Woodbois Regulatory News (WBI)

28 June 2023

Woodbois Limited

("Woodbois" or the "Company") 

Subscription, Debt Refinancing & Issue of Warrants

Woodbois, the Africa-focused forestry, timber trading and afforestation company is pleased to announce that it has raised £6 million by way of a subscription for new ordinary shares at a price of 0.5 pence (the "Subscription"). This satisfies the cash shortfall created when the $6m working capital facility was withdrawn by Sydbank in April 2023, allowing the Company the flexibility to discharge its remaining obligations to Sydbank in full, and to benefit from the incentives for early repayment.

The Subscription forms part of a wider financing package, including a debt-for-equity swap of £1.75m and including the issuance of warrants, described in more detail below. This financing package transforms the Company's balance sheet and allows the Company to re-commence its operations in full and return to its growth path.

The Company expects to have reduced its total debt from c.$15m as at 31 December 2022 to around $5m by 30 June 2023.

Introduced by Mr Miles Pelham, a former Chair of the Company, the Subscription is with two Monaco-based British investors, whom the Directors believe will be highly beneficial to the Company's future trajectory. With significant expertise in both the financial and timber sectors, these new investors can help the Company overcome some of the bottlenecks that have historically hindered its growth.

Hugh Wade-Jones has subscribed through his investment vehicle CHCH Ventures, which will own 21.7% of the voting shares of Woodbois following Admission (as defined below). He is the Founder of Enness Global, a leading debt-advisory business, and is also founder of Guernsey based private debt specialist Tenn Capital, a JV Partnership with US Hedge Fund Elliott Management, which offers specialised debt solutions for complex transactions.

John Scott has also subscribed and will own 10.85% of the voting shares following Admission. John has built the Scott Group over the last 32 years into one of Scotland's most successful and sustainable businesses with a turnover in excess of $350m per annum and employing over 1,300 people. He has a wide range of business interests and has won numerous awards.

Miles Pelham, who was Woodbois Chair between 2016-2019 and a major shareholder through his wholly owned company Rhino Ventures Limited ("RVL") will become a Strategic Adviser to the Company for a six-month term. He will assist in undertaking a comprehensive review of all business lines intended to maximise shareholder value.

Directorate Change

After seven years, Paul Dolan, CEO, will be standing down from this position once a suitable replacement has been found. It is intended that he will become a non-independent non-executive director and will also be responsible for the initial phase of the afforestation project in Gabon within the Company's carbon division.

Chair, Graeme Thomson said,

"Following the unexpected termination of our working capital facility in April, we are delighted to emerge from this challenging period with a vastly improved balance sheet. Our two new substantial shareholders both bring a welcome combination of high-level timber industry experience and access to a diversified pool of capital for our trading and carbon businesses. The energy and entrepreneurship offered by Miles Pelham is also warmly welcomed.

"The Board wishes to place on record its thanks to Paul Dolan for his unstinting efforts in transforming the Group's activities and are pleased he will remain an integral member of the senior team. I must also acknowledge and thank our resilient staff and dedicated board of directors, all of whom have worked relentlessly and often under high levels of pressure to achieve this welcome outcome. I also thank our creditors and loyal customers and shareholders for their understanding and continued support throughout this unfortunate process.

"We now stand refreshed and ready to deliver on our business objectives with a strong balance sheet in place, with the benefits of our recent capex to come, strong new partners and an enviable position in the buoyant carbon space. I am conscious that the recent months have been tough but I am confident in our path and am intent on making sure the comprehensive review of our business helps deliver meaningful results in both the short and long term."

The Financing Package

Following the announcements on 19 April 2023 and 6 June 2023 regarding the termination of the loan facility with Sydbank A/S ("Sydbank") and agreement having been reached to repay it no later than 29 December 2023, the Company has held numerous discussions with third parties in order to obtain alternative financing on best available terms.

Having reviewed and considered the available options, the Company is pleased to have agreed the following financing package;

· Subscription for £6 million

A Subscription for 1,200,000,000 new ordinary shares of 0.01 pence each in the Company ("Ordinary Shares") (the "Subscription Shares"), raising £6 million, at an issue price of 0.5 pence per Ordinary Share.

800,000,000 Subscription Shares are being subscribed for by CHCH Ventures FZ-LLP and 400,000,000 Subscription Shares are being purchased by John Scott (together the "Subscribers").

Admission of the Subscription Shares to trading on AIM is expected to occur on Thursday 29 June 2023 and receipt of funds by the Company no later than Friday 30 June 2023.

· Conversion of existing debt to a convertible loan

Woodbois has a loan outstanding with RVL, with the balance outstanding of $2.255 million (inclusive of all accrued interest). Under the terms of a Deed of Capitalisation, and conditional on admission of the Subscription Shares, this loan will be capitalised, at the price of 0.5 pence per share, into 350,000,000 Non-Voting Ordinary Shares (the "Non-Voting Conversion Shares") and a redemption payment will be made of £25,590.

The conversion of this loan to Non-Voting Ordinary Shares has the effect of significantly reducing the Company's outstanding financial liabilities.

The Company has also entered into a Commission Agreement with RVL, in respect of Miles Pelham's assistance in procuring the Subscription, under which RVL can elect to receive 60,000,000 new Voting Ordinary Shares (the "Commission Shares") and, subject to the passing of resolutions at a Company General Meeting to grant Directors further authority to allot new shares on a non pre-emptive basis (the "Commission Fee"). The Commission Fee equates to a 5% commission on the funds raised through the Subscription. Should the resolutions allowing the Commissions Shares to be issued not be approved then the Commission Fee will be settled in cash.

· Issuance of Warrants

The Company will issue 1,200,000,000 share warrants to the Subscribers on a 1 for 1 basis, in respect of the Subscription Shares. Each Warrant gives the holder the right to subscribe for one new Voting Ordinary Share at a price of 1 pence per Voting Ordinary Share, at any time until 29 June 2025 (the "Warrants").

Under the terms of the Deed of Capitalisation and conditional on the passing of certain resolutions at a Company General Meetings as described above, RVL will also be issued with 350,000,000 Warrants on a 1 for 1 basis, in respect of the 350,000,000 Non Voting Conversion Shares. These Warrants are over Non-Voting Ordinary Shares in Woodbois.

Subject to the passing of those same resolutions, RVL can also elect under the Commission Agreement to receive 60,000,000 Warrants over Voting Ordinary Shares in Woodbois.

(altogether, the "Financing Package")

Use of Funds

The Financing Package will enable the Group to satisfy its other short-term debt obligations, including settling with Sydbank, to ramp back up to full operational scale and to commence its pilot on the afforestation project. The Directors believe it provides the Company with sufficient working capital for at least the next 12 months.

Related Party Transaction

As RVL has been a substantial shareholder in the Company, as defined by the AIM Rules for Companies, in the last 12 months, it is considered a related party of the Company. The arrangement with RVL, being the entering into of the Deed of Capitalisation and the Commission Agreement (together the "RV Agreements"), is therefore considered a related party transaction under the AIM Rules for Companies.

The Directors, having consulted with Canaccord Genuity Limited, the Company's Nominated Adviser, consider the terms of the RV Agreements to be fair and reasonable insofar as the Company's shareholders are concerned.

Total Voting Rights

Application has been made to the London Stock Exchange for the 1,200,000,000 Subscription Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will become effective on or before 8.00 a.m. on 29 June 2023.

Following Admission, the Company's total number of Ordinary Shares in issue will become 4,289,988,873, which will consist of 3,685,850,726 Voting Ordinary Shares, 19,138,147 Treasury Shares and 585,000,000 Non-Voting Ordinary Shares. The aforementioned figure of 3,685,850,726 Voting Ordinary Shares 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 Company under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

Enquiries

Market Abuse Regulation

The information contained within this announcement would have, prior to its release, constituted inside information as stipulated under Article 7 of the Market Abuse Regulation (EU) No.596/2014 as incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019 ("UK MAR"). Upon the publication of this announcement via a regulatory information service, this inside information will be considered to be in the public domain. For the purposes of UK MAR, the person responsible for arranging for the release of this information on behalf of the Company is Carnel Geddes.