Feronia Inc.

Feronia Inc.

July 16, 2012 09:24 ET

Feronia Inc. Announces Brokered Private Placement

TORONTO, ONTARIO--(Marketwire - July 16, 2012) -


Feronia Inc. ("Feronia" or the "Company") (TSX VENTURE:FRN) today announced that it has entered into an engagement letter with Macquarie Private Wealth Inc. and Renaissance Securities (Cyprus) Limited (the "Agents") for a proposed brokered private placement to raise gross proceeds of up to Cdn.$10,000,000 (the "Offering"). The Agents will also have the option (the "Over-Allotment Option") to solicit and accept subscriptions for up to an additional 15% of the maximum Offering, exercisable in whole or in part up to 30 days following the closing of the Offering.

The Offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the approval of the TSX Venture Exchange, as well as the negotiation and execution of certain documentation related to the Offering, including an agency agreement between the Agents and the Company. The Offering may close in one or more tranches with the first tranche anticipated to close on or about July 19, 2012.

Two types of securities shall be available to purchasers under the Offering. The first shall be a unit (a "Debenture Unit") consisting of one Cdn.$1,000 principal amount 12.0% convertible unsecured subordinated debenture (a "Debenture") and 1,667 common share purchase warrants (a "Warrant"). The purchase price for a Debenture Unit shall be Cdn.$1,000 per unit.

The second security available to purchasers shall consist of one common share in the capital of the Company (a "Common Share") at a purchase price of Cdn.$0.10 per share.

The Debentures will bear interest at 12.0% per annum, payable semi-annually on the last day of June and December of each year, commencing on December 31, 2012, and shall be due and payable five years from the closing of the Offering (the "Maturity Date"). The principal amount of the Debentures will be convertible at the holder's option into Common Shares at any time prior to the close of business on the Maturity Date, at a conversion price of Cdn.$0.175 per share, being a ratio of 5,714 Common Shares per Cdn.$1,000 principal amount. The Debentures shall be governed by a trust indenture which shall include customary adjustment provisions to the conversion price.

Each whole Warrant will entitle the holder thereof to purchase one Common Share at a price of Cdn.$0.30 per share for a period of two years following the closing of the Offering.

The Corporation has engaged the Agents to sell the securities on a commercially reasonable efforts basis on a private placement basis to purchasers within Canada and internationally. At the closing of the Offering, the Agents shall be entitled to an aggregate cash commission equal to 7% of the gross proceeds of the Offering and an aggregate number of non-transferable options (each, an "Agents' Option") equal to: (i) 3.5% of the gross proceeds of the Debenture Units sold under the Offering and/or the Over-Allotment Option, if applicable, divided by Cdn.$0.175; and (ii) 3.5% of the number of Common Shares sold under the Offering and/or the Over-Allotment Option, if applicable.

Each Agents' Option will be exercisable for one Common Share at a price of Cdn.$0.175 for a period of two years following closing of the Offering. The Company will also pay a corporate finance fee to Macquarie Private Wealth Inc. of up to Cdn.$20,000 plus applicable taxes. The Company may also issue warrants, on terms equivalent to the Agents' Options, equal to 3.5% of a portion of the gross proceeds as a finder's fee to certain finders in connection with the Offering.

All securities issued in connection with the Offering will be subject to a statutory hold period of four months plus one day from the date of completion of the Offering, in accordance with applicable securities legislation. Feronia will apply to list the Debentures and the Warrants on the TSX Venture Exchange following the completion of such hold period.

The proceeds from the Offering will be used by Feronia for working capital purposes.

"We anticipate a rapid close to this financing and the addition of several new, high-quality investors as well as broad participation from our existing investor base, demonstrating our ability to secure funding in a difficult environment. Assuming completion of the Offering in full, we expect to have sufficient working capital in place to fund our progress to positive free-cash flow across the business" said Ravi Sood, Executive Chairman.

"Feronia is at a major inflection point in terms of value creation. We expect that the completion of the Yaligimba palm oil mill in Q4 of this year will allow the Company to increase crude palm oil production by over 50% in 2013. The Company is then expected to have in place substantial excess processing capacity at each of its plantations allowing it to continue its major re-planting programme with minimal capital expenditures. We believe that the risks associated with this next phase of growth are far lower and less capital intensive than the first several years of rebuilding.

In the arable farming operation, by the end of the third quarter we anticipate having capacity in place to mill over 30,000 tonnes of rice per annum and farm 2,000 hectares of land. The Company is limiting its expenditures on the arable farming operation and focusing its efforts on continuing to prove yields through smaller-scale plantings. Once commercially compelling yields have been demonstrated, our objective will be to leverage our existing infrastructure to rapidly expand the operation with far less capital expenditure than was required to commence the operation" concluded Sood.

About Feronia Inc.

Feronia is a large-scale commercial farmland and plantation operator in the DRC. The Company uses modern agricultural practices to operate and develop its oil palm plantations and arable farming business division. Feronia believes in the immense agricultural potential of the DRC for high-quality foodstuffs and edible oils given its ideal climate, excellent soil and highly skilled and experienced workforce. Feronia's management team is comprised of senior agriculturalists with extensive experience in managing both plantations and large-scale mechanized farming operations in emerging markets. Feronia is committed to sustainable agriculture, environmental protection and providing support for local communities. For more information please see www.feronia.com.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities referred to herein in the United States or in any jurisdiction where such offer or sale would be unlawful. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to or for the account or benefit of a "U.S. person" (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act. No public offering of securities is being made in the United States. Nothing in this announcement constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

Cautionary Notes

Except for statements of historical fact contained herein, the information in this press release constitutes "forward-looking information" within the meaning of Canadian securities law. Such forward-looking information may be identified by words such as "anticipates", "plans", "proposes", "estimates", "intends", "expects", "believes", "may", "will" and include without limitation, statements regarding the terms of the Offering, entering into an agency agreement with the Agents and the completion of the proposed Offering. There can be no assurance that such statements will prove to be accurate; actual results and future events could differ materially from such statements. Factors that could cause actual results to differ materially include, among others: the inability of the Company to enter into an agency agreement with the Agents on terms favourable to the Company, or at all; fluctuations in currency exchange rates; a shift in commodity trends and demands; fluctuations in the world market; and stock market volatility. Most of these factors are outside the control of the Company. Investors are cautioned not to put undue reliance on forward-looking information. Except as otherwise required by applicable securities statutes or regulation, the Company expressly disclaims any intent or obligation to update publicly forward-looking information, whether as a result of new information, future events or otherwise.

The distribution of this announcement in certain jurisdictions may be restricted by law. Persons into whose possession this announcement comes are required by each of the Company and the Agents to inform themselves about, and to observe, any such restrictions.

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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