THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO THE REGISTERED AND BENEFICIAL OWNERS OF THE SUBJECT SECURITIES. IF APPLICABLE, ALL DEPOSITORIES, CUSTODIANS AND OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUESTED TO EXPEDITE THE RE-TRANSMITTAL TO BENEFICIAL OWNERS OF THE SECURITIES IN A TIMELY MANNER.  IF NOTEHOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD TAKE, IF ANY, THEY SHOULD IMMEDIATELY CONSULT THEIR OWN INDEPENDENT PROFESSIONAL ADVISERS AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 (IF THEY ARE IN THE UNITED KINGDOM) OR ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER AND TAKE SUCH OTHER ADVICE FROM THEIR OWN PROFESSIONAL, TAX AND LEGAL ADVISERS AS THEY DEEM NECESSARY.

18 April 2024

NOTICE TO NOTEHOLDERS

NEUTRAL CAPITAL FINANCE PLC

(Incorporated in England and Wales with registered number 11846211)

to the holders of those of the Series 2019-NF1 notes issued by the Issuer on 12 April 2019 with
ISIN: GB00BJHPK447
(the "Noteholders" and the "Notes", respectively)

Unless otherwise defined in this Notice, capitalised terms used in this Notice shall have the meanings ascribed to them in the Trust Deed dated 12 April 2019 (as supplemented, restated or amended from time to time) between the Issuer and Note Trustee (the "Trust Deed").

Events of Default under the Loan Agreement

The Issuer hereby confirms to Noteholders that Neutral Fuels LLC (the "Borrower") has failed to pay interest due up to and including 12 April 2024 to the Issuer (as lender) in an amount of US$247,500.02 pursuant to the terms of the Loan Agreement and that, as of 18 April 2024, this constitutes an Event of Default under the terms of the Loan Agreement and consequently constitutes an Event of Default under Condition 13(h) of the Notes.

Additionally, the Issuer hereby confirms to Noteholders that the Borrower has failed to repay the Loans due for repayment on 12 April 2024 to the Issuer (as lender) in an amount of US$12,000,000 pursuant to the terms of the Loan Agreement and that, as of 18 April 2024, this constitutes an Event of Default under the terms of the Loan Agreement and consequently constitutes an Event of Default under Condition 13(h) of the Notes.

Right to direct the Note Trustee

Pursuant to Condition 13 (Events of Default), if an Event of Default has occurred and is continuing, the Note Trustee at its discretion may, and if so requested in writing by the holders of at least one-quarter of the aggregate principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall (subject to the Note Trustee having been indemnified and/or secured and/or prefunded to its satisfaction), give written notice to the Issuer (an "Acceleration Notice") declaring the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their Early Redemption Amount together with accrued interest without further action or formality.

The Security shall become enforceable upon the service of an Acceleration Notice by the Note Trustee on the Issuer.

Pursuant to Condition 18 (Enforcement), if an Acceleration Notice is served by the Note Trustee on the Issuer, the Note Trustee may at any time at its discretion and without notice, take such action under or in connection with any of the Transaction Documents or the Notes or the Coupons as it may think fit (including, without limitation, directing the Security Trustee to take any action under or in connection with any of the Transaction Documents or, at any time after the security has become enforceable, to take steps to enforce the Security). The Note Trustee shall not be bound to take any such action unless (i) it shall have been directed by an Extraordinary Resolution of Noteholders or so requested in writing by the holders of at least one-quarter in principal amount of the Notes then outstanding and (ii) it shall have been indemnified and/or secured and/or prefunded to its satisfaction. The Security Trustee shall not, and shall not be bound to, take any such action unless (i) instructed by the Note Trustee and (ii) it shall have been indemnified and/or secured and/or prefunded to its satisfaction.

The Note Trustee will require the Notes of any Noteholder that gives any direction to the Note Trustee to be blocked in CREST.  Further instructions will be provided in connection with the enforcement process on request.

Correspondence to the Note Trustee regarding enforcement should be addressed to security@woodsidesecretaries.co.uk with the ISIN of the Notes and "Neutral Capital Finance Plc" in the subject line of the email.

No Further Action by Note Trustee

For the avoidance of doubt (but without prejudice to the exercise of any discretion, power or authority which the Note Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Noteholders under the Trust Deed), the Note Trustee will not take any further action without the request or direction (including indemnification) of the holders as described above.

Potential Events of Default under the Notes

The Issuer hereby notifies Noteholders that, without payment of interest from the Borrower to the Issuer pursuant to the terms of the Loan Agreement, the Issuer was unable to pay its coupon due on the Interest Payment Date falling on 12 April 2024 in an amount of US$247,500.02. Should this continue for a period of 14 days from 12 April 2024 an Event of Default under Condition 13(a) of the Notes will occur.

Additionally, the Issuer hereby notifies Noteholders that, without repayment of the Loans by the Borrowers to the Issuer pursuant to the terms of the Loan Agreement, the Issuer was unable to redeem the Notes due for redemption in respect of Series 2019-NF1 on 12 April 2024 for the nominal amount of US$12,000,000.  Should this continue for a period of 7 days from 12 April 2024 an Event of Default under Condition 13(a) of the Notes will occur.  

Communication from the Borrowers

On 15 April 2024, the Issuer received from the Borrowers the following communication (the "Proposal"):

*****

Proposal to Amend & Extend

Proposal for revisions herein (the "Proposal"); for Neutral Capital Finance PLC, Series 2019-NF1, being up to USD$12,000,000, 8.25% secured medium term notes due 2024, with ISIN: GB00BJHPK447 and issued on 12 April 2019 (the "Bond" or "Series 2019-NF1).

Dear Sirs

PROPOSAL SUMMARY

Neutral Fuels LLC, the borrower under Series 2019-NF1 (the "Borrower") is pleased to be able to report that the business has grown substantially during the past five years. It has successfully met its targets and is now the largest producer of biodiesel in the Middle East (from using Used Cooking Oil ("UCO") from its local market).

The business is generating revenue at 4x greater than before Series 2019-NF1 was issued and is now engaged with leading financial institutions to refinance Series 2019-NF1.

To comply with international sanction regulations, the Borrower must replace a non-beneficial shareholder with immediate effect in order to proceed with its refinance options. The Borrower has already taken consent in principle from the Trustee (subject to documentation and legal opinions being satisfactory) with regard to this amendment and is in the process of executing the change.

As this requirement has emerged at the point of maturity of Series 2019-NF1, the management has taken the decision to propose an amend and extend period, to allow for the required headway for refinancing, post the change of non-beneficial shareholder.

Upon agreement of this Proposal, the Borrower will continue to pay the coupons on Series 2019-NF1 and fully expects to be able to refinance or otherwise extinguish the principal of the Bond in due course.

This Proposal will outline a request for an extension to the maturity date (and thus a deferment of the payment of the principal) of Series 2019-NF1 and further revisions to the terms, as detailed in the below table:

REQUESTED POST-PROPOSAL TERMS

Following approval of the Proposal, the Borrower would enter into new legal resolutions and amend the required transaction documents to formalise the new terms.

DESCRIPTION OF THE ISSUER AND THE BORROWER

Neutral Capital Finance PLC (the "Issuer") is a public limited company incorporated on 25 February 2019 and registered in England and Wales with registered number 11846211 whose registered office is 1 Bartholomew Lane, London, EC2N 2AX. The Issuer is a vehicle specifically set up to issue debt and is bankruptcy remote.

In April 2019, Series 2019-NF1 was issued with an initial volume of USD$12,000,000. The interest rate is 8.25% per annum (paid quarterly). Series 2019-NF1 had a term of five years and was included for trading on The Frankfurt Stock Exchange (the Open Market (Freiverkehr)) and The Global Exchange Market of Euronext Dublin. The proceeds of Series 2019-NF1 were onward lent to the borrower detailed under its transaction documents.

The Borrower of Series 2019-NF1 is a fully integrated player in the biodiesel space. It converts waste oil and fats using UCO from different sources (e.g. restaurants, hotels, etc.) into different blends of biodiesel. It was the first certified company allowed to produce biodiesel in the UAE under the ESMA license (Emirates Authority for Standardization and Metrology) and has a presence across the entire value chain (from UCO collection, refining and distribution in its local market).

The Borrower currently operates two facilities, one in Dubai and one in Abu Dhabi, using its proprietary processing technology.

The Borrower has been working to apply a strategy to its business model that could best allow it to navigate the refinancing of Series 2019-NF1 and see it grow significantly in the future.

Over this time, its business has garnered interest from many financial institutions because of its strong market position, performance and potential for significant growth - all coupled with a truly environmental offering that is aligned to corporate and government emission agendas.

CURRENT BUSINESS STATUS & STRATEGIC DECISIONS

There is an increasing number of companies, across various sectors, that are committed to reducing carbon emissions; and the Borrower has successfully convinced many blue-chip customers to switch from traditional diesel to biodiesel; and as a result, created demand for blended products.

The Borrower has been building-up production capacity and has gained significant market share across sectors (transportation, maritime, power generation and hotels & hospitality). The market in the UAE also anticipates a potential change in the diesel market regulation, with the introduction of a mandatory use of B5 or B7 (for all diesel). Such regulation would significantly increase demand and the Borrower expects to have a first-mover advantage over others.

BACKGROUND TO REFINANCING EFFORTS

Institutions specialising in both debt and M&As have been engaged by the Borrower in preparation for the repayment of Series 2019-NF1. In order to proceed with these options, the Borrower has been notified that a non-beneficial and non-executive shareholder must be replaced. This is because this individual has a relationship with a third party, currently subject to OFAC Sanctions.

Removing the individual^[1] cures this position for the Borrower immediately and has been approved by its management. Failure to remove the individual prevents onboarding with all financial services companies and makes the Borrower subject to material risks - concerning refinancing, equity raises/sales, reputational damage and further restrictions including access to business and banking networks.

As the shares of the Borrower are pledged under the Bond, a release is required before any refinancing can be completed, and it is imperative that this change is made in the very near future. In addition, there is a potential risk that the sanctions are extended to the UK and/or EU which could prevent funds flowing via banking channels and clearing houses. There is no detrimental effect for Bondholders, this is purely a technical replacement.

The replacement of the current non-beneficial and non-executive shareholder is already underway but could not be completed ahead of the maturity of Series NF1-2019. Consent for this change has already been provided in principle by the Trustee and another local shareholder has been engaged. The legal process to perfect the security, post the replacement described above, is nearing completion.

Post the change of the non-beneficial and non-executive shareholder, institutional refinancing work can be restarted; and the Bondholders can also benefit from a reduced risk to the Borrower, that has adversely affected its ability to meet its obligation on maturity of Series 2019-NF1.

The Borrower will continue to pay the coupons on Series 2019-NF1 under the new maturity profile, which will be accrued until approval of this Proposal.

EXPLANATION OF THE PROPOSED RESOLUTIONS AND TIMELINES

Following the approval of this Proposal, the Issuer's legal counsel, alongside the Trustee's independent counsel, will draft the required updates to the transaction documents, before all key transaction parties formally enter into the new amendments, namely those of the Loan Agreement, the Trust Deed and/or any ancillary documents necessary to effectuate the following:

Series 2019-NF1

·      Maturity (and principal repayment) to be extended by 18-months

o  New maturity date of 12 October 2025

·      A call option for the Borrower available anytime post 31 May 2024

o  Set at 100% of nominal value

·      If call option not activated, 8.25% p.a. coupon payments will be made on the following quarterly dates;

o  12 July 2024, 12 October 2024, 12 January 2025, 12 April 2025, 12 July 2025 and 12 October 2025

In addition, the Borrower may be reimbursed for third party fees and professional service fees reasonably incurred (including legal and accounting fees) under this Proposal.

The Borrower wishes to undertake the approval process for this Proposal within 30 days. This is to ensure a clear and quick resolution for Bondholders and allow the Borrower to reengage the financing opportunities it has originated. The Borrower of Series 2019-NF1 will pay any and all due and accrued coupon payments upon approval.

We look forward to your consideration of the above Proposal.

Yours faithfully,

Authorised Signatory of:
Neutral Fuels LLC

*****

The Borrower gave consent to the Issuer to publish the Proposal for the Noteholders' information on 15 April 2024. 

Neither the Issuer nor the Note Trustee make any recommendations and give no legal or investment advice in respect of the Proposal or as to the Notes generally. 

Noteholders should take and rely on their own independent legal and financial advice and may not rely on advice or information provided to the Note Trustee, statements as to the legal position included in notices issued by the Issuer or the Note Trustee relating to the Notes or otherwise or the views of the Issuer or the Note Trustee expressed herein or otherwise.

Noteholders should note that the Proposal relates to the Notes only.

Information regarding the Proposal

Queries regarding the Proposal should be made promptly by email to the Borrower at the following address: info@2019-nf1.com using the reference "2019-NF1".

Noteholders should take and rely on their own independent legal and financial advice in respect of the Proposal.

No Further Action by the Issuer or Note Trustee in respect of the Proposal

For the avoidance of doubt (but without prejudice to the exercise of any discretion, power or authority which the Note Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Noteholders under the Trust Deed), neither the Issuer nor the Note Trustee currently intend to take any further action in respect of the Proposal without the request or direction (including indemnification) of the Noteholders, subject always to the terms and conditions of the Trust Deed. Noteholders are reminded that the Note Trustee is under no obligation to take (or to instruct the Security Trustee to take) any enforcement action unless instructed to do so and indemnified and/or secured and/or prefunded to its satisfaction by the Noteholders.

Notwithstanding the above, the Issuer and the Note Trustee intend to facilitate Noteholders in their decision whether or not to accept the Proposal through the passing or rejecting of Extraordinary Resolutions (pursuant to the terms and conditions of the Notes). The Issuer will, at the appropriate time, convene a meeting of Noteholders and/or arrange for written Extraordinary Resolutions to be circulated to Noteholders for the purposes of approving or rejecting the Proposal.

This notice is given by the Issuer.