TIDMZIOC
RNS Number : 1492R
Zanaga Iron Ore Company Ltd
26 June 2020
26 June 2020
Subscription Agreement with Shard Merchant Capital Ltd
Zanaga Iron Ore Company Ltd ("ZIOC" or the "Company") (AIM:
ZIOC), is pleased to announce that it has entered into a
subscription agreement ("Subscription Agreement") with Shard
Merchant Capital Ltd ("SMC"), an institutional investor, dated 25
June 2020.
Under the Subscription Agreement the Company will issue and SMC
will subscribe for up to 21 million ordinary shares of no par value
in the Company ("Subscription Shares") in up to three tranches of
up to 7 million shares each (as described below).
In the event the maximum number of Subscription Shares are
issued by ZIOC and subscribed for by SMC, the share capital of ZIOC
will be increased by c.6.8% on a fully diluted basis, based on the
286,034,367 ordinary shares in the Company in issue as at today's
date.
Pursuant to the Subscription Agreement, SMC has undertaken to
use its reasonable endeavours to place the relevant Subscription
Shares that it has subscribed for and to pay to ZIOC 95% of the
gross proceeds of any such sales.
The Subscription Agreement provides a number of attractive
advantages to ZIOC, which are highlighted below:
-- Relatively low level of dilution to ZIOC shareholders
-- ZIOC has the ability to repurchase any unsold Subscription
Shares from SMC, subject to legal requirements - an important
element of flexibility for ZIOC. Any Subscription Shares
re-purchased will be cancelled, limiting dilution further
-- Low cost of capital - SMC will retain only 5% of the gross
proceeds of any sale of Subscription Shares
Structure Overview:
Issues of Tranches of Subscription Shares
Under the Subscription Agreement, Subscription Shares will be
issued and SMC will subscribe for the Subscription Shares in
tranches of up to 7 million shares. The first tranche of 7 million
Subscription Shares (the "First Tranche") will be subscribed for by
SMC within three trading days of the date of the Subscription
Agreement.
A second Tranche of 7 million Subscription Shares (the "Second
Tranche") will be subscribed for by SMC 10 trading days following
the earlier of: (a) the date on which SMC has sold all the
Subscription Shares subscribed for in the First Tranche; and (b)
such other date as SMC and the Company agree.
Solely at the discretion of the Company, a third tranche of up
to 7 million Subscription Shares will be subscribed for by SMC (the
"Third Tranche" and together with the First Tranche and the Second
Tranche, each a "Tranche"). Any such subscription will take place
within 14 trading days of the earlier of: (a) the date on which SMC
has sold all the Subscription Shares subscribed for in the Second
Tranche; or (b) such other date as SMC and the Company agree.
Sales of Subscription Shares
As regards each Tranche, SMC has agreed to use its reasonable
endeavours to place all the Subscription Shares comprised in that
Tranche within a three month period from the date of issue of the
relevant Subscription Shares to it (the "Relevant Three Month
Period"). Such period can be extended prior to the end of the
Relevant Three Month Period by either the Company or ZIOC giving
notice to the other. Any such extension is for a three month period
from the giving of the extension notice. All such sales are subject
to trading restrictions, as mentioned below.
Payment of proceeds of Subscription Shares
In respect of each Tranche, the amount which SMC has undertaken
to pay for the Subscription Shares issued to it in that Tranche is
95% of the gross proceeds of sale received by SMC from all sales of
the relevant Subscription Shares made by it during the Relevant
Three Month Period (as extended, if that occurs).
The Subscription Agreement provides for regular payments to be
made by SMC to ZIOC following any sales of Subscription Shares.
-- Payments under the First Tranche are to be made weekly and then fortnightly.
-- Payments under the Second Tranche and any Third Tranche
payments are to be made every two weeks (unless an alternative time
for payment is agreed between the parties).
Illustrative example
For illustrative purposes only, if the average price at which
SMC places the 14 million Subscription Shares comprised in the
First Tranche and the Second Tranche was 6.27 pence (being ZIOC's
mid-market closing share price on Wednesday 24 June 2020), the net
proceeds received by ZIOC from such sales would be approximately
GBP0.9m. Further, ZIOC has the discretion to elect to issue up to a
further 7 million shares by way of the Third Tranche.
Custodian
The Subscription Agreement provides that the Subscription Shares
are to be held by a custodian authorized by the Financial Conduct
Authority (FCA). Proceeds of any sale of Subscription Shares by SMC
will be held by the Custodian until remitted by the Custodian to
SMC and SMC shall pay to ZIOC 95% of the gross proceeds of any such
sales. To secure SMC's payment obligations, any proceeds of sale,
as well as SMC's beneficial interest in the Subscription Shares,
are to be held by SMC on trust for the benefit of the Company.
Termination and Unsold Shares
The Subscription Agreement can be terminated by the Company at
any time and by SMC on the occurrence of certain specified
events.
If on termination of the Subscription Agreement, any
Subscription Shares subscribed for by SMC have not been sold by it
(the "Unsold Shares"), the Subscription Agreement provides that
such Unsold Shares shall be bought back by the Company from SMC at
the same price that SMC has subscribed for such Unsold Shares (the
"Buy-Back") . Completion of the Buy-Back may be deferred if at the
relevant time the Company is precluded from completing the buy-back
arrangement under any applicable legislation.
Suspension of sales of Subscription Shares:
The Company has the right to require that SMC cease to make (or
procuring) sales of Subscription Shares under any Tranche for such
time as the Company determines ("Suspension Period"). In such
event, the relevant Three Month Period will be extended for the
same amount of time as the Suspension Period.
Trading restrictions:
In order to preserve an orderly market in the Company's shares,
SMC has agreed to effect any sales of Subscription Shares made by
it in accordance with customary orderly market provisions.
Future updates:
The Company will make appropriate further announcements in due
course.
The Company's cash balance at 31 May 2020 was US$434,000, with
no debt and the Company continues with its prudent cash management,
with additional cost reductions having been implemented in 2019.
The proceeds received by the Company from SMC pursuant to the
Subscription Agreement will be applied to general working capital,
including the provision of further contributions to the Zanaga Iron
Ore Project's operations.
The 7 million Subscription Shares in the First Tranche are
expected to be admitted to trading on AIM on 29 June 2020. The
First Tranche of Subscription Shares will rank pari passu with the
Company's existing Ordinary Shares. The Company does not hold any
shares in treasury. Following admission of the First Tranche of
Subscription Shares, the total number of Ordinary Shares and voting
rights in the Company will be 293,034,367.
This figure of 293,034,367 Ordinary Shares may be used by
shareholders 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 FCA's
Disclosure Guidance and Transparency Rules.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain.
Clifford Elphick, Chairman of ZIOC commented:
"Following entry into of the Subscription Agreement, ZIOC is
pleased that a financing structure has been put in place which will
give the Company access to funding through a relatively low cost
structure which minimises dilution to shareholders.
This transaction enables ZIOC to secure capital in the future as
the project progresses and further milestones are achieved."
The Zanaga Iron Ore Company Limited LEI number is
21380085XNXEX6NL6L23.
For further information, please contact:
Zanaga Iron Ore
Corporate Development and Andrew Trahar
Investor Relations Manager +44 20 7399 1105
Liberum Capital Limited
Nominated Adviser Scott Mathieson, Edward Thomas
and Corporate Broker +44 20 3100 2000
About us:
Zanaga Iron Ore Company Limited (AIM ticker: ZIOC) is the owner
of 50% less one share in the Zanaga Iron Ore Project based in the
Republic of Congo (Congo Brazzaville) through its investment in its
associate Jumelles Limited. The Zanaga Iron Ore Project is one of
the largest iron ore deposits in Africa and has the potential to
become a world-class iron ore producer.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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