Company Announcements

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

29 December 2020

Atlas Mara Announces New Financing and Standstill Agreement

Atlas Mara Limited ("Atlas Mara" or the "Company," and including its subsidiaries, the "Group"), the sub-Saharan African financial services group, has entered into a new secured facility agreement (the "Facility") with a fund entity managed by UBS O'Connor LLC (the "Lender") and entered into a standstill agreement with certain creditors in respect of the Company's and ABC Holdings Limited's ("ABCH") financing arrangements (the "Standstill"). 

As previously announced, the board of Atlas Mara commenced in 2019 a review of strategic options, with a view to focusing the Company on a path to acceptable scale and profitability.  In parallel, the Company was also engaged in a strategic fundraising initiative targeting both debt and equity, to be utilized to support operations as well as address a balance sheet realignment given debt maturities expected in 2020. 

While the Company has made significant progress in asset disposals as previously announced, and continues to explore other potential transactions, the economic challenges related to the COVID-19 pandemic resulted in delays in the strategic fundraising initiative, which was paused as a result of tightening global liquidity.  Further compounding these challenges, the major currency depreciations across the African markets in which the Group operates resulted in a more than $150 million reduction in the US dollar value of the Company's assets and thus a reduction in the Company's debt capacity.  The cumulative effect of these challenges, and the pandemic's effects on growth and liquidity of the Group, led to an acceleration of potential transactions, as well as discussions with principal holders of the Group's convertible bonds due 31 December 2020 and other bilateral lenders.  These discussions explored a range of options to provide stability to position the Company to weather the current downturn.  These discussions culminated in the agreements being announced today.  

Michael Wilkerson, Executive Chairman of Atlas Mara, said, "Amid the current challenging operating environment, we are pleased to have secured new funding and obtained such high levels of support from our convertible bondholders and bilateral lenders. The new Facility and Standstill will provide the time and stability necessary to enable the Company to continue to pursue its strategic options, including further asset sales, as well as a broader debt restructuring to realign the balance sheet to prospects for value.  We thank our convertible bondholders, bilateral lenders, and other stakeholders for their support and flexibility through this phase.  As we weather the challenges of the pandemic, we are pursuing a comprehensive solution for our balance sheet for the benefit of all of our stakeholders." 

"This plan is focused only on the Group's holding company structure and does not include our operating subsidiaries.  Despite a number of acute market challenges including COVID-19 related business disruptions, market liquidity shortages, local currency depreciation and interest rate cuts, our operating banks continued to show continued growth and resilience.  This includes safely supporting our customers, pursuing digital innovation and protecting our banking franchises through credit management and cost controls.  We thank the teams for their hard work in continuing to serve our customers and positioning our subsidiaries for more profitable growth alongside a post-pandemic economic recovery." 

The Facility is for a new investment in the principal amount of approximately US$25,824,075 with a duration of 18 months. The Facility will be used to fund the near-term operating expenses and working capital requirements of the Group, and to finance the purchase of 26,435,188 ordinary shares of the Company held by the Lender at a price of $0.40 per share, reflecting the closing market price on the day the funding was agreed between the parties.  The repurchased shares will be held in treasury.  Following the share repurchase, which is a condition of the Facility, the new investment will result in sufficient net proceeds for the Company's operational liquidity needs through the target date for a comprehensive restructuring of the Company's and ABCH's debt obligations.  The Company expects to generate additional liquidity from asset disposals to support medium-term operations, subject to discussions between the Company and its creditors.

The security package for the Facility includes first and second lien securities on shares and other assets owned by the Company and/or subsidiaries of the Company, as well as a silent second lien granted to the holders of the Group's convertible bonds to replace a pre-existing negative pledge held by the bondholders over certain of these assets. Other key terms of the Facility include capitalized interest with a 15% annual rate, and a minimum return on invested capital of 15% in the event of early repayment of the Facility. There are certain other required covenants aligned with the target of a comprehensive restructuring transaction with creditors by 31 March 2021.

Alongside the Facility, counterparties representing over 87.7 percent of the aggregate amount outstanding under bilateral facilities at Atlas Mara and ABCH have agreed to the Standstill or similar bilateral agreements in order to address certain upcoming principal and interest payments. The Standstill has also been entered into by over 60 percent of the principal holders of the Group's convertible bonds due 31 December 2020. The objective of the Standstill is to provide sufficient time for engagement between the Company and its creditors to reach agreement on a sustainable long-term solution for the Company's and ABCH's debt and repayment profile. The consenting creditors under the Standstill have agreed not to exercise certain rights, or otherwise take actions, in respect of rights and repayments that may arise under the convertible bonds and bilateral facilities as a result of the Group not making principal and interest payments, until and including the earlier of 31 March 2021 (unless extended) and termination of the Standstill. These agreements relate to the holding companies only and exclude facilities of the Group's operating companies.

The Standstill also contains customary information rights and certain interim milestones in order to allow the Company and the consenting creditors to continue to progress discussions in relation to the allocation of proceeds from the previously announced strategic transactions and a comprehensive recapitalisation or restructuring of the Group's balance sheet.  The Standstill contains early termination events if certain requirements or milestones are not satisfied. 

The Company intends to continue discussions with certain creditors that are not currently party to the Standstill, including other holders of the Company's convertible bonds and bilateral lenders to the Company and ABCH, in order to obtain their support.  Although no agreement has been reached, any comprehensive recapitalisation or restructuring of the Company's or ABCH's balance sheet may involve further strategic transactions including asset disposals, the extension of debt maturities and/or the conversion or impairment of debt which may result in dilution for current shareholders.

The agreements will support near-term stability to enable the Company to continue engagement with creditors, to achieve a comprehensive recapitalisation or restructuring of debt, to enable long-term stability and growth. The Company continues to carry out its cost reduction program, and remains on track with its strategic repositioning, including asset disposals and other transactions.

Contact Details:

Investors

Kojo Dufu, +1 212 883 4330

Media

Apella Advisors, +44(0) 7818 036 579

Anthony Silverman 

About Atlas Mara

Atlas Mara Limited (LON: ATMA) is a financial institution listed on the London Stock Exchange. Atlas Mara aims to be a positive disruptive force in the markets in which we operate by leveraging technology to provide innovative and differentiated product offerings, deliver excellent customer service and accelerate financial inclusion. For more information, visit www.atlasmara.com.