RE: Takeover NPV8 percentages?6 Dec 2022 20:10
11 Convertible loan notes liability
On 29 March 2022 the Company issued convertible loan notes to the value of $65 million at an interest rate of 11.75% with interest accruing quarterly in arrears. The convertible loan notes were issued at a discount of 5.75%. The maturity date of the instruments is 15 October 2032.
The convertible loan notes are unsecured and the noteholders will be repaid as follows:
Interest shall be capitalised until the Araguaia Project Completion date, estimated to be 31 December 2025 (subject to various technical operating tests being passed)
After Project Completion Date, interest shall be paid quarterly only if there is available cash (after the company meets its senior debt and other senior obligations)
After Project Completion Date, principal repayments (including accrued capitalized interest) shall be paid quarterly subject to available cash for distribution. In addition a cash sweep of 85% of excess cash will apply on each interest payment date
Any amount outstanding on the CLN on the maturity date 15 October 2032, Horizonte is obliged to settle in full on the maturity date.
At any time until the Maturity Date, the Noteholder may, at its option, convert the notes, partially or wholly, into an amount of ordinary shares up to the total amount outstanding under the Convertible Note divided by the Conversion Price. The Conversion Price is 125% of the Subscription Price of 0.07 pence converted to US$ at a rate of 1.3493. The Conversion Price is therefore $0.11806.
The convertible loan is a hybrid financial instrument, whereby a debt host liability component and an embedded derivative liability component was determined at initial recognition. As the convertible loan notes was issued close to the quarter end date, the fair value of the financial instrument approximates the cash received.
After the fifth anniversary of the closing date, Horizonte shall have a one-time right to redeem the Convertible Notes, in whole, at 105% of the par value plus accrued and unpaid interest in cash if:
The thirty-business day VWAP of Horizonte shares exceeds 200% of the Conversion Price and the average daily liquidity of the Company’s shares (across all relevant exchanges) exceeds US$2.5 million per trading day over the prior 30 trading days; or
There is a change of control.
Management have assessed the likelihood of the above events occurring is highly improbable and thus the value of the redemption right is immaterial and was thus not considered in the valuation of the instrument.
Sign In
Follow the stocks
