R.E.A. unit to issue £26.22 million new notes in offer for 9½% notes

By Susanna Moon

Chicago, Sept. 2 – R.E.A. Holdings plc said its subsidiary REA Finance BV will issue £26,216,000 of new notes in the exchange offer for its 9½% guaranteed sterling notes due 2017.

REA also will place £336,000 of new sterling notes with Guy Butler at par.

As a result, REA Finance is now issuing £26,552,000 of new sterling notes, subject to the notes being admitted for trading on the London Stock Exchange, which is expected Sept. 3, according to a company notice.

New sterling notes issued under the extended placing will be issued as a second tranche of new sterling notes in an amount of up to £5,124,000, to be consolidated and form a single series with the tranche 1 sterling notes, the company said.

REA Finance will announce the results of the extended placing on Sept. 7, and the tranche 2 notes are expected to be admitted for trading on Sept. 9.

As previously announced, holders approved the company’s plans to issue £40 million of 8¾% guaranteed sterling notes due 2020, with £34.54 million offered in exchange for the 9½% notes. The meeting was held at 6 a.m. ET on Aug. 27.

For each £1,000 principal amount of the £34.54 million of existing notes, R.E.A. is offering £1,000.00 principal amount of the new notes plus £20.00 in cash plus accrued interest up to the date on which the offer becomes unconditional.

R.E.A. previously said it is carrying out the exchange because £9.9 million of the existing notes are due to be repaid on Dec. 31, 2015.

The company had planned to fund the redemption from internal cash flows, new bank borrowings and proceeds from the sale of shares in PT REA Kaltim Plantations, both by a public offering and a placing ahead of the offering. REA Kaltim holds the company’s agricultural operations including its oil palm operations in Indonesia.

However, REA said its directors expect that possible new investors in REA Kaltim would prefer to see the funds applied to extend its planting program rather than repay debt.

In addition, the directors believe that extending the company’s maturity will improve the perception of REA Kaltim.

Further, they would like to establish a cash cushion.

Proceeds from the cash sale will be used for the expenses of the offering and as a loan to subsidiary REA Services Ltd. which will then lend the funds to Indonesian subsidiaries involved in cultivation and processing of oil palms.

The exchange offer is being conducted in multiples of £100,000 of notes, but R.E.A. is offering a top-up option enabling holders of less than £100,000 to make up the shortfall in cash.

If holders take advantage of the top-up option, the amount of the cash placement will be proportionately reduced, as previously noted.

Guy Butler Ltd. is placement agent for the cash sale.

The exchange offer was subject to the participation by holders of at least £10 million by 6 a.m. ET on Sept. 1.

Both the exchange and the placement are conditional on there being at least £10 million of new notes.

R.E.A. previously said it had informal indications from holders of more than £25 million of the existing notes that they were likely to vote for the extraordinary resolution and take part in the exchange.

London-based R.E.A. is engaged in the cultivation of oil palms and the production of crude palm oil and crude palm kernel oil in the Indonesian province of East Kalimantan.

© 2015 Prospect News.
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