Feronia Inc. announces strategic investment from Phatisa's African Agriculture Fund

The AAF is a leading pan-African agriculture and food private equity fund that is managed by Phatisa, an Africa-based private equity investment management firm.

Feronia Inc. | 9.12.2012

Feronia Inc. Announces Strategic Investment from Phatisa's African Agriculture Fund

TORONTO, ONTARIO--(Marketwire - Dec. 9, 2012) - Feronia Inc. ("Feronia" or the "Company") is pleased to announce that it has entered into a share subscription agreement with the African Agriculture Fund ("AAF") managed by Phatisa Fund Managers Limited ("Phatisa"). All amounts in this release are expressed in Canadian dollars unless otherwise indicated.

AAF, through one of its subsidiaries, has agreed to subscribe for common shares in the capital of the Company in two tranches. In the first tranche, AAF has agreed to purchase 42,028,000 common shares at a purchase price of $0.12 per share for an aggregate purchase price of approximately $5.0 million. Following such investment, AAF will indirectly hold 19.9% of the Company's issued and outstanding common shares.

Following completion of the first tranche and subject to TSX Venture Exchange ("TSXV") approval, the Company will appoint two AAF-nominees, Mr. David White and Mr. Anders Einarsson, to the Company's Board of Directors. One or both of such nominees will also act on the various committees of the Board. Mr. White is a graduate in Economics and Business, and has extensive experience of Africa, having lived and worked in Nigeria during the early stages of his banking career. He is currently also Chairman of a palm oil company in Sierra Leone and a member of the Investment Committee of AAF. Mr. Einarsson is a graduate in Business and has spent his career in corporate finance and investment activities in emerging markets. Anders is a Deal Partner at Phatisa.

In the second tranche, the Company is proposing to issue up to 82,500,000 common shares to AAF and other qualifying investors on a private placement basis at a price of $0.12 per share for gross proceeds of up to $9.9 million. AAF has agreed to purchase in the second tranche up to 46,009,000 common shares for gross proceeds of up to approximately $5,550,000.

The completion of the two tranches is subject to various terms and conditions as set out in the subscription agreement including TSXV approval with respect to both tranches and shareholder approval with respect to the second tranche. The first tranche is expected to close in early January 2013 with the second tranche expected to close immediately following a meeting of the Company's shareholders anticipated to take place in late February 2013.

The AAF is a leading pan-African agriculture and food private equity fund that is managed by Phatisa, an Africa-based private equity investment management firm. The AAF includes among its limited partner investors a number of European development finance institutions ("DFIs") such as the Agence Francaise de Developpement (AFD), the Spanish Agency for International Development Cooperation (AECID), and Promotion et Participation pour la Cooperation Economique (Proparco); a number of African DFIs such as the African Development Bank (AfDB), the Development Bank of Southern Africa (DBSA), the West African Development Bank (BOAD) and the ECOWAS Bank of Investment and Development (EBID); and other private European and USA investors.

"This strategic investment in Feronia is AAF's second African palm oil investment and we see opportunities to grow this asset profitability, while meeting important development objectives," says Valentine Chitalu, Chairman of Phatisa Group.

The AAF also has an associated Technical Assistance Facility ("TAF") of EUR10 million which provides technical assistance to agri and food-related businesses that receive investment through the AAF, allowing them to create new opportunities for small-holder farmers, farmer business groups and rural communities. The TAF is funded primarily by the European Commission and managed by the International Fund for Agricultural Development (IFAD). It is also co-sponsored by the Italian Development Corporation, United Nations Industrial Development Organisation (UNIDO) and the Alliance for a Green Revolution in Africa (AGRA). The Company's management is optimistic that as a result of AAF's strategic investment, the TAF can be accessed to provide a grant to accelerate the Company's goal of facilitating small-holder farming in the vicinity of its operations.

The Company's management and Board of Directors believe that the strategic investment from AAF positions the Company well from a working capital perspective in the short-term, and to access non-dilutive forms of growth funding from other sources in the medium and long-term. "The investment from Phatisa's African Agriculture Fund is a significant milestone for the Company. It is a major endorsement from one of the continent's most sophisticated investors and is expected to have many long-term benefits that greatly exceed the initial cash investment" said Ravi Sood, Executive Chairman of Feronia. "We are pleased to welcome the fund as a significant shareholder and active supporter of management's efforts to achieve our business objectives and create value for shareholders."

Private Equity Africa · December 11, 2012

Phatisa in $10.5m Feronia PIPE deal

Phatisa has committed to invest $10.5 million in Feronia, an agriculture company in the Democratic Republic of the Congo (DRC), through a private investment in public equity (PIPE) deal.

Phatisa is buying common shares in the company, which has been listed on the Toronto Stock Exchange’s junior bourse, TSX Venture Exchange, since 2010. The investment will be made through two tranches, the first being $5 million, and will result in the investor holding 19.9% of Feronia.

The second tranche will see Phatisa gain $5.5million worth of shares, out of the total $9.9 million that will be placed with private investors. Phatisa will finance the company through its maiden fund, the African Agriculture Fund (AAF).  The investment is set to complete in February 2013.

The deal comes just after Feronia raised $7.7 million through privately placed debentures and share purchase warrants. The capital went into financing development and strengthening the company’s liquidity position.

Phatisa has backed the company because of the strong management team, and also on expectations that the DRC has the potential to become one of the leading agricultural producers, globally, with the capacity to feed over two billion people. The investor will be represented on the board by deal partner Anders Einarsson and investment committee member David White.

“This is the second African palm oil investment for the AAF in West and Central Africa and we see opportunities to grow this asset profitably, whilst meeting important development objectives” said Valentine Chitalu, Phatisa’s chairman [pictured].

Feronia operates through three farms, whose principal products are crude palm oil and palm kernel oil. The company also owns one of the country’s oldest farms, the Plantations et Huileries du Congo (PHC), which was founded in 1911. It bought the farm from Unilever in 2008. Feronia’s oil is sold to domestic refiners, who produce cooking oils, soaps, and other consumer goods.  The company employs approximately 4,000 people.

For the quarter that ended June 2012, the company’s revenue was up 25% to $2.02 million from $1.61 million in the same period in 2011. Annual revenues in 2011 grew to $7.45 million from $3.91 million in 2010. The company narrowed its net loss to -$5.7 million, compared to a loss of – $6.87 million in 2010.

Analysts expect the company’s revenues to reach $25.4 million by the end of 2013, from $10.4 million at the 2012 year-end. Feronia is the first ever Africa-based agri-business to be listed on a North American Stock Exchange.
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