5 September 2016
EQUATORIAL PALM OIL plc
("EPO" or the "Company")
Loan of up to US$30.0m for Joint Venture Company
Equatorial Palm Oil plc (AIM: PAL), the AIM listed palm oil development and production company with operations in Liberia, West Africa announces today its 50 per cent. owned joint venture company, Liberian Palm Developments Limited ("LPD"), has entered into a loan agreement for the loan of up to US$30m with KLK Agro Plantations Pte Ltd ("KLK Agro"), a wholly owned subsidiary of Kuala Lumpur Kepong Berhad ("KLK"), for the operations and funding for LPD (the "Loan").
The Loan will be used to continue with the next phase of growth of LPD and fund the construction of the new 60 metric tonne ("MT") palm oil mill to be built on Palm Bay estate.
The key terms of the Loan, which is unsecured, are as follows:
· Amount - up to US$30m
· Term - 2 September 2016 to 25 January 2020 (the "Term")
· Interest - 3-months USD LIBOR + 5 per cent per annum
· Repayment - loan principal (together with all accrued interest) due on expiry of the Term or such earlier date as LPD may decide
The Loan is in addition and on predominantly the same terms as the Loan of US$20.5m announced on 27 January 2015, which has now been fully drawn down and remains outstanding, falling due on 25 January 2020. The Loan can be drawn down by LPD in line with its operational funding requirements and subject to the consent of the KLK Agro.
Geoffrey Brown, Executive Director of EPO, commented:
"We are very pleased that LPD has now secured this $30.0m loan with KLK Agro for the development of our oil palm estates in Liberia. This funding will drive our operations into production in 2018 and fund the building and commissioning of a new 60MT palm oil mill at Palm Bay. The recently signed Memorandum of Understanding with all the communities on Palm Bay estate for oil palm development gives us great confidence for continued expansion."
Related Party Transaction
KLK (through its wholly owned subsidiary KL-Kepong International Limited) currently holds ordinary shares in EPO representing approximately 62.86 per cent. of the issued share capital of the Company. In addition, KLK Agro also currently holds 50 per cent. of the issued share capital of LPD and KLK appoints three directors to the Board of EPO, namely Lee Oi Han, Teh Sar Moh Nee and Yap Miow Kien. Accordingly, the Loan is classified as related party transaction under the AIM Rules for Companies. Michael Frayne and Geoffrey Brown, being the non-related directors of EPO for the purposes of this transaction, consider, having consulted with the Company's nominated adviser, Strand Hanson Limited, that the terms of the Loan are fair and reasonable insofar as the Company's shareholders are concerned.
For further information, please visit www.epoil.co.uk or contact:
Equatorial Palm Oil plc
Geoffrey Brown (Executive Director)
+44 (0) 20 7016 9885
Strand Hanson Limited (Nominated Adviser)
James Harris / James Bellman
+44 (0) 20 7409 3494
Mirabaud Securities LLP (Broker)
+44 (0) 20 7484 3510
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").
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Notes to editors:
Equatorial Palm Oil plc is an AIM listed crude palm oil developer and producer with palm oil estates in Liberia, West Africa. The Company was founded in 2005 and is focused on becoming a global, sustainable producer of high quality palm oil to regional and international markets.
With a significant land position in Liberia through its operating subsidiary LPD, the Company is geographically well positioned to serve the international and regional markets and is committed to making a positive impact on the communities in which it operates through investment in local schools, health clinics, housing and infrastructure.
The Company's largest shareholder and 50:50 joint venture partner in LPD is KLK. KLK is one of the largest palm oil producers in the world and the Company will greatly benefit from their many years of expertise in oil palm development.
This information is provided by RNS