Oliver's Real Food Secures Amended Debt Facilities and New Loan
OLIVER'S REAL FOOD LIMITED (OLI) Share Update September 2024 Thursday 26th
Oliver's Real Food Announces Significant Debt Facility Amendments
Oliver's Real Food Limited (ASX: OLI) has announced significant changes to its debt facilities, including a twelve-month interest moratorium and an additional $1.4 million unsecured loan.
Instant Summary:
- Twelve-month interest moratorium on $4.91 million unsecured debt.
- Extension of maturity and repayment schedules for secured and unsecured loans.
- Additional $1.4 million unsecured debt facility provided by Michael Gregg.
- Interest rate of 7.3% on the new loan, repayable by 31 December 2025.
- Potential conversion of the $1.4 million debt to equity, subject to shareholder approval.
Debt Facility Amendment
Oliver's Real Food Limited has reached an agreement with its principal lenders, Michael & Suzanne Gregg and Gelba Pty Ltd, to amend its debt facilities. The key amendment includes a twelve-month interest moratorium on all $4.91 million unsecured debt, backdated to 1 July 2024. This moratorium will provide an additional $358,000 in working capital for the company.
Additionally, the maturity and repayment schedules for both secured and unsecured loans have been extended by twelve months, giving Oliver's more time to manage its financial obligations.
New Unsecured Debt Facility
In a significant boost to its liquidity, Oliver's has secured an additional $1.4 million unsecured debt facility from Michael Gregg. The loan carries an interest rate of 7.3% and is repayable on or before 31 December 2025. To date, $850,000 of this facility has already been drawn down.
Importantly, the lender has agreed, subject to shareholder approval, to convert the $1.4 million debt into equity at $0.014 per share. This conversion rate is a premium compared to the current share price of $0.010 as of 26 September 2024.
Shareholder Approval Process
Since Michael Gregg is a Related Party, the proposed debt-to-equity conversion requires shareholder approval under Section 611(7) of the Corporations Act 2001 and Chapter 10 of the ASX Listing Rules. The Board intends to include this resolution in the Annual General Meeting scheduled for late November 2024. Shareholders will receive the Notice of Meeting and accompanying Explanatory Statement in mid-October 2024.
Impact on Equity
If shareholders approve the debt-to-equity conversion, the equity structure of the company will change significantly. Michael Gregg and related parties' shareholding will increase from 21.54% to 36.05%, while Gelba Pty. Limited and other shareholders will see their percentages decrease.
These transactions are designed to provide Oliver's with the necessary liquidity to focus on growing the business and improving its market position.
The amendments to the debt facilities and the additional unsecured loan are likely to provide Oliver's Real Food with much-needed liquidity. This financial flexibility will enable the company to focus on its growth initiatives without the immediate pressure of debt repayment. The potential conversion of debt to equity at a premium share price could also boost investor confidence.
Investor Reaction:
Analysts are likely to view these developments positively, as they provide Oliver's with the financial stability needed to pursue its business objectives. However, the increase in equity for Michael Gregg and related parties may raise concerns among some investors about the dilution of their shares.
Conclusion:
Investors should keep an eye on the upcoming Annual General Meeting and the shareholder vote on the debt-to-equity conversion. The outcome will have a significant impact on the company's financial structure and future growth prospects. Staying informed and understanding the implications of these changes will be crucial for making well-informed investment decisions.