Woodbois Regulatory News (WBI)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

19 June 2020

Woodbois Limited

("the Group" or "the Company")

AIM "WBI"

Conditional Debt and Balance Sheet Restructuring

Updated Strategy

Gabon Sawmill Operations Recommence

The Company is pleased to provide the following update regarding operations, strategy and its proposed balance sheet restructuring.

Proposed Debt and Balance Sheet Restructuring

Discussions with the majority holder of the Company's 2024 convertible bonds ("Convertible") have continued, and the Company is pleased to have now reached an agreement in principle with the major bondholder such that not less than 75% of the $30 million notional outstanding of the Convertible will be exchanged into voting and non-voting equity and with the balance restructured into a zero coupon convertible bond. Such agreement in principle will be conditional upon the Company raising additional equity and finalisation of the definitive legal documentation to enable it to continue to build on the substantial investments made over the last couple of years and is intended to hasten sustained positive operating cash flow.

The Company has initiated discussions with the majority holders of its internal trade finance facility ("ITF"). Lombard Odier, which is both a substantial shareholder and holder of approximately $5.5m of the ITF, has indicated its ongoing commitment to the business by agreeing, subject to final terms to be a cornerstone investor in the planned equity fundraise, which itself will be of sufficient quantum to right size the balance sheet and unlock material growth. The discussion with other holders of the ITF are continuing and the Company is intending to have completely retired the ITF as part of the planned restructuring and fundraise.

Further announcement regarding the restructuring and potential equity fundraising will be made in due course.

Updated Strategy

At this stage the Company expects to prioritise additional capex of c$3-5 million to increase the capacity at its existing operations in Gabon and in particular increase its veneer production, which is intended to increase current gross production capacity by approximately a further 50% whilst materially improving its gross margin from 24% achieved in 2019. The Company also intends to materially expand its trading operations where it believes it can become a leading operator through its extensive network and deployment of proprietary trading technology. Since May the Group's operations in Mozambique recommenced and are operated under an agreement whereby profits are shared 50:50 with it having no cash funding obligation. To date operations have progressed as expected and the Directors are pleased with the development plans.

The Directors believe that sustainable forestry and the production of sawn timber and veneer is a market with strong structural support, underpinned by population growth in our target markets. Capturing a fraction of the African Export Market which is estimated to be worth over $4billion pa is expected by the Directors to enable Woodbois to deliver on its ambitious growth targets. 

The current crisis has exaggerated the scarcity of capital available to support the production cycle, and Woodbois believes it would be ideally placed to increase not only its own sustainable production but to source and secure dedicated third party supply throughout West Africa without the operational constraints to growth that proprietary production can face when scaling up.

The Directors believe that timber is the perhaps last natural resource largely unrepresented on global exchanges or capital markets. The Directors believe that Woodbois' restructured balance sheet will provide a fundamental step towards a leading position within a sector suitable for consolidation and disruption through the introduction of innovative sales and trading technology for sustainably sourced and traceable timber which the Company is developing.

In recent weeks management has met a broad range of investors with a view to raising awareness of Woodbois, the sustainable nature of its operations and the opportunity to deliver very significant growth with the appropriate balance sheet and access to capital to develop its production and trading businesses. Whilst the Company's plans and the ultimate shape of the restructuring are not yet finalised and as such there is no certainty that the restructuring and an injection of further equity will proceed, the Directors are optimistic that potential and existing stakeholders share a vision of the relevance of a well-funded, sustainable timber business listed on the London Stock Exchange. The Directors believe that with ESG (Environmental, Social and Governance) considerations throughout the natural resources sector increasingly becoming front and centre of investors' asset allocation thought process, the sustainability-driven Woodbois business model should expect to receive recognition from a broad and growing set of stakeholders.

Gabon Sawmill Operations Recommence

Further to the announcement on 11th June 2020 where it was announced that timber harvesting had restarted, the Company is pleased to confirm that sawmill operations have recommenced in Gabon. Throughout the current pandemic, the welfare of our staff has been a key priority: the Company is one of the largest employers in the town of Mouila in Gabon, and the ability to restart operations provides a vital lifeline for many of the Company's loyal staff and the community. With exports continuing through the port in Libreville, the Company looks forward to increasing the number of workers permitted on site as government covid-19 guidelines further evolve.

Enquiries:

Woodbois Limited

Paul Dolan - Chairman and CEO

www.woodbois.com

+44 (0)20 7099 1940

Canaccord Genuity (Nominated Adviser and Broker)

Henry Fitzgerald-O'Connor

James Asensio

Thomas Diehl

+44 (0)20 7523 8000