African Battery (LON:ABM) Conditional Refinancing & Business update

REFINANCING, BUSINESS STRATEGIC UPDATE AND UPDATE ON RESUMPTION OF TRADING

African Battery Metals plc (LON:ABM) the AIM listed African focused exploration company developing projects in strategic battery metals today announces a refinancing and business strategic update.

HIGHLIGHTS:

  • Conditional placing and subscription (the “Refinancing”) raising £1,000,000 at a price of 0.5 pence per new ordinary share, resulting in the issue of 200,000,000 new ordinary shares of 0.1 pence each, (the “Refinancing Shares”);
  • The Refinancing of the Company is subject to the passing of all resolutions at a General Meeting to be held by the Company, (the “General Meeting”) (further details of which are set out below), the resumption to trading in the Company securities on AIM and the admission of to trading on AIM of the Refinancing Shares, Creditor Shares, Fee Shares and Director Shares (“Admission”);
  • Each Refinancing Share has an attaching warrant to subscribe for a new ordinary share of 0.1 pence each in the Company, (“New Ordinary Shares”), at a price of 1 pence per share with a two-year life to expiry (the “Refinancing Warrants”) from the date of Admission;
  • The refinancing exercise will allow payment of all material Company creditors through a mixture of cash and/or shares and enable the Company to be essentially debt free with a robust cash position sufficient for at least 12 months of operation when considering current business costs and operational plans;
  • Subject to the passing of resolutions at the General Meeting and the conditions detailed below, Roger Murphy, CEO and Matt Wood, Executive Director to step down from the board with Andrew Bell to be appointed Executive Chairman and Paul Johnson as Executive Director;
  • Andrew Bell and Paul Johnson (or their connected parties) have committed to subscribe for £50,000 each in the Refinancing on the terms as outlined above. Additionally, Red Rock Resources, a company of which Andrew Bell is a director, has committed to subscribe for £100,000 in the Refinancing; and
  • A full strategic and operational review will be undertaken to ensure corporate costs are minimised, to target forward exploration resources in a prioritised manner and to consider potential new opportunities to complement and diversify the Company’s interests.

Roger Murphy, Chief Executive Officer of African Battery Metals commented:

“Following the Company’s announcement on 11 December 2018, I am pleased to report the board have been able to negotiate and conclude a business restructuring and refinancing package that enables the Company, subject to shareholder approval at General Meeting, to return to trading on the market.

I would like to thank all the parties involved including my fellow board members and our advisers, for their support during what has been an intensive six weeks of work and discussions to reach this point today.

Of paramount importance is that the Company has now been financially stabilised and that it utilises this fresh start to grow and return value to our shareholders. In this regard I thank shareholders for their support and trust that the business can now flourish and become a strong natural resource exploration and development company. I wish the new management team the very best in this endeavour.”

DETAILED TRANSACTION INFORMATION

Refinancing Exercise:

  • Conditional Placing and subscription raising £1,000,000 at a price of 0.5 pence per New Ordinary Share, resulting in the issue of 200,000,000 new ordinary shares of 0.1 pence each, subject to the passing of all resolutions at a General Meeting to be held by the Company, the resumption of trading in the Company securities on AIM and the admission to trading on AIM of the Refinancing Shares, Creditor Shares, Fee Shares and Director Shares (“Admission”)
  • Each Refinancing Share has an attaching warrant to subscribe for one New Ordinary Share at a price of 1 pence per share with a two-year life to expiry from the date of admission resulting in the issue of 200,000,000 1 pence warrants;
  • Proposed new directors Andrew Bell and Paul Johnson to each subscribe for 10,000,000 New Ordinary Shares in the Refinancing representing a financial commitment of £50,000 per proposed director; and
  • Red Rock Resources plc (“Red Rock Resources”), a company of which Andrew Bell is a director and a significant shareholder as defined by the AIM Rules for Companies, has committed to subscribe for 20,000,000 new ordinary shares in the Refinancing, representing a commitment of £100,000.

Business Creditor Settlement:

  • Following Admission outstanding amounts owed to creditors will be settled and the Company will have no material debts remaining;
  • This will be partly accomplished by a cash payment to certain creditors representing 70% of their outstanding balances;
  • In addition, certain creditors have elected to receive New Ordinary Shares, (the “Creditor Shares”) in lieu of outstanding balances (rather than the cash payment referred to above) as a result of this 13,402,938 New Ordinary Shares at 0.5 pence per share will be issued to settled approximately £67,014 of credit balances. Creditor Shares issued are subject to lock-in agreement for a period of six months from Admission. Additionally, Mr Brian Moritz, a former non-executive director of the Company has been granted 6,000,000 warrants to subscribe for New Ordinary Shares at the warrant price of 0.5 pence with a life to expiry of two years from Admission in settlement of the amount due to him from the Company (the “Creditor Warrants”);
  • In addition to the above, directors Roger Murphy, Matt Wood and Iain Macpherson, have agreed to settle all outstanding amounts due from the Company, (net of tax) through the issue of new ordinary shares at 0.5 pence per share (“Director Shares”). The Director Shares will be subject to a lock-in agreement for a six month period. Further detail on the issue of Director Shares can be found below:
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In addition to the Director Shares, certain of the Creditor Shares are being issued to related parties of the Directors, such that 2,000,000 New Ordinary Shares are being issued to ONE Advisory Ltd, a company connected to Matt Wood, in lieu of fees due, and 8,605,738 new ordinary shares are being issued to Ongeza Mining, a company connected to Iain Macpherson.

The proposed issue of the Director Shares and the issue of Creditor Shares to One Advisory Ltd and Ongeza Mining as described above is a related party transaction for the purposes of AIM Rule 13 by virtue of the Director Shares being issued to Roger Murphy, Iain Macpherson and Matt Wood and their related parties. Scott Richardson Brown, the independent Director for the purposes of the issue of the Director Shares and the issue of Creditor Shares to One Advisory Ltd and Ongeza Mining considers, having consulted with the Company’s nominated adviser, SP Angel, that the issue of the Director Shares to such related parties is fair and reasonable insofar as the Shareholders are concerned.

General Meeting:

  • The Company proposes to hold the General Meeting in February 2019 to secure shareholder approval for the issue of equity and warrants in the refinancing and to authorise the board to issue further new Ordinary Shares on a non-pre-emptive basis to support future activities of the Company;
  • Irrevocable undertakings to vote in favour of the General Meeting resolutions have been secured from existing shareholders holding 64,925,666 ordinary shares of the Company, representing 47.54% of the Company’s issued ordinary shares;
  • A further announcement will be made by the Company confirming dispatch of the circular and notice of General Meeting.

Business Restructuring:

  • Subject to the passing of resolutions at the General Meeting, Roger Murphy, CEO of ABM will step down at the conclusion of the General Meeting and Matt Wood, Executive Director, will step down immediately following the publication of the Audited Financial Accounts of the Company for the year ended 30 September 2018;
  • Roger Murphy is to provide consultancy services to the Company following his resignation to support with the transition following the General Meeting;
  • One Advisory Limited, (“One Advisory”) a company of which Matt Wood is a director and shareholder, will continue to provide administrative support in respect of accounting, general legal and company secretarial support;
  • In addition, subject to passing of resolutions at the General Meeting, Andrew Bell and Paul Johnson will be appointed as directors in the roles of Executive Chairman and Executive Director respectively, with effect from the conclusion of the General Meeting;
  • It is proposed that Red Rock Resources, a Company of which Andrew Bell is significant shareholder and acts as CEO & Chairman, and Value Generation Limited, a Company beneficially owned by Paul Johnson will be awarded 5,000,000 New Ordinary Shares at 0.5 pence per share each as payment for restructuring fees (“Fee Shares”), representing a total of £50,000 costs settled by this share issue. The Fee Shares issued are subject to a lock-in agreement for a period of six months from Admission;
  • Andrew Bell and Paul Johnson to be granted 13,613,929 management options each, (the “Management Options”) at a strike price of 1 pence, vesting immediately on conclusion of the General Meeting and with a life to expiry of 3 years. These options will only be exercisable once the volume weighted average share price of the Company is 1.5 pence or greater for five consecutive trading days, after which they may be exercised at any time.

The proposed issue of the Management Options as described above is a related party transaction for the purposes of AIM Rule 13 by virtue of the Management Options being awarded to Andrew Bell and Paul Johnson. Scott Richardson Brown and Iain MacPherson, being the independent Directors for the purposes of the award of the Management Options considers, having consulted with the Company’s nominated adviser, SP Angel, that the issue of the Director Shares to such related parties is fair and reasonable insofar as the Shareholders are concerned.

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Business Strategic and Operational Review:

  • A programme of core cost review has been undertaken and the corporate plc costs of the business have been reduced to minimal levels;
  • All board incentivisation will be: reflective of the cash position of the Company; performance based and will be published on the Company’s website for full transparency;
  • The Company is to undertake a full strategic and operational review to:

– Review existing Company interests and target exploration resources in a prioritised manner;

– To develop a Strategic and Operational Plan for the Company, which will be published by market announcement for the benefit of all shareholders; and

– To identify, review and if appropriate acquire new opportunities to complement and diversify existing business interests. This may include the potential acquisition of interests within Africa, or new territories. In addition, this may include Battery Metals interests or interests in other commodity categories.

Appointment of Joint Broker:

  • SI Capital Limited to be appointed as joint broker to the Company with effect from conclusion of the General Meeting, subject to passing of all resolutions and the resumption of trading in the Company’s securities on AIM; and
  • SI Capital Limited are to be awarded 2,500,000 warrants to subscribe for New Ordinary Shares at the above warrant price of 1.0p with a life to expiry of two years (“Broker Warrants”). In addition, SP Angel Limited (Joint Broker) to also to be awarded 2,500,000 Broker Warrants on the same terms.

Proposed board changes – Further information

A noted above, it is proposed that, subject to the passing of resolutions at the General Meeting to be held by the Company, Roger Murphy will step down from the Board with immediate effect and Matt Wood will step down upon publication of the Company’s audited results for the year ended 30 September 2018. Iain Macpherson and Scott Richardson Brown will remain as non-executive directors of the Company. It is further proposed that Paul Johnson will be appointed Executive Director and Andrew Bell be appointed as Executive Chairman.

Paul Johnson

Paul Johnson holds a degree in Management Science from the University of Manchester Institute of Science and Technology and is a Chartered Accountant, Chartered Loss Adjuster and Associate of the Chartered Insurance Institute. Paul is the Chief Executive Officer of Value Generation Limited a family investment and advisory company focused on the natural resource and related fintech sectors.

Paul Johnson is an experienced public company director and has previously been Chief Executive Officer of Metal Tiger plc (AIM), Metal NRG plc (NEX) and China Africa Resources plc (AIM). He has been Chairman of ECR Minerals plc (AIM) and Non-Executive Director of Greatland Gold plc (AIM), Papua Mining plc (AIM) and Thor Mining plc (AIM).

Andrew Bell

Andrew Bell began his career as a natural resources analyst at Morgan Grenfell & Co. in the 1970s. His business experience encompasses periods in fund management and advisory work at leading financial institutions, international corporate finance work and private equity. Andrew Bell’s listed company directorships are Regency Mines plc (AIM)Non-Executive Director, Red Rock Resources Plc (AIM), Chairman and Chief Executive Officer, and Jupiter Mines Ltd (ASX), Non-Executive Director. Andrew Bell is also a former Director various resource sector companies including Star Striker Ltd (now Intiger Group Ltd) (ASX), and a former Non-Executive Chairman of Greatland Gold Plc (AIM).

Andrew Bell has considerable sector experience, and his relevant skills also include financial, business and legal analysis, knowledge of Africa and Asia, as well as experience of public markets.

Further information in relation to the appointment of Mr Paul Johnson and Mr Andrew Bell pursuant to paragraph (g) of Schedule Two of the AIM Rules for Companies appears below.

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