DekelOil Public Limited Unlocks significant value with removal of EUR5.1m of debt
DekelOil Public Limited ('DekelOil' or the 'Company'), operator and 51% owner of the vertically integrated Ayenouan palm oil project in Cote d'Ivoire (the "Project"), is pleased to announce that it has improved the Project's economics following an agreement with its joint venture partner, Biopalm Energy Ltd ("Biopalm"), which reduces the Company's debt position by EUR5.1m. An offset agreement has been signed between the Company and Biopalm, whereby a capital note totalling EUR5.1 million owed to Biopalm at the Project level, is to be cancelled.
Under the terms of the loan note, interest was payable by the Project at 10% per annum and ranked above that of future dividends to ordinary shareholders. In exchange for the cancellation of the loan note, DekelOil has agreed to waive Biopalm's outstanding equity contribution to the Project, which totals EUR1.1m and relates to the recent expansion of the Project with the now operating palm kernel crushing plant ("PKO"), and allows Biopalm to maintain its 49% interest in the joint venture.
This agreement has been reached as part of the Company's broader strategy to strengthen its balance sheet and reduce interest expense following a period of significant growth in profitability. This was highlighted in the recent half yearly report, which stated EBITDA for the six months ended 30 June 2015 totalled EUR2.3 million.
DekelOil Executive Director Lincoln Moore said, "The debt write off of EUR5.1m is very positive news and unlocks significant value for shareholders. This follows the successful ramp up of operations at Ayenouan in 2015, which for the nine months to 30 September 2015 saw 29,137 tonnes of CPO produced, more than double the total volumes achieved in 2014. With profits on an upwards trajectory, and the PKO plant now in operation, the Board will continue to take full advantage of the excellent progress made on the ground to date to further strengthen our balance sheet so that it more fully reflects DekelOil's status as a growing palm oil producer rather than a pure project development company."