Verde Announces Plans for First Distribution of Gains and Restructure
BELO HORIZONTE, Brazil, May 24, 2022 (GLOBE NEWSWIRE) -- Verde AgriTech Plc (TSX: "NPK") (OTCQB: "AMHPF") ("Verde" or the "Company") is pleased to announce the findings of the Independent Special Committee of the Board of Directors (the "Committee") to re-domicile Verde to Singapore (the "Re-domiciliation") to deliver commercial freedoms and benefits. The Committee believes the Re-domiciliation is in the best interests of Verde's future commercial success, with access to new markets, while helping in the implementation of the Paid for Growth ("P4G") strategy, a cornerstone program aimed at distributing gains to shareholders while maintaining Verde's expansion without shareholder dilution.
The Committee was composed of Mr. Michael St Aldwyn (Verde's Lead Independent Director), Mr. Renato Gomes and Mr. Paulo Sergio Ribeiro Machado, see press release issued on 22 February, 2022.1 Working alongside Verde's management, the Committee determined that ongoing and expanding sales is expected to generate enough accumulated cashflow in the second half of 2022 to warrant returning gains to shareholders in the coming months.
By year end 2022, the Company expects to be able to return a minimum of C$10 million to shareholders while maintaining a minimum of C$30 million in cash and receivables.
For 2023, Verde expects to continue returning gains to shareholders while maintaining a minimum of C$30M in cash and receivables, in addition to fully self-funding Plant 3, without need for equity or debt financing.
In 2021, the Company had its second profitable year thanks to sales of 400,133 tonnes of Verde's multinutrient potassium products, BAKS(TM) and K Forte(TM) sold internationally as Super Greensand(TM) (the "Product"), as disclosed in the press release of March 22, 2021.2 Verde's latest 2022 guidance provides for sales of 1,000,000 tonnes of Product, with projected revenue of C$109.09 million, EBITDA of C$49.06 million and net earnings per share ("EPS") of C$0.87, as detailed in the press release of May 03, 2022.3
The P4G strategy is not intended to conflict with Verde's accumulated cashflow funded construction of Plant 3, which is planned for 2023 and is expected to add 10 million tonnes per year ("Mtpy") production capacity. Plant 3's post-tax net present value is projected at US$2.91 billion (8% discount rate) with an internal rate of return of 427.17%, assuming a potash price at less than a third of current Potassium Chloride ("KCl") prices and those adopted by Verde. Currently, Verde operates Plant 1 with a capacity of 0.6Mtpy, with Plant 2 on track for commissioning in Q3 2022, with an additional capacity of 2.4Mtpy.
BACKGROUND TO THE RE-DOMICILIATION
Verde is currently domiciled in the United Kingdom, a country with which it has no other business connection beyond its incorporation address and the relatively high costs of reporting and compliance under local regulations. Verde is also aiming at an increased access to a wider commodities market for its products. Furthermore, the United Kingdom bars companies from making any type of payment to shareholders while there are no distributable reserves available in the parent Company. The Re-domiciliation to Singapore will provide all the commercial advantages explained in the next section while also enabling the Verde group of companies ("Group") to eventually execute its P4G through dividend, variable dividend, share buyback and other potential structures that will be further studied in the event that the Re-domiciliation is completed.
"Over 15 years, Verde has overcome many challenges to reach our current stage of production and profitability. We need to ensure that we are well placed to quickly access new markets and we also consider that the time is approaching for the Company to reward its shareholders, many of whom have unwaveringly supported the Company over many years. P4G will only be adopted without compromising Verde's accelerated growth trajectory and without depleting a sizeable cash reserve," affirmed Verde's Founder, President & CEO Cristiano Veloso.
To implement the Re-domiciliation, Verde shareholders shares will be exchanged for shares in a new Singaporean company ("New Verde") on a one-for-one basis. Following the share exchange, New Verde will become the sole parent company of the Group. There will be no changes to the respective shareholdings of each Verde shareholder. Verde's listing on the Toronto Stock Exchange will be replaced with New Verde's listing on the Toronto Stock Exchange, with no impact on Verde shareholders.
The Re-domiciliation will not impact the Group's underlying assets or operations, strategy, or business plan.
ABOUT SINGAPORE
Among the jurisdictions analysed by Verde, the Committee chose Singapore because of its advantages to the Company's business activities and its Shareholders. Noticeably:
In 2022, Singapore is the number 1 country out of 177 in the Index of Economic Freedom, an annual index and ranking created in 1995 by conservative think-tank The Heritage Foundation and The Wall Street Journal to measure the degree of economic freedom in the world's nations. Since 2017 Singapore has held the 2nd position out of 190 countries in the World Bank's Ease of Doing Business Report, which reflects a productive regulatory environment for doing business. In 2021, Singapore ranked 4th position out of 180 countries in the Corruption Perceptions Index, an index which ranks countries "by their perceived levels of public sector corruption, as determined by expert assessments and opinion surveys." The index is published annually by the non-governmental organisation Transparency International since 1995. Because of its streamlined regulatory environment, Singapore is a major global trading hub for commodities. In agriculture, three of the world's largest commodity trading houses are headquartered in the country: Trafigura, Wilmar International and Olam International. According to estimates, as the world's largest importer of food, Asia is and will continue to be the growth engine for global agriculture. This growth is mainly driven by economies such as India and China. Brazil and Singapore have a bilateral tax treaty, signed on May 07, 2018, which will ensure the most efficient flow of profits to the Company. IMPLEMENTATION
The Re-domiciliation will be implemented by way of scheme of arrangement (the "Scheme") sanctioned by the High Court of England and Wales (the "Court") and will therefore be subject, amongst other things, to approval by Verde shareholders in Court convened general meeting (the "Scheme Meeting") and sanction by the Court.
If Verde shareholders approve the Re-domicile proposals at the Scheme Meeting and the Scheme is subsequently sanctioned by the Court, it is currently envisaged that the Scheme would take effect in July 2022. Prior to the Scheme becoming effective, an application will be made to the Toronto Stock Exchange to de-list the ordinary shares of the Company and to list the new ordinary shares to be issued to Verde shareholders pursuant to the terms of the Scheme on the exchange. It is expected that the de-listing of the Company's ordinary shares and the listing of New Verde's ordinary shares will both take effect on the same day in July 2022.
The Company will provide Verde shareholders with a circular setting out a detailed timetable, information on the reasons for the Re-domiciliation and an explanation of the Scheme later this month, subject to receipt of the Court's permission to convene the Scheme meeting. Verde shareholders are encouraged to read the circular once available, as it will contain important information in relation to the Re-domiciliation.
The Company will issue a further announcement with anticipated timings in due course. |
