20 Jan 2014 07:00
20 January 2014
NOVA RESOURCES LIMITED
("Nova" or the "Company")
(A) Investment in Enerstry Group Limited
Nova (AIM: NOVA), the investment company focused on high growth opportunities in the energy, infrastructure, technology, natural resources and manufacturing sectors, primarily in Russia and Asia, today announces that it has agreed to make equity and loan investments in Enerstry Group Limited ("EG"), alongside a syndicate of other investors. EG is a company incorporated in England and Wales which owns 93.33% of the total issued share capital of Enerstry Co., Limited ("Enerstry Korea"), a company incorporated in the Republic of Korea. Enerstry Korea has granted EG warrants which, if exercised, will increase EG's shareholding in Enerstry Korea to approximately 99%. Prior to the above equity investments, EG's sole shareholder and director was Park Jae Hyun.
Nova's equity investment in EG is for a consideration of £806.48, which comprises 80,648,000 ordinary shares in the capital of EG, subscribed for at a price of 0.001p per ordinary share. Nova's holding of 80,648,000 ordinary shares in the capital of EG represents 23.72% of EG's enlarged ordinary share capital.
In addition, Nova has agreed to provide an unsecured loan of US$806,480 to EG, which will bear interest of 10 per cent per annum and will be repayable by 18th January 2015. Nova Board members, Christopher Morgan and Chan Fook Meng, will join the board of EG as non-executive directors.
Other investors have also agreed to subscribe for ordinary shares in EG and certain of these investors have agreed to provide loans to EG on the same terms as the loan made to EG by Nova. Following these equity and loan investments, EG will have a total of US$1,700,000 of new loan finance available to it, alongside a total of £3,570 of cash from new equity subscriptions.
The table below shows the shareholders of EG and the amounts that is loaned to EG, following the equity and loan investments:
Name | Shareholding in EG | Consideration for Equity Investment in EG | Amount Loaned to EG | % Shareholding of EG |
Nova | 80,648,000 | £806.48 | US$806,480 | 23.72% |
Cairo Investments Limited | 44,302,000 | £443.02 | US$443,020 | 13.03% |
Lee Hoon | 4,250,000 | £42.50 | US$42,500 | 1.25% |
Sea Rock Holdings Limited * | 20,400,000 | £204.00 | US$204,000 | 6% |
Consiliou Growth Fund SPC | 20,400,000 | £204.00 | US$204,000 | 6% |
EG's Management Team | 170,000,000 | £1,870.00 | None | 50% |
Total | 340,000,000 | £3,570.00 | US$1,700,000 | 100% |
* Sea Rock Holdings Limited is partly owned, but is controlled, by Chan Fook Meng, Executive Chairman and CEO of Nova.
Enerstry Korea was founded in January 2012. The business of Enerstry Korea is to build, own and manage renewable energy plants which generate electricity and/or heat energy for supply to users and utility groups for an economic return. Enerstry Korea has a management team which has the technical and management experience needed to establish and operate the projects that Enerstry Korea has targeted.
Pursuant to its strategy, Enerstry Korea has built a plant which uses wood pellets as fuel to create heat energy and steam for use at a site owned by Yonsei Milk, which is located approximately 80 km from central Seoul (the "Yonsei Plant"). The Yonsei Plant was completed, tested and commissioned at the end of November 2013 and is wholly owned and managed by Enerstry Korea.
Yonsei Milk has entered into a 10 year (the "Term") offtake agreement with Enerstry Korea, under which Yonsei Milk is to pay for the heat energy supplied by the Yonsei Plant at rates set at levels that reflect savings when compared to the use of Liquefied Natural Gas, which was the previous source of fuel for power generation at the Yonsei Plant.
At the end of the Term, an extension to the offtake agreement may be negotiated, failing which, the ownership of the Yonsei Plant will be transferred to Yonsei Milk for zero consideration. The Yonsei Plant started generating revenues in late November 2013 and based on certain assumptions, Enerstry Korea expects revenues of approximately US$1.2 million per annum from the Yonsei Plant.
Yonsei Milk is a substantial producer of milk in the Republic ofKorea, having a large production facility in the Seoul region. Yonsei Milk is the seventh largest milk company in the Republic of Korea and had revenues of approximately US$190 million in 2012.
Following the new equity investment in, and loans available to, EG, Enerstry Korea now has the financial capability to build, own and manage additional environmentally friendly renewable energy plants in Korea. Nova's Board of Directors (the "Board") believes that Enerstry Korea has reasonable prospects of growing rapidly.
(B) Exercise of the Investment Facility Agreements
Nova is pleased to announce that both Upside Management (Offshore) SAL ("Upside") and Consiliou Growth Fund SPC ("Consiliou") (together, the "Facility Investors") have approved Nova's equity and loan investments in EG. As such, the Company has required each of the Facility Investors to subscribe for 25,800,000 new ordinary shares of 1p each in the capital of the Company ("Ordinary Shares") at an issue price of 1p per new Ordinary Share, raising a total of £516,000 for the Company. Under the terms of the Investment Facility Agreements announced on 11 November 2013, upon the issuance of the 25,800,000 new Ordinary Shares to each of the Investors, Nova shall additionally issue 103,200,000 warrants (exercisable into new Ordinary Shares at an exercise price of 1p until 31 December 2018) to each of the Facility Investors.
(C) New funding
Nova announces that it has successfully secured further new investment into the Company of £30,000 0% unsecured convertible loan notes (the "New Notes"). The funds raised via the issuance of the New Notes will be put towards the working capital expenses of the Company as well as pursuing the Company's investing policy.
The New Notes have been subscribed for by Landham Group Limited ("Landham"), a British Virgin Island incorporated company. The principal terms of the New Notes are as follows:
• The New Notes will be repayable by 31 December 2018 and do not carry a coupon.
• Landham has the right, but not the obligation, at any time to convert part of, or the whole of, the principal amount outstanding under the New Notes into new Ordinary Shares at the conversion rate of 1p for each Ordinary Share.
• Landham will be issued with 1,500,000 warrants to subscribe for new Ordinary Shares (the "Landham Warrants"). The Landham Warrants can be exercised at any time up until 31 December 2018 and at the exercise price of 1p per Ordinary Share.
• The New Notes and the Landham Warrants are transferable with the consent of the Company (which consent shall not be unreasonably withheld).
The conversion rate of the New Notes and exercise price of the Landham Warrants represents a premium to the average closing mid-market price of Nova's Ordinary Shares in the last 30 market sessions.
Conversion of the New Notes in full would result in the issue of 3,000,000 Ordinary Shares and exercise of the Landham Warrants in full would result in the issue of 1,500,000 Ordinary Shares which, in aggregate, would represent approximately 2.38% of Nova's then enlarged total issued ordinary share capital (assuming that no other Ordinary Shares are issued and none of the other warrants already issued by the Company are converted).
(D) Issuance of warrants to service providers
Nova has granted the following warrants to the following parties:
(a) 1,500,000 warrants to Blythe Weigh Communications Ltd, Nova's financial public relations agent, pursuant to an agreement in which services to be rendered are to be paid partially by cash and the said warrants;
(b) 5,000,000 warrants to Reed Works Limited for services rendered and various consultations in relation to the investment in EG.
The above warrants are exercisable into new Ordinary Shares at an exercise price of 1p, until 31 December 2018. The exercise price of 1p represents a premium to the average closing mid-market price of Nova's Ordinary Shares in the last 30 market sessions.
(E) Conversion of Existing Convertible Notes and Warrants into Ordinary Shares
Nova announced on 28 August 2013 that it had issued certain convertible notes, which are convertible into new Ordinary shares at a conversion rate of 1p for each Ordinary Share. Some of these loan notes have already been converted, leaving a balance of £170,000 still unconverted. The Company has received notices to convert certain loan notes, totalling £38,250, which are as follows:
Name | Amount Converted | New Ordinary Shares To Be Issued |
Lim Li Huay Melissa | £5,000 | 500,000 |
Upside Management (Offshore) SAL | £33,250 | 3,325,000 |
Total | £38,250 | 3,825,000 |
Application will be made to the London Stock Exchange for the 55,425,000 Ordinary Shares to be issued and allotted pursuant to paragraphs (B) and (E) to be admitted to trading on AIM and it is expected that admission will be effective and trading will commence at 8:00 am on 24 January 2014.
(F) Parties with discloseable interests
The parties with discloseable interests are:
(a) Chan Fook Meng's total indirect beneficial interest, through Shine Link Limited, remains as 55,000,000 Ordinary Shares in Nova, representing 29.80% of Nova's total enlarged issued ordinary share capital. Chan Fook Meng has an interest in warrants and options to acquire a further 84,500,000 Ordinary Shares in Nova. If the said warrants and options are exercised, and no other warrants nor options are exercised, Mr Chan would then have an interest in a total of 139,500,000 Ordinary Shares, representing 51.85% of Nova's then enlarged total issued ordinary share capital.
(b) Having issued and allotted a total of 29,125,000 Ordinary Shares to Upside Management (Offshore) SAL pursuant to paragraphs (B) and (E) herein, Mazen Houssami has a total direct and indirect beneficial interest in 34,125,000 Ordinary Shares, representing 18.49% of Nova's total enlarged issued ordinary share capital, and following this acquisition of warrants by him through Upside Management (Offshore) SAL, he has an interest in warrants and options to acquire a further 103,250,000 Ordinary Shares in Nova. If the said warrants and options are exercised, and no other warrants nor options are exercised, Mr Houssami would then have an interest in a total of 137,375,000 Ordinary Shares in Nova, representing 47.73% of Nova's then enlarged total issued ordinary share capital.
(c) Having issued and allotted a total of 25,800,000 Ordinary Shares to Consiliou pursuant to paragraphs (B) herein, Consiliou has beneficial interest in 25,800,000 Ordinary Shares, representing 13.98% of Nova's total enlarged issued ordinary share capital. Following the said allotment, Consiliou has an interest in warrants to acquire a further 103,200,000 Ordinary Shares in Nova; in addition, it has a convertible note that may be converted into 11,375,000 Ordinary Shares. If the said warrants are exercised, and no other warrants nor options are exercised, Consiliou would then have an interest in a total of 129,000,000 Ordinary Shares in Nova, representing 44.83% of Nova's then enlarged total issued ordinary share capital.
(G) Cancellation of options
Further to the announcement dated 17 May 2012, regarding the resignation of Mr Charles Green, the 1,000,000 share options which had been issued to him have now been cancelled.
(H) Total Voting Rights
Following the issue of Ordinary Shares and warrants as detailed above, the Company's issued share capital at the date of this announcement consists of 184,540,287 Ordinary Shares and 425,400,000 warrants and options exercisable into Ordinary Shares. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights is 184,540,287.
The above figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the Financial Conduct Authority's Disclosure and Transparency Rules.
(I) Further Investments
Nova's Board will continue to seek other investments which it believes present strong potential for long-term, sustainable growth. Nova will announce such investments as and when appropriate.
Enquiries:
Nova Resources Limited +65 6236 2985
Chan Fook Meng, Chairman and CEO
Daniel Stewart & Co (Nominated Advisor & Broker) +44 20 7776 6550
David Hart / Alex Brearley
Blythe Weigh Communications +44 20 7138 3204
Paul Weigh / Halimah Hussain