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Ncondezi Energy Ltd on Monday said it will restructure a loan agreement with Seritza Ltd, which will allow for a non-cash resolution.
The Mozambique-based power development company said it has agreed to restructure the working capital facility term loan to a convertible loan note, with a 12-month extension.
Shares in the firm were down 4.7% to 0.81 pence each in London on Monday morning.
The facility was drawn down to the amount of $250,000 in February 2020, and at the end of June, the outstanding amount including interest stood at $309,000.
The maturity date will be extended by 12 months when the restructuring is complete, as the interest rate increases to 12% from 10%.
The new terms allow for Seritza to convert the principle amount into Ncondenzi shares at a 25% discount, or convert any new interest portion into shares at a 30% discount.
The price will be calculated from a 30-day volume-weighted average, or a placing price if a placing has been concluded in the month prior.
The restructuring is expected to be complete before the end of the month, and is subject to shareholder approval at a general meeting, yet to be announced.
‘The proposed restructuring terms provide the company with a potential non-cash solution and protects existing working capital. The loan conversion terms are considered attractive versus other refinancing options currently available to the company. The restructuring follows positive progress on the company's solar power initiative which we look forward to providing a more detailed update on in the near future,’ said Chief Executive Officer Hanno Pengilly.
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