His stake in DekelOil will fall to 110.3 million shares, equal to a 4.7% stake.
The placing and acquisition are both subject to shareholder approval at a general meeting on June 16, with irrevocable undertakings already received from shareholders with a combined stake of 35.7% - all of which have come from the company's directors.
"The directors believe that the proposals are in the best interests of DekelOil and its shareholders as a whole and unanimously recommend that you vote in favour of the resolutions," said the company.
The 812.1 million shares being issued represents around 53% of DekelOil's existing share capital and will represent around 36% of the enlarged issued share capital of the company.
DekelOil expects those shares to be admitted to trading on June 17, adding the placing is not underwritten.
Tutalon Investments Ltd, a related party to DekelOil Chief Executive Youval Rasin, has agreed to purchase 75.5 million of the placing shares made available, which will push Rasin's interest in DekelOil up to 479.6 million shares, equal to a 20.4% stake in the company.
After the placing is completed, DekelOil also is proposing to consolidate its existing shares on a 10 for 1 basis into new shares, which would become effective on June 21. Prior to the consolidation, DekelOil will have 2.35 billion shares in issue, meaning after the consolidation it will have 235 million.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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Dekel Agri (DKL)