Woodbois Regulatory News (WBI)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.

7 March 2019

Obtala Limited

("Obtala", the "Group" or the "Company")

(AIM: OBT)

Equity Raise 

Obtala Limited (AIM: OBT), the African focused forestry and timber trading company, is pleased to announce that it has raised £2 million (~US$2.5m), with no expenses, by entering into a subscription agreement with existing institutional investor Lombard Odier Asset Management group ("Lombard Odier").

The Company is today on a much stronger footing than at any time in its history, with a clear strategy and understanding of its operations and the market in which it operates. The opportunity now exists to invest in business lines in which we can excel, and in markets in which we have deep understanding, thereby materially improving operational and financial results.

As such the proceeds are earmarked for immediate capex to drive margin improvement from existing facilities in Gabon including:

· upgrading 2 heavy-duty vertical bandsaws in the sawmill;

· moving up the value chain by installing a plywood manufacturing line within the veneer factory;

together with investment in the trading business and providing headroom for incremental investment as the business continues to scale.

Obtala's CEO Paul Dolan commented, "Analysis of our recovery and production data for 2018 combined with comprehensive research into the most up to date equipment on the market suggest that the investment in two new bandsaws will improve recovery rates by up to 20%, with an expected corresponding impact on gross profit margins. We expect the delivery and installation of the two new bandsaws to take place within Q3 2019.

The introduction of a plywood line within our new veneer factory will also serve to enhance margins, since composite veneer sheets can be created and incorporated within plywood boards from material that is currently sold at a discount to standard sized veneer sheets. Serving the fast-growing market for construction plywood in Africa is a natural extension to our business.

Having rationalised and focused the Company's operations on the production and trading of sustainable African hardwood products, the Board's foremost priority is now to combine our rapid pace of revenue growth with production efficiencies and enhanced marginal returns. This funding round will enable your company to achieve these objectives while confirming Lombard Odier as the Company's largest shareholder. Importantly, this new investment provides strong support for the Board's ambition to develop a market leadership position for your company in the production and distribution of sustainable African hardwood products."

Details of the Subscription

Pursuant to the Subscription, Obtala will issue 32,000,000 ordinary shares of £0.01 each in the Company ("Ordinary Shares") to Lombard Odier at an issue price of 6.25 pence per Ordinary Share (the "Subscription Shares"). The subscription price represents a discount of 3.8% to Obtala's closing share price on 6th March 2019. 

Application will be made for the Subscription Shares, which will rank pari passu with the Company's existing Ordinary Shares, to be admitted to trading on AIM ("Admission"). Admission is currently expected to occur at 8.00 a.m. on or around 12th March 2019.

Following Admission, Lombard Odier will hold 86,400,000 Ordinary Shares in Obtala, representing 19.23% of the Group's enlarged issued share capital with voting rights.

The subscription constitutes a related party transaction in accordance with AIM Rule 13. The Group's Directors, having consulted with the Company's nominated adviser, consider the terms of the subscription to be fair and reasonable insofar as the shareholders are concerned.

Total Voting Rights

Following Admission of the Subscription Shares, the Company will have a total of 449,451,931 Ordinary Shares in issue with voting rights. The Company currently holds 99,378 Ordinary Shares in Treasury and the figure of 449,352,553 Ordinary Shares may therefore be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.