RCS - Neutral Cap Fin PLC - Updated Proposal to Amend & Extend
30/05/2024 18:30
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RNS Number : 5387Q Neutral Capital Finance PLC 30 May 2024
NEUTRAL FUELS LLC
(the "Borrower")
Neutral Fuels LLC - Updated Proposal to Amend & Extend
30 May 2024
Neutral Capital Finance PLC Series 2019-NF1 8.25% Bonds Due 2024
(ISIN: GB00BJHPK447)
(the "Bonds")
On 15 April 2024, Neutral Capital Finance PLC (the "Issuer") received from the
Borrower a proposal to amend the terms of the Loan Agreement and the Notes,
which the Issuer published in full in its announcement of 18 April 2024.
Following feedback from a number of Noteholders and their representatives, the
Borrower delivered and updated proposal to the Issuer on 29 May 2024. The
Borrower now wishes to share the updated proposal directly with the
Noteholders of the Bonds. Please see below:
*******************
Updated Proposal
Update to Proposal to Amend & Extend
Updated Proposal for revisions herein (the "Updated Proposal"); for Neutral
Capital Finance PLC, Series 2019-NF1, being up to USD$12,000,000, 8.25%
secured medium term notes due 2024, with ISIN: GB00BJHPK447 and issued on 12
April 2019 (the "Bond" or "Series 2019-NF1).
To: Woodside Corporate Services Ltd
4th Floor, 50 Mark Lane
Neutral Capital Finance Plc
London
1 Bartholomew Lane
EC3R 7QR
London
EC2N 2AX
29 May 2024
Dear Sirs
UPDATED PROPOSAL SUMMARY
Following feedback and dialogue with Bondholder representatives, Neutral Fuels LLC, the borrower under Series 2019-NF1 (the "Borrower") has revised some of the key terms of its amend and extend proposal, released 18(th) April 2024 (the "Proposal") -
Proposal to Amend & Extend - 2019-NF1 - 16:08:50 18 Apr 2024 - IRSH News article | London Stock Exchange (https://www.londonstockexchange.com/news-article/IRSH/proposal-to-amend-extend-2019-nf1/16430520)
. The following are the details of the Updated Proposal.
UPDATED PROPOSAL TERMS
15 April Proposal Terms 29 May Updated Proposal Terms
Series 2019-NF1 maturity (and principal repayment) to be extended by Series 2019-NF1 maturity (and principal repayment) to be extended by
18-months, to 12 October 2025 12-months, to 12 April 2025
Series 2019-NF1 callable at 100.00% of nominal amount from 31 May 2024, to Series 2019-NF1 callable at 100.00% of nominal amount upon the implementation
allow for possible early exit of Bondholders of the Updated Proposal, to allow for possible early exit of Bondholders
Retainment of Series 2019-NF1 8.25% p.a. coupon, paid quarterly until 12 Increase of Series 2019-NF1 coupon to 10.25% p.a., for the period from 12
October 2025 (and accrued until Proposal is approved) April 2024 until 12 April 2025 - with all such interest payments being paid on
12 April 2025 (or calculated to the date of the repayment if earlier than 12
April 2025)
Upon agreement of the Updated Proposal, the Borrower fully expects to be able to refinance or otherwise extinguish the principal of the Bond in due course (and ahead of the 12 April 2025 maturity date proposed herein).
Following approval of the Updated Proposal, the Borrower would enter into new legal resolutions and amend the required transaction documents to formalise the new terms.
REPLACEMENT OF NON-BENEFICIAL SHAREHOLDER
As detailed in the first Proposal, Institutions specialising in both debt and
M&As have been engaged by the Borrower in preparation for the repayment of
Series 2019-NF1. In order to proceed with these options, the Borrower has been
notified that a non-beneficial and non-executive shareholder must be replaced.
This is because this individual has a relationship with a third party,
currently subject to OFAC Sanctions. Making this change has now become
critical.
Removing the individual(1) cures this position for the Borrower immediately
and has been approved by its management. The current failure to remove this
individual not only prevents onboarding with all financial services companies
but since the Proposal was released the Borrower has been subjected to
material risks - including a block to all international payments (this
situation has delayed the payment of its unrelated second series bond coupon).
In addition, there is a growing risk that the sanctions are extended to the UK
and/or EU which could prevent funds flowing via banking channels and clearing
houses.
There is no detrimental effect for Bondholders, this is purely a technical
replacement. It is the Borrower's strong view that the change is imperative to
allow for the Updated Proposal to be viable.
1. The Borrower wishes to make clear that the sanctioning by the US, of the
unrelated company, in no way indicates any wrong doing by the individual local
shareholder.
CURRENT BUSINESS STATUS
The Borrower's business has grown substantially during the five years since the 2019-NF1 bond was issued and is now generating 4x greater revenues. The Borrower has been building-up production capacity and has gained significant market share across many sectors (transportation, maritime, power generation and hotels & hospitality). As the largest producer of biodiesel in the Middle East (from using Used Cooking Oil from its local market) it expects to have a first-mover advantage for the anticipated change in the diesel market regulation, which will potentially introduce a mandatory use of B5 or B7 (for all diesel). Such regulation would significantly increase demand and the Borrower is well placed to benefit.
EXPLANATION OF THE UPDATED PROPOSED RESOLUTIONS AND TIMELINES
Following the approval of this Proposal, the Issuer's legal counsel, alongside
the Trustee's independent counsel, will draft the required updates to the
transaction documents, before all key transaction parties formally enter into
the new amendments, namely those of the Loan Agreement, the Trust Deed and/or
any ancillary documents necessary to effectuate the following:
Series 2019-NF1
· Maturity (and principal repayment) to be extended by 12-months
o New maturity date of 12 April 2025
· A call option for the Borrower available upon the implementation
of the Updated Proposal
o Set at 100% of nominal value
· If call option not activated, 10.25% p.a. coupon payments from 12
April 2024 to 12 April 2025, accrued and paid on 12 April 2025
In addition, the Borrower may be reimbursed for third party fees and
professional service fees reasonably incurred (including legal and accounting
fees) under this Updated Proposal.
If this Updated Proposal is accepted, all costs related to its execution
(transactional, legal, trustee etc.) will be borne by the Borrower (subject to
the shareholder change being successfully completed).
However, if this proposal is rejected or security was enforced, alternative
arrangements would need to be put in place; and their costs will not be borne
by the Borrower.
Furthermore, any enforcement may take a great deal of time and the activation
of transaction parties, who each sit higher in the Post-Enforcement Priority
of Payments; taking their fees ahead of Bondholders, will significantly weaken
the final settlement for the Bondholders, in the Borrowers view.
The Borrower wishes to undertake the approval process within 30 days of the
date of this Updated Proposal. This is to ensure a clear and quick resolution
for Bondholders and allow the Borrower to reengage the financing opportunities
it has originated. The Borrower of Series 2019-NF1 will pay any and all due
and accrued coupon payments upon approval.
Due to its critical nature and current material impact, the required process
for the replacement of the non-beneficial shareholder, as detailed in this
Updated Proposal, is being completed with urgency and is independent of this
Updated Proposal.
We look forward to your consideration of the above Updated Proposal.
Yours faithfully,
Authorised Signatory of:
Neutral Fuels LLC
*******************
Information regarding the Proposal
Queries regarding the Proposal should be made promptly by email to the
Borrower at the following address: info@2019-nf1.com
(mailto:info@2019-nf1.com) .
Noteholders should take and rely on their own independent legal and financial
advice in respect of the Proposal.
This notice is given by the Borrower.
IMPORTANT INFORMATION
This notice contains important information that is of interest to the
registered and beneficial owners of the subject securities. If applicable, all
depositories, custodians and other intermediaries receiving this notice are
requested to expedite the re-transmittal to beneficial owners of the
securities in a timely manner. If noteholders are in any doubt as to the
action they should take, if any, they should immediately consult their own
independent professional advisers authorised under the financial services and
markets act 2000 (if they are in the United Kingdom) or another appropriately
authorised independent financial adviser and take such other advice from their
own professional, tax and legal advisers as they deem necessary.
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