Aim-listed Ncondezi Energy has received an updated notice of "in principle" support from all loan holders to enter into a loan restructuring proposal.

This entails an extension on existing terms, including 12% yearly interest rate and ability for lenders to swap debt for equity in part or in full at a conversion price of 10p apiece; a 12-month extension from the future restructuring approval date; and a right for Ncondezi to pay off the original principal amount of the loan, along with the conversion of all interest into Ncondezi shares listed on the Aim at a 25% to 30% premium to the 30-day volume weighted average price.

The restructuring process is currently subject to the completion of internal approval from the Africa Finance Corporation (AFC). This has been delayed as a result of the impact of Covid-19.

All lenders, including AFC, have indicated that they will not call in the loan while the restructuring is being finalised. The loan matured on November 30, 2019.

The loan is currently valued at $4.5-million.

AFC holds 50% of the loan, while 43% is held by Ncondezi board and management.

The restructuring is subject to the lenders agreeing to the documentation and the necessary related party transaction process being completed by the company's independent directors.

Ncondezi will make a further announcement once definitive documentation to effect the restructuring has been entered into.

"Today's announcement highlights continued support from lenders to finalise the restructuring. The completion of AFC's internal approval process, the key factor in progressing the restructuring, has taken longer than originally agreed, and the developing impact of Covid-19 has prolonged their process over the last three months.

Despite the delays, AFC has indicated that it is supportive of the restructuring and will continue to work with Ncondezi to get the necessary approvals as soon as possible,” comments Ncondezi CEO Hanno Pengilly.

Recent engagement with lenders has led to a reconfirmation of in-principle support for the restructuring with the inclusion of a longer repayment extension targeting 12 months from the date of restructuring approval compared with the original proposal to November 30.

This will provide the company with additional time to progress its 300 MW Ncondezi power project, de-risking the investment opportunity and potentially creating more attractive refinancing solutions for the loan in the future, he noted.

The project is an advanced staged, integrated thermal coal power plant and mine project located in the Tete province in northern Mozambique.