Projects Financing | Energy
Botswana Public Officers Pension Fund (BPOPF) will inject a total of P100 million into Tlou Energy, a statement from Tlou has revealed.
Tlou is a Botswana Stock Exchange listed diversified energy development company boasting of its advanced Coal Bed Methane power generation Lesedi project.
BPOPF is the largest pension fund inthe Botswana, by far, currently worth over P60 billion, with much of the funds invested offshore.
Underpinned by over 140 000 civil servants pension contributions the BPOPF is already a significant investor in Tlou Energy. Tlou listed on the BSE in December 2017.
The company said on Tuesday that it has signed a Convertible Note Agreement with the BPOPF and has also agreed terms for an equity investment by the same Fund.
In a statement floated on its website Tlou Energy revealed that the funds are planned to be used to finance construction of transmission line infrastructure to connect the Lesedi Project to the Botswana Power Corporation(BPC) power grid and to fund installation of generation assets and ancillary costs to facilitate power generation and sale of electricity.
The Note has a fixed interest rate of 7.75% p.a. payable every six months. Interest may be capitalised for the first 18 months. This can be converted to ordinary shares on exercise of the conversion option by BPOPF at a 10% discount to the weighted average traded price of the Company’s shares on the highest average volume exchange of the BSE/ASX/AIM over the 90 trading days prior to the maturity date.
Upon conversion of the Note into fully paid ordinary shares, the shares will rank pari passu with the Company’s existing shares.
Tlou Energy says it shall obtain all regulatory and shareholder approvals as applicable which shall be conditions precedent to the coming into force and effect of the Note and any obligations placed upon BPOPF to subscribe for the Note.
In addition to the Note, the Company and BPOPF have agreed preliminary terms for a further BWP 50m (~USD 5m) equity investment post 1 July 2022 which is conditional to legal agreements in relation to this process being prepared and finalised.
Last month Tlou Energy penned a lucrative deal with Botswana Power Corporation (BPC) worth over half a billion pula.
Under the terms of agreement of the Power Purchase Agreement (PPA) Botswana Power Corporation (BPC) will purchase up to 10 Megawatts of power generated at Tlou Energy’s Lesedi Power Project.
The Power Purchase Agreement is for an initial five-year term, with the 10 Megawatt project being the first phase of Tlou’s planned power project expansion.
Tlou Energy’s Lesedi project is the company’s most advanced operation and is located in the Central District of Botswana. Once in full production, the 10 Megawatt project is expected to generate revenue of up US$ 10 million (over P110 million) annually, meaning from the first 5-year deal the company will rake in over P550 million in revenue from the project.
Commenting on the financing deal Botswana Public Officers Pension Fund Chief Executive Officer Mr Moemedi Malindah, BPOPF CEO, said Tlou Energy is building vital assets and infrastructure for Botswana.
“We are committed to long‐ term support of the project and look forward to its continued success. This is a long‐term strategic investment, and we are very pleased to be able to support the Company and help bring clean reliable power and sustainable employment to Botswana.” he said
For his part Mr Tony Gilby, Tlou’s Managing Director, said the company was extremely grateful to BPOPF for their continued and unwavering support.
“We look forward to working together in the long term to develop the Company to its full potential and bring a return to BPOPF and all our shareholders.With funds now in place along with required approvals and agreements to commercialise our gas we look forward to pushing on with development.”