| Mon 7 May 2012, 8:36 | | FSE - Firestone Energy Limited - Finalisation of financial restructuring |
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FSE
FSE
FSE - Firestone Energy Limited - Finalisation of financial restructuring,
reinstatement of trading and withdrawal of cautionary
FIRESTONE ENERGY LIMITED
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
FINALISATION OF FINANCIAL RESTRUCTURING, REINSTATEMENT OF TRADING AND WITHDRAWAL
OF CAUTIONARY
The Board of Firestone Energy Limited (ASX/JSE: FSE) (the "Company" or " FSE")
is pleased to announce that the Company has agreed to terms for a A$30.7 million
funding facility to be provided by Ariona Company SA (Ariona), a special purpose
vehicle representing a consortium of international institutional and private
investors focusing on global resource opportunities. In addition, the Company
has been informed that Ariona has agreed to acquire from Sekoko Resources, a
significant shareholding in the Company and a direct interest in the Waterberg
Coal Project owned by the Company in joint venture with Sekoko, and to provide
the long term funding requirements for the development the Waterberg Coal
project.
Mr Tim Tebeila, FSE`s Chairman said, "These transactions represent a significant
step in the Company`s development of the Waterberg Coal Project. The financial
backing provided by Ariona will allow us to proceed with developing the project
to completion. This is an exciting time for the Company and we very much
welcome Ariona`s involvement in the Project and as a substantial shareholder of
Firestone Energy."
Funding Facility
The Company has entered into a conditional term sheet with Ariona under which
Ariona will provide A$30.7 million to the Company under a secured convertible
note facility replacing the current convertible notes. The terms of the
convertible notes will be:
Term: 4 Years
Coupon: 8.0%pa
Interest Payments: Payable half yearly. For the first 24 months interest to be
paid in cash or capitalised at the election of FSE and after the first 24 months
interest to be paid in cash or capitalised as agreed by the Company and Ariona.
Conversion Price: A$0.025 per share
Conversion Terms: Convert into ordinary shares at the election of the
noteholder.
The Funds raised will be applied in approximately the manner set out below.
Redeem existing convertible notes (ECNs) at face value: A$21.3m
Pay outstanding interest on the ECNs: A$0.845m
Working Capital: A$6.655m
Expenses of the Transaction (estimate): A$1.9m
Total: A$30.70m
The new convertible note facility is subject to certain conditions precedent,
the most significant of which are:
* completion of a legal and financial due diligence on the ECNs, satisfactory
to Ariona;
* Obtaining all necessary regulatory and shareholder approvals;
* FSE and its Joint Venture Partner, Sekoko initiating the transfer of the
prospecting rights and mining rights comprising the Waterberg Joint Venture
into a joint venture company as contemplated in various public
announcements (subject to the requisite regulatory consents to such
transfer first being obtained);
* the Company and the existing convertible note holders being satisfied with
the financial capacity of Ariona and the identity and financial capacity of
the parties backing Ariona and forming the investment consortium; and
* Entering into the long form agreements incorporating all of the provisions
of the Term Sheet, to the satisfaction of all parties.
Other significant terms are:
* Ariona will be entitled to nominate up to two directors to the Board of the
Company;
* The Company will, subject to necessary shareholder approval, offer those
existing convertible note holders who agree to the early redemption of
their notes, incentive options exercisable over 2 years at a price of
A$0.025 per share. The number of incentive options to be issued to an
accepting ECN Holder shall be pro rata to its holding of ECNs on the basis
that 300 million incentive options would be issued in the case of 100%
acceptance of early redemption of ECNs; and
* Until completion of the transaction, the interest payments on the ECNs will
be calculated on a monthly basis and at the election of the ECN holders,
either converted into shares on a monthly basis at a 10% discount to the 5
day VWAP or capitalising the interest until completion of the transaction.
New Substantial Shareholder
The Company has been informed by Sekoko Resources, its major shareholder, that
it has entered into a binding term sheet with Ariona pursuant to which:
* Ariona will acquire 800 million shares in the Company from Sekoko for A$8
million. This represents approximately 25.7% of the issued share capital of
the Company, reducing Sekoko`s current shareholding in FSE from 27.4% to
1.7%;
* Ariona will also acquire a 10% interest in the Waterberg Joint Venture from
Sekoko for approximately A$13 million reducing Sekoko 40% direct interest
in the project to 30%; and
* Ariona is to pay Sekoko US$7.5 million upon completion of the transaction
subject to the satisfaction of certain conditions.
FSE has been informed that the transactions above are subject to conditions
precedent normal to transactions of this type and include:
* completion of a legal, financial and technical due diligence satisfactory
to Ariona;
* entering into long form agreements incorporating all of the provisions of
the Term Sheet, to the satisfaction of the parties; and
* obtaining all necessary regulatory and shareholder approvals.
FSE has also been informed that the transaction will include:
Ariona undertaking to Sekoko to procure project funding for the development of
the Waterberg Joint Venture of up to US$400 million (including the joint venture
funding obligations of Sekoko on a "deferred carry" basis that is, Sekoko`s
equity contribution will be funded by Ariona on the basis that the principal
plus interest will be repaid from Sekoko`s share of profits from the Project).
As a result of these acquisitions, Ariona will be the largest shareholder in the
Company and the ownership of the Waterberg Joint Ventures will be:
FSE 60%
Sekoko 30%
Ariona 10%
It is noted that, as the Company is not a party to the Term sheet between Ariona
and Sekoko and was not involved in its negotiation, it has no control over the
final form of the formal long form agreements between Ariona and Sekoko. To the
extent that the Company becomes aware of any significant change to the material
terms of the transaction between Ariona and Sekoko, the Company will provide an
update to shareholders and the market generally.
Shareholder Approval
There are several aspects of the transactions which will require shareholder
approval including, among other things Ariona acquiring more than 20% of FSE, as
an exception to Ariona making a formal takeover offer for FSE. The Company is
targeting 18 June 2012 as the date for a general meeting of shareholders of the
Company to approve the transactions. The Company will commission a report from
an independent expert to assess whether the transactions are fair and reasonable
for those shareholders of the Company not participating in the transactions.
The independent experts report will accompany the notice of meeting and
information memorandum to be sent to shareholders.
The Company has appointed BBY Limited as corporate finance advisers and Lead
Manager, and Kelly & Co. Lawyers as its legal advisers.
Reinstatement of Trading and Withdrawal of Cautionary
Shareholders are referred to the announcements made by the Company on 30 April
and 2 May 2012 and are advised that caution is no longer required to be
exercised by shareholders when dealing in their securities and as a result of
this announcement trading in the securities of the Company will be reinstated at
the commencement of trading today, 7 May 2012.
Yours sincerely,
David Knox
Chief Executive Officer
www.firestoneenergy.com.au
Tel: Australia (+61 08 9287 4600)
South Africa (+27 11 706 3548)
About Firestone Energy
Firestone Energy Limited is an independent, Australian exploration and
development company listed on the Australian Stock Exchange Ltd (ASX) and the
Johannesburg Stock Exchange (JSE). Firestone Energy has entered into a Joint
Venture with Sekoko Resources (Pty) Ltd through which Firestone Energy has
acquired the right to 60% participation interests in the Waterberg Coal Project
located in Lephalale area, Limpopo Province, South Africa.
The first stage of the project is to develop the Smitspan mine which has a
substantial measured thermal coal resource and to develop the Vetleegte mine
which is a substantial metallurgical coal deposit.
Firestone Energy is committed to becoming a profitable independent coal and
energy producer at its projects in South Africa, thereby making a substantial
contribution to the social and economic development of the Lephalale area and
South Africa.
Corporate Details
ASX: FSE
JSE: FSE
Issued Capital:
3,114 million ordinary shares
Major Shareholders:
Sekoko Resources (Pty) Ltd
Linc Energy Ltd
BBY Nominees Pty Ltd
Bell Potter Nominees Ltd
Directors and Officers
Non Executive Directors:
Mr Tim Tebeila (Chairman)
David Perkins (Deputy Chairman)
Dr Pius Kasolo
Ben Mphahlele
Kobus Terblanche
Officers:
Mr David Knox CEO
Mr Jerry Monzu Company Secretary
Contact:
Suite B9, 431 Roberts Road
Subiaco, Western Australia 6008
Tel: +61 (08) 9287 4600
Web: www.firestoneenergy.com.au
About Sekoko Resources
Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and
minerals company developing the coal, magnetite iron ore and PGMs Projects in
the Limpopo Province of South Africa. This includes a significant exploration
program and development of the Waterberg Coal Joint Venture Project based on
significant Coal Zone Resources.
Johannesburg
Sponsor
River Group
7 May 2012
Date: 07/05/2012 08:36:01 Produced by the JSE SENS Department.
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