MARKET DEVELOPMENT
Feronia Secures $49M Term Facility for Palm Oil Operations
Feronia Secures $49M Term Facility for Palm Oil Operations
23/12/2015 (EIN Presswire) - Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE: FRN) is pleased to announce that its palm oil subsidiary, Plantations et Huileries du Congo SA ("PHC"), has entered into a secured term facility agreement (the "Facility") for up to $49 million with a syndicate of European lenders consisting of four Development Finance Institutions ("DFIs"). All amounts in this press release are expressed in US dollars unless otherwise indicated.
The financing allows the DFIs to contribute to the development of poor rural areas through supporting the private sector; an important engine for employment and income in developing nations such as the DRC.
DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH ("DEG"), lead arranger and agent for the syndicate, has agreed to provide $16.5 million of the Facility. Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. ("FMO"), the Dutch development bank, has agreed to provide $16.5 million, the Belgian Investment Company for Developing Countries ("BIO"), the Belgium Government's DFI, has agreed to provide $11 million and the Emerging Africa Infrastructure Fund ("EAIF"), a facility of the Private Infrastructure Development Group, has agreed to provide $5 million of the Facility (collectively the "Lenders").
The purpose of the Facility is to finance investment into equipment, replanting, fertiliser and environmental and social governance ("ESG") expenditures required as part of the rehabilitation of PHC's three palm oil plantations in the Democratic Republic of the Congo (the "DRC").
The initial and subsequent advances pursuant to the Facility are subject to satisfying various initial and ongoing conditions precedent. The amounts advanced under the Facility will be repaid semi-annually over a six year period commencing September 2019. The Facility is subject to covenants, pledges and charges typical of a loan facility of this nature and shall be secured by way of a first ranking security against the assets of PHC and by way of a pledge of the shares of PHC by a Belgian subsidiary of Feronia. The Company expects that the first advance under the Facility will occur in Q1 2016.
Feronia selected the Lenders following a tender process which saw considerable interest from a variety of debt providers and DFIs. Approval of the loan by the Lenders followed a comprehensive due diligence process and the further development and extension of the Company's Environmental and Social Management ("ESM"). The ESM is the Company's aims for implementing environmental and social best practice and improving social infrastructure across its operations and was jointly developed with CDC Group plc, one of Feronia's key shareholders.
Ravi Sood, Chairman of Feronia, commented: "This is a landmark transaction for Feronia, PHC and the entire agriculture industry in the DRC. In rebuilding a 104-year old business, we are playing a key role in driving sustainable growth in the communities in which we operate and providing an essential product across the DRC. The Lenders' involvement is a huge positive for all stakeholders and highlights the promise of agriculture to create sustainable employment and alleviate poverty in the DRC.
"The due diligence process for this facility has been rigorous and the standards required by the Lenders with regards to sustainability, transparency and governance are of the highest level. We are very proud that we have signed this facility agreement with a discerning and committed syndicate of international lenders and will benefit from the knowledge and expertise their involvement will bring.
"Through the provision of this facility, the Lenders are directly helping to secure the future of this business in a sustainable way and, with it, the livelihoods of over 3,800 employees and tens of thousands of people who are directly dependent on our company. We are committed to working with our new partners to deliver on all of our objectives and to becoming a model for transparency and sustainability both in the DRC and in the palm oil sector."
The financing allows the DFIs to contribute to the development of poor rural areas through supporting the private sector; an important engine for employment and income in developing nations such as the DRC.
DEG - Deutsche Investitions - und Entwicklungsgesellschaft mbH ("DEG"), lead arranger and agent for the syndicate, has agreed to provide $16.5 million of the Facility. Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. ("FMO"), the Dutch development bank, has agreed to provide $16.5 million, the Belgian Investment Company for Developing Countries ("BIO"), the Belgium Government's DFI, has agreed to provide $11 million and the Emerging Africa Infrastructure Fund ("EAIF"), a facility of the Private Infrastructure Development Group, has agreed to provide $5 million of the Facility (collectively the "Lenders").
The purpose of the Facility is to finance investment into equipment, replanting, fertiliser and environmental and social governance ("ESG") expenditures required as part of the rehabilitation of PHC's three palm oil plantations in the Democratic Republic of the Congo (the "DRC").
The initial and subsequent advances pursuant to the Facility are subject to satisfying various initial and ongoing conditions precedent. The amounts advanced under the Facility will be repaid semi-annually over a six year period commencing September 2019. The Facility is subject to covenants, pledges and charges typical of a loan facility of this nature and shall be secured by way of a first ranking security against the assets of PHC and by way of a pledge of the shares of PHC by a Belgian subsidiary of Feronia. The Company expects that the first advance under the Facility will occur in Q1 2016.
Feronia selected the Lenders following a tender process which saw considerable interest from a variety of debt providers and DFIs. Approval of the loan by the Lenders followed a comprehensive due diligence process and the further development and extension of the Company's Environmental and Social Management ("ESM"). The ESM is the Company's aims for implementing environmental and social best practice and improving social infrastructure across its operations and was jointly developed with CDC Group plc, one of Feronia's key shareholders.
Ravi Sood, Chairman of Feronia, commented: "This is a landmark transaction for Feronia, PHC and the entire agriculture industry in the DRC. In rebuilding a 104-year old business, we are playing a key role in driving sustainable growth in the communities in which we operate and providing an essential product across the DRC. The Lenders' involvement is a huge positive for all stakeholders and highlights the promise of agriculture to create sustainable employment and alleviate poverty in the DRC.
"The due diligence process for this facility has been rigorous and the standards required by the Lenders with regards to sustainability, transparency and governance are of the highest level. We are very proud that we have signed this facility agreement with a discerning and committed syndicate of international lenders and will benefit from the knowledge and expertise their involvement will bring.
"Through the provision of this facility, the Lenders are directly helping to secure the future of this business in a sustainable way and, with it, the livelihoods of over 3,800 employees and tens of thousands of people who are directly dependent on our company. We are committed to working with our new partners to deliver on all of our objectives and to becoming a model for transparency and sustainability both in the DRC and in the palm oil sector."