Kropz PLC on Tuesday announced a financial restructuring alongside plans to raise funds in a bid to ramp up operations in South Africa.

The African phosphate producer and developer said it plans to raise £8.9 million via a subscription for shares from ARC Fund at 1.39 pence per share plus a £1.8 million retail offer at the same price.

Kropz shares were quoted at 1.50p each in London on Tuesday afternoon. They last traded at 1.28p on Thursday last week.

The additional funds will progress the ramp-up of operations at the Elandsfontein phosphate project in South Africa and provide further funding to Cominco SA, which owns the Hinda project in the Republic of the Congo, the firm said.

Further, funds will finance the remaining repayment of a facility with BNP Paribas, allow partial repayment of accumulated accrued interest on convertible loan notes as well as working capital for general corporate purposes.

ARC, the firm’s major shareholder, has agreed to subscribe for a minimum of 515 million shares, and to underwrite an amount equal to the retail offer to ensure the fundraising equates to around £8.9 million.

Kropz explained that due to a number of resource and processing issues it has required significantly more capital than was originally anticipated at the time of the company’s admission to AIM back in 2018.

As part of the restructuring, intercompany debt and some loans between the company and its subsidiaries and ARC are being simplified and new convertible loan notes issued.

These steps will eliminate all the debt accumulated within the subsidiaries and simplify the group’s corporate structure, Kropz said.

The restructuring, issue of convertible loan notes and the fundraising are conditional on approval from the South African Reserve Bank, Kropz noted.

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