Homeland Energy Group Ltd., a coal producing company with operations in South Africa, registered in the British Virgin Islands and publicly traded on TSX entered into an agreement with Nedbank Capital, a division of Nedbank Limited, to amend the terms of the existing credit facility.
Under the terms of the agreement, Homeland is to invest R70 million by January 2010. The first step to meet this obligation for the BVI company was to complete private placement with GMR Energy Limited, which is its largest shareholder, by issuing up to 27,465,100 common shares, or 10% of the Company’s current outstanding capital. In anticipation of this private placement, Homeland has received an advance from GMR of approximately CAD$2.7 million. Also, as required under the amendment of the credit facility with Nedbank, GMR has agreed to loan to the BVI company approximately CAD$4.2 million by November 30, 2009.
Homeland Energy Group is currently exploring its alternatives to raise the balance of the funds required to satisfy Nedbank, including rights offering. If such rights offering is undertaken, GMR will be entitled to have the loan repaid to the extent of their participation in the rights offering.
The required sum of R70 million will be reinvested in the business through working capital, ongoing commissioning requirements and necessary capital expenditures. This is necessary to establish the required infrastructure to access the life of mine reserves.