Aim-listed Bushveld Minerals has revised agreement terms regarding Mustang Energy’s acquisition of a 22.1% interest in Bushveld’s indirect subsidiary Vanadium Redox Flow Battery Holdings (VRFB-H), including to extend the maturity date of the agreement to February 28.
Bushveld CEO Fortune Mojapelo says the companies were unable to close the transaction within the original timeframe, owing to unforeseen events, and the extension of the maturity date may allow some visibility as to the potential outcome of litigation surrounding the deal that is in progress.
In April last year, Bushveld announced an investment by Mustang of about $7.5-million into VRFB-H by subscribing for a 22.1% interest, being an indirect interest of 11.05% in Enerox Holdings Limited (EHL), which is a vanadium redox flow battery manufacturer providing grid-scale and microgrid energy storage solutions.
Bushveld Minerals’ 84%-owned Bushveld Energy subsidiary holds an indirect 25.25% interest in Enerox through VRFB-H’s 50% interest in Enerox’s parent company EHL.
Mustang funded the investment by way of an issue of $8-million of unsecured convertible loan notes bearing a 10% coupon to certain investors.
On completion of the investment, in July last year, Bushveld announced that Garnet Commerce, which is a 50% shareholder in EHL, issued a claim form in the High Court of Justice: Business and Property Courts of England and Wales against VRFB-H and EHL.
Garnet seeks declarations against VRFB-H concerning alleged breaches of the EHL joint venture agreement, in respect of Mustang’s indirect investment into EHL through VRFB-H.
The matter will be heard in court on January 19.
The Mustang capital raise and concurrent acquisition of shares in VRFB-H constitutes a reverse takeover, which requires the publication of a prospectus; however, the ongoing uncertainty owing to the litigation precludes Mustang from issuing such prospectus.
In turn, this is a precursor for Mustang shares to be readmitted to trading on the LSE.
A condition of the investment agreement between Mustang and Bushveld is that, if readmission did not occur by December 31, 2021, Bushveld would have to pay a backstop fee and issue each convertible loan note holder such number of new Bushveld shares as is equivalent to the par value of the notes initially, together with accrued interest – this all within five days of the maturity date lapsing.
In turn, Mustang would need to transfer its VRFB-H shares back to Bushveld. Certain of the convertible loan note holders, on exercise of the backstop, have the choice to elect not to receive new Bushveld shares and instead receive shares directly in the capital of VRFB-H.
Mustang is now required to publish a prospectus by no later than February 28.
Bushveld has provided Mustang with a working capital loan of $220 000 at no interest, which is repayable if the litigation is settled or determined in such a way that Mustang can hold shares directly or indirectly in VRFB-H.
The loan shall be waived if the litigation is determined as such that Bushveld can not hold shares directly or indirectly in VRFB-H and the backstop arrangements have been implemented.