Adm Energy Regulatory News (ADME)

10 Apr 2007 15:57

Pan Pacific Aggregates PLC10 April 2007 Pan Pacific Aggregates Plc Issue of Secured Convertible Loan Notes The Board of Pan Pacific Aggregates plc (AIM: PPA) ("PPA" or the "Company") ispleased to announce that it has agreed the terms (conditional upon shareholderapproval) of: • the issue of £4,250,000 Secured Convertible Loan Notes (the "New LoanNotes") pursuant to a Loan Note Investment Agreement entered into between theCompany and RAB Special Situations (Master) Fund Limited ("RAB"), a fund managedby RAB Capital plc; • a variation of the terms of the existing convertible loan notes("Existing Loan Notes") with a principal amount of £2,000,000 which weresubscribed by RAB in July 2006; and • a proposed grant of warrants over ordinary shares of £0.001 each("Ordinary Shares") in the capital of the Company pursuant to a warrantinstrument to be issued by the Company (the "Warrants"). RAB will subscribe £4,000,000 for the New Loan Notes and the remaining principalamount of £250,000 of the New Loan Notes will be issued in satisfaction of allinterest accrued under the Existing Loan Notes. The terms of the Existing LoanNotes will be varied so as to be the same as those of the New Loan Notes(meaning that the Existing Loan Notes will become secured Loan Notes also).Interest on the New Loan Notes and the Existing Loan Notes (together the "LoanNotes") will be payable at a rate of 2% per month (such amount to be grossed upto take account of any withholding). Interest accrues from the date of issue ofthe New Loan Notes (and the date that the Existing Loan Notes are varied) and iscapitalised monthly. The Loan Notes will be transferable. The Loan Notes will be repayable at par at the option of the holder on or at anytime following 31 January 2008, or in the event that federal approval isrequired in respect of the application for certain environmental certificationpermissions, 30 April 2008. Upon the first redemption of any of the Loan Notesthe Company will pay a redemption premium of £260,000. The Company'sobligations under the Existing Loan Notes and the New Loan Notes will be securedby a debenture over the assets of the Company and separate debentures over theassets of the Company's wholly owned Canadian subsidiaries. The Loan Notes will be convertible into Ordinary Shares at a conversion pricewhich is the lesser of (a) 33 pence per Ordinary Share; and (b) a price whichreflects a discount of 10% to the average of the volume weighted average dailyprice at which the Company's Ordinary Shares are traded over the 60 consecutivetrading days immediately prior to the business day on which a conversion noticeis lodged, subject to adjustment in certain circumstances. Under the terms of the instrument constituting the Warrants, RAB shall begranted Warrants upon the conversion of Loan Notes at the rate of one Warrant tosubscribe for one Ordinary Share for every two Ordinary Shares issued on suchconversion. The Warrant exercise price shall be the same as the conversionprice for the Loan Notes whose conversion resulted in the grant of such Warrant. The Warrants will be transferable. PPA was established to consolidate the mineral claims over land situated on theSechelt Peninsula, British Columbia, Canada (the "Sechelt Claims") and todevelop these claims in order to produce industrial minerals and constructionaggregates with the aim of serving local and global markets. An aggregate amount of £4,000,000 will be subscribed for the New Loan Notes inthree tranches, subject to satisfaction of certain conditions. The amountssubscribed will be used, inter alia, for: • obtaining environmental permitting; • drilling and mine definition of the Company's Sechelt Claims; and • general working capital. The subscription by RAB is considered by the Board to be critical to the futureof the Company, not just in the long term but also to fund short term workingcapital requirements. Without such funds, it is unlikely that the Company wouldhave sufficient working capital over the coming months unless alternativefinancing arrangements were available to the Company. However, the Board doesnot believe that such alternative arrangements could be made in the timeavailable. This subscription by RAB therefore represents, in the view of theBoard, the most efficient and certain route to raising short term workingcapital as well as providing finance to meet the Company's longer termobjectives. It is considered that the issue and grant of the Loan Notes and Warrants is arelated party transaction for the purposes of rule 13 of the AIM Rules, as RABholds 13,525,000 Ordinary Shares (approximately 21.09% of the issued sharecapital of the Company) and holds warrants to subscribe up to an additional6,800,000 Ordinary Shares. Under the terms of the Loan Notes and the Warrants,RAB could subscribe Ordinary Shares representing more than 5% of the issuedshare capital of the Company. The Directors of the Company consider, havingconsulted with the Company's Nominated Adviser, Insinger de Beaufort, that theproposed terms of issue of the New Loan Notes, the variation of the ExistingLoan Notes and the issue of the Warrants are fair and reasonable in so far asthe Company's shareholders are concerned and given the Company's short andmedium term working capital requirements. In reaching its opinion Insinger deBeaufort has had regard to the financial position of the Company and has reliedon the Directors' commercial assessment. An Extraordinary General Meeting ("EGM") of the Company has been convened for 3May 2007 at which shareholders can vote on these proposals as set out in thenotice of EGM dated 10 April 2007. Enquiries : William Voaden, Chief Executive Officer 020 7628 3989Peter Ward, Corporate Finance Adviser, Insinger de Beaufort 020 7190 7000Don Nicholson, Chairman +1 604 835 8413 - ends - This information is provided by RNS The company news service from the London Stock Exchange