DekelOil Public Limited, operator and 51% owner of the vertically integrated Ayenouan palm oil project in Cote d’Ivoire, announced today that it has entered into an agreement with its joint venture partner, Biopalm Energy Ltd, which reduces the Company’s debt position by €5.1m. This will have a major positive impact on the Company’s profitability, where excellent progress continues to be made in increasing crude palm oil production at its state of the art Mill. An offset agreement has been signed between the Company and Biopalm, whereby a capital note totalling €5.1 million owed to Biopalm is to be cancelled. Under the terms of the loan note, interest was payable by DekelOil 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 €1.1m, to allow Biopalm to maintain its 49% interest in the joint venture.
Our view: This is an excellent arrangement for DekelOil, having a capital note of €5.1m cancelled, saving €500,000 annual interest charge. Biopalm retains its 49% stake in the joint venture, and no longer has to remit its outstanding equity contribution of €1.1m. Whilst there is no announcement about dividends, with the debt removed the Company is now in a position to pay dividends. Buy
Beaufort Securities acts as corporate broker to DekelOil Public plc
