Phatisa’s African Agricultural Fund (AAF) and UK development finance institution CDC subscribed $9.18 million to a private placement of secured convertible debentures offered by Toronto Stock Exchange-listed Feronia, Inc. last week. The deal, in combination with the $7.15 million raised in January when the offering was first announced, completes the firm’s secured convertible debenture financing of up to $16.325 million.
Feronia is an agribusiness operating in the Democratic Republic of Congo (DRC). CDC is subscribing almost $6.2 million as part of the first tranche, while AAF, which is executing the transaction through its subsidiary Golden Oil Holdings, has agreed to subscribe $2 million in the first tranche, which was expected to close on June 19th 2015.The pan-Africa private equity impact investment fund is committing an additional $983,000 in a second tranche, which is expected to close on July 15th, 2015.
The proceeds from the offering will be used for both working capital and expansion capital for the company’s assets in the DRC. At the core of its portfolio is its palm oil business, Plantations et Huileries du Congo (PHC), which it acquired from Unilever in 2009. Feronia’s three, long-established, plantations, Lokutu, Yaligemba and Baketa produce crude palm oil and palm kernel oil, providing livelihoods for more than 8,000 people who are either directly or indirectly employed by the company. The plantations had suffered from years of underinvestment and disruption caused by the conflicts in the DRC, but now have been rebuilt and put back into production.
According to the terms of the deal, the debentures will mature on January 22nd, 2016 at which point they will either be repaid of converted. The debentures will pay 12% interest per annum, compounded semi-annually, and will accrue and be payable on maturity unless converted earlier. Each of the subscribers will receive a 2% arrangement fee on the value of the debentures purchased.