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Fairfax Africa Holdings Corp
Symbol FAH
Shares Issued 20,620,189
Close 2018-04-24 U$ 13.00
Market Cap U$ 268,062,457
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Fairfax Africa to invest $16M (U.S.) in Atlas Mara

2018-04-24 07:55 ET - News Release

Mr. Guy Bentinck reports

FAIRFAX AFRICA INVESTS IN CONVERTIBLE BONDS OF ATLAS MARA LIMITED AND PROVIDES FINANCING TO PHILAFRICA FOODS

Fairfax Africa Holdings Corp. has agreed to invest in secured convertible bonds issued by Atlas Mara Ltd. and has separately agreed to provide bridge financing to Philafrica Foods Pty. Ltd. (Note: All dollar amounts in this news release are expressed in U.S. dollars, except as otherwise noted.)

Investment in Atlas Mara convertible bonds

Fairfax Africa has agreed to invest $16-million in Atlas Mara secured convertible bonds maturing in April, 2020, as an anchor investment in connection with a targeted $37.5-million debt fundraising by Atlas Mara.

The bonds are secured with a portion of Atlas Mara's shareholding in Union Bank of Nigeria PLC (UBN). Subject to Atlas Mara shareholder approval, which will be sought at Atlas Mara's next annual meeting, the bonds will be convertible, at Fairfax Africa's option, into Atlas Mara shares at the lower of (i) $2.475 per share and (ii) a 10-per-cent discount to the 30-day volume-weighted average price prior to the maturity date. The bonds will bear interest at a rate of 7.5 per cent payable in cash semi-annually and, in the event that shareholder approval for the conversion feature is not obtained, the interest rate will increase retroactively to 9.0 per cent. In connection with the investment, Fairfax Africa will earn a structuring fee equal to 3 per cent of the aggregate proceeds of the debt fundraising (approximately $1.1-million) for its role in anchoring and structuring the debt fundraising.

The proceeds of the debt fundraising will be used by Atlas Mara for general corporate purposes, including providing continuing liquidity support for Atlas Mara's operations. Closing of the investment is subject to the finalization of security documentation relating to the UBN shares.

Atlas Mara is a publicly traded, sub-Saharan African financial services group listed on the London Stock Exchange under the stock symbol ATMA. Atlas Mara's vision is to establish itself as a premier financial institution across key markets in sub-Saharan Africa. Since its inception in 2013, Atlas Mara has acquired control or a significant stake in banking operations spread across seven key sub-Saharan African countries: Botswana, Mozambique, Nigeria, Rwanda, Tanzania, Zambia and Zimbabwe.

Facility agreement with Philafrica

Fairfax Africa has entered into a secured lending arrangement with Philafrica, a subsidiary of AFGRI Group Holdings Pty. Ltd. (AFGRI), pursuant to which it has provided Philafrica with 330 million South African rand (approximately $27-million at current exchange rates). Philafrica sought out the financing ahead of an expected future equity capital raise in the form of a rights offering of Philafrica shares to existing AFGRI shareholders.

The Philafrica facility is guaranteed by a wholly owned subsidiary of AFGRI and matures in October, 2018. Subject to AFGRI shareholder approval, the Philafrica facility may be repaid through the issuance of Philafrica shares to Fairfax Africa. The Philafrica facility bears interest at a rate of South African prime plus 2 per cent and, in the event that the AFGRI shareholder approval is not obtained, the interest rate will increase retroactively to South African prime plus 4 per cent. Fairfax Africa will receive an upfront fee equal to 2 per cent of the loan proceeds (approximately $540,000 plus interest), which fee is payable at maturity or upon repayment of the Philafrica facility.

The proceeds from the Philafrica facility will be used by Philafrica to finance strategic acquisitions and for general corporate purposes.

Based in South Africa, Philafrica owns and operates maize mills, wheat mills, oilseed-crushing and extraction of oil and other raw materials into edible oils, fats and proteins for human consumption (primarily for the food processing and quick-service restaurant industries). Philafrica is as also one of South Africa's leading animal feed manufacturers with a production capacity of approximately one million tonnes per annum.

Fairfax Africa is an investment holding company the objective of which is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments of African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa.

We seek Safe Harbor.

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