R.e.a.hldgs. Regulatory News (RE.)

31 Jan 2006 08:43

R.E.A.Hldgs PLC31 January 2006 R.E.A. Holdings plc ("REA")Proposed equity issues As previously announced, on 23 January 2006, REA and certain of its subsidiariesand directors entered into an agreement (the "settlement agreement") with Mr M EZukerman and connected parties for the settlement of the outstanding actual andthreatened litigation claims between them and for the acquisition by REA of allof the issued shares of its subsidiary, Makassar Investments Limited, notalready owned by it. REA has concluded that it should seek additional equity capital. To this end,two transactions are in contemplation: first, a limited placing of new ordinaryshares and, second, an open offer of new ordinary shares combined with a furtherplacing of such shares. Pursuant to the first of these transactions, it is proposed to place with alimited number of institutional investors, subject to certain conditions, up to1,372,000 new ordinary shares (the "first transaction shares") at a placingprice of 260p per share so as to raise some £3.6 million (before expenses). Theplacing of the first transaction shares would be conditional upon completion ofthe settlement agreement and upon admission of the first transaction shares tothe Official List of the Financial Services Authority and to trading on theLondon Stock Exchange's market for listed securities. The first transactionshares would be allotted under authorities granted to the directors of REA byresolution of REA shareholders passed at the annual general meeting of REA heldon 15 June 2005. The first transaction shares would rank pari passu with, andform a single issue with, the ordinary shares of REA that are already in issue. The principal purpose of this first transaction would be to raise a sterlingamount approximately equivalent to $6 million so as to replace the group cashresources expended in funding the $6 million cash payment to be made by asubsidiary of REA pursuant to the settlement agreement. Pursuant to the second of the transactions referred to above, it is proposedthat between 2.1 million and 2.6 million further new ordinary shares (the"second transaction shares") should be issued for cash at a price of 260p pershare so as to raise between £5.5 million and £6.8 million before expenses. Itis envisaged that the issue of the second transaction shares would be effectedby an open offer of new ordinary shares to holders of existing ordinary sharesand warrants combined with a further placing of new ordinary shares withinstitutional investors. A proportion of the second transaction shares comprisedin the placing component of the issue would be subject to clawback ifapplications for second transaction shares pursuant to the open offer exceeded acertain minimum level to be agreed. The second transaction shares would, if andwhen issued, rank pari passu with, and form a single issue with, the ordinaryshares of REA that are then in issue. The issue of the second transaction shares would be conditional upon completionof the settlement agreement, obtaining necessary ordinary shareholder approvalsand admission of the second transaction shares to the Official List of theFinancial Services Authority and to trading on the London Stock Exchange'smarket for listed securities. It would be intended that the net proceeds of the issue of the secondtransaction shares be applied in financing the continuing development of thegroup's oil palm operations which, if other circumstances (including operationallogistics and the level of future CPO prices) permit, may to some extent beaccelerated. The issue of the first and second transaction shares would alsoincrease REA's equity base and thus counterbalance the increased debt burdenthat will result from the issue of a further $19 million nominal of 7.5 per centdollar notes 2012/14 of REA pursuant to the settlement agreement. The proposed issues of both the first transaction shares and the secondtransaction shares are dependent upon procurement of placees willing tosubscribe all of the first transaction shares and a substantial proportion ofthe second transaction shares. Discussions with institutional investors arrangedthrough Mirabaud Securities Limited have resulted in indications of interest atthe required levels but no binding commitments have as yet been signed.Implementation of the proposed issue of the second transaction shares willrequire preparation and despatch of the necessary formal documentation includingthe issue of a prospectus incorporating a circular to shareholders. This information is provided by RNS The company news service from the London Stock Exchange