03:00 Fri 26 Jun 2020
Zanaga Iron Ore - Funding Update
Subscription Agreement with
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
Custodian
The Subscription Agreement provides that the Subscription Shares are to be held by a custodian authorized by the
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
The 7 million Subscription Shares in the First Tranche are expected to be admitted to trading on AIM on
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
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.
"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:
Corporate Development and
Investor Relations Manager +44 20 7399 1105
Nominated Adviser Scott Mathieson, Edward Thomas
and Corporate Broker +44 20 3100 2000
About us:
This information is provided by RNS, the news service of the
The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of...
FOR OUR FULL DISCLAIMER CLICK HERE