DJ R.E.A. Holdings plc: Proposals re 7.5 per cent dollar notes 2026
R.E.A. Holdings plc (RE.)
R.E.A. Holdings plc: Proposals re 7.5 per cent dollar notes 2026
11-Aug-2025 / 08:00 GMT/BST
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NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION
For immediate release
11 August 2025
R.E.A. Holdings plc (the "company")
Proposals (a) to extend the redemption date for the 7.5 per cent dollar notes 2026 issued by the company from 30 June
2026 to 31 December 2028 and (b) to seek the consent of the holders of the dollar notes to a possible reduction of the
capital of the company by way of a reduction of up to USD20.0 million of the amount standing to the credit of the
company's share premium account
Introduction
In its annual report published on 17 April 2025, the company announced a proposal to improve the maturity profile of
its debt by inviting holders of the USD27.0 million nominal of 7.5 per cent dollar notes 2026 issued by the company (the
"dollar notes") to roll over their dollar notes to 31 December 2028.
The company now announces that it is today despatching a circular (the "circular") to the holders of the dollar notes (
"noteholders") giving details of, and seeking the approval of noteholders, to be given by way of an extraordinary
resolution to be proposed at a general meeting of noteholders convened for 4 September 2025, as regards such proposal.
At the same time as seeking the approval of noteholders to the proposed extension of the redemption date for the dollar
notes, the opportunity is being taken to seek the consent of noteholders to a possible reduction of the capital of the
company by way of a reduction of the amount standing to the credit of the company's share premium account. The notice
of general meeting included in the circular includes a further extraordinary resolution to this end.
Background to and reasons for the proposed extension of the redemption date for the dollar notes
As previously announced, 2024 saw a marked improvement in profitability of the group's operations, with higher selling
prices more than offsetting the lower than expected production volumes that were reportedly widespread across the palm
oil industry in Indonesia. A significant reduction in estate operating costs also made a meaningful contribution to the
group's results. In addition, good progress was made throughout the year in bringing both the stone and sand operations
to commercial production.
The 2024 improved trading performance was accompanied by a material reduction in group net indebtedness with the
subscription by a subsidiary of PT Dharma Satya Nusantara Tbk of USD53.6 million for additional shares in PT REA Kaltim
Plantations ("REA Kaltim"). To date during 2025, net indebtedness has further benefitted from completion of the sale by
the group of PT Cipta Davia Mandiri in early June. Additionally, loan funding provided by PT Bank Mandiri (Persero) Tbk
("Bank Mandiri") to the Indonesian operating companies within the group has been repackaged and increased on a basis
that improves the maturity profile of the group's debt.
Prepaid sales advances from customers were reduced during 2024 from USD17.1 million to USD8.0 million and the group aims to
eliminate all remaining such advances by the end of 2025.
Whilst the group acknowledges the need to continue reducing its net indebtedness, it wishes to ensure an orderly
reduction that does not place strain on the group's liquidity. The group has in hand the cash resources to meet the
redemption of the outstanding balance of GBP21.4 million of the sterling notes which falls due on 31 August 2025, and
will redeem such notes on that date. However, redemption of the outstanding USD27.0 million of dollar notes on the due
date of 30 June 2026, when coupled with group bank debt repayments falling due in 2026 of USD20.0 million, would result
in a further outflow of cash during 2026 that would be disproportionate to the group's internal cash generation.
Accordingly, the group would prefer to phase the redemption of the dollar notes over a longer period. The proposed
extension of the redemption date for the dollar notes and attendant sale facility have been formulated with that
objective.
Roll-over fee
In consideration of, and subject to, noteholders sanctioning the proposed extension of the redemption date for the
dollar notes, the company will pay to those noteholders on the register of noteholders at 6.00 p.m. on 3 September 2025
("qualifying noteholders") who have not elected to take advantage of the sale facility (details of which are set out
below) (whether or not such noteholder voted in favour of the extraordinary resolution sanctioning the extension but
only if the extension becomes effective) a roll-over fee in an amount equal to:
(1% + 2A) x B
where:
A is the percentage amount (if any) by which the 180 day Average Secured Overnight Financing Rate published by the
Federal Reserve Bank of New York on 23 June 2026 exceeds 4.5 per cent (and nil if such rate does not exceed 4.5 per
cent); and
B is the nominal amount of dollar notes held by the qualifying noteholder at 6.00 pm on 3 September 2025.
Provided that the proposed extension of the redemption date for the dollar notes has become effective, the roll-over
fee will be paid in cash on 30 June 2026.
The roll-over fee will be paid in dollars unless the relevant qualifying noteholder has already elected, in accordance
with the terms and conditions attaching to the dollar notes, to receive interest in respect of the dollar notes in
sterling, in which event the consent fee will be paid to that noteholder in sterling.
Sale facility
The directors are aware that the market in the dollar notes can be limited, and that not all noteholders may be willing
to have the monies represented by their holdings of dollar notes tied up beyond 30 June 2026. Accordingly, in
conjunction with the proposal to extend the redemption date for the dollar notes, the company is putting in place a
sale facility whereunder, conditional upon the proposed extension of the redemption date for the dollar notes becoming
effective, any qualifying noteholder who wishes to realise its holding of dollar notes on the current redemption date
of 30 June 2026 will be able to do so.
Any qualifying noteholder who wishes to take advantage of the sale facility is invited to contact R.E.A. Services
Limited ("REA Services") in writing at 5th Floor North, Tennyson House, 159-165 Great Portland Street, London W1W 5PA
or by email to companysecretary@rea.co.uk at any time on or after 1 May 2026 but by no later than 5.00 p.m. on 29 May
2026. REA Services will then either purchase the relevant dollar notes or arrange the purchase thereof by a third
party, in either case at par for settlement on 30 June 2026 (that is, the current due date for redemption of the dollar
notes). Any such sale will be subject to the provisions as regards the transfer of dollar notes included at Condition 3
attaching to the dollar notes (that is: (i) any election to sell must be in respect of a minimum amount of USD120,000
nominal of dollar notes and (ii) where the election is in respect of part only of a holding of dollar notes, the
transfer of the same must not result in the transferor retaining a minimum holding of less than USD120,000 nominal of
dollar notes represented, in the case of dollar notes held in certificated form, by one certificate).
REA Services may seek to re-sell, over time, any dollar notes acquired by it pursuant to the sale facility. To the
extent not so sold, REA Services intends to retain the dollar notes pending redemption of the same in accordance with
their terms. There is no current intention that any dollar notes acquired by REA Services pursuant to the sale facility
be surrendered for cancellation.
Contemplated reduction of capital
The company has built up a substantial capital reserve in its share premium account through the issue of shares at
prices in excess of the nominal value of those shares. As at 31 December 2024, the amount standing to the credit of the
share premium account was some USD47.4 million. As the share premium account is an undistributable reserve, it has only
limited application and cannot be used to pay dividends.
As at 31 December 2024, the distributable reserves of the company amounted to approximately USD8.0 million. The company
requires distributable reserves of some USD8.7 million to meet the annual preference dividend payable in respect of the
preference shares before even considering any dividend to the holders of the ordinary shares.
The terms of the loans made by Bank Mandiri to REA Kaltim and its subsidiaries include provisions requiring that REA
Kaltim obtain the consent of Bank Mandiri to any proposed dividends. Whilst the group has no reason to expect that Bank
Mandiri would refuse consent for the payment by REA Kaltim of dividends that are proportionate to REA Kaltim's annual
earnings, were Bank Mandiri to do so, this might result in a situation in which the company had the cash resources to
meet a proposed dividend but was unable to pay such dividend because it would not be covered by the company's
distributable reserves.
The directors are therefore currently considering the possibility of undertaking a reduction of capital by way of the
reduction of the amount standing to the credit of the company's share premium account, up to a maximum amount of USD20.0
million. Any such reduction of capital would not of itself involve the distribution or repayment of monies by the
company, and would not reduce the underlying net assets of the company, but it would result in an amount equal to the
amount of the reduction being credited to to the distributable reserves of the company.
Any reduction of capital would be subject to the approval of shareholders of the company, given by way of the passing
of a special resolution in general meeting, and also to confirmation by the High Court of Justice in England and Wales
(the "Court"). In considering an application by the company for an order confirming a reduction of capital, the Court
would need to be satisfied that there is no real likelihood that the reduction would result in the company being unable
to discharge all amounts due by it, at the time of the reduction, to creditors (including contingent creditors) of the
company when such amounts fall due. The Court may require measures to be put in place for the protection of such
creditors, except in the case of creditors who have consented to the reduction. Noteholders are, of course, creditors
of the company.
The additional distributable reserves that would be created in the books of the company were the company to proceed
with the contemplated reduction of capital would be available for the future payment by the company of dividends to its
shareholders and for any other general corporate purposes, subject always to the financial performance of the company
and to compliance by the company with any restrictions imposed by the Court. This would have the effect of reducing the
likelihood of the company being prevented by legal, rather than commercial, constraints, from paying dividends (and in
particular from paying the dividends payable in respect of the preference shares). Any such dividends would result in a
diminution in the cash reserves of the company.
It is likely that the decision as regards whether or not to proceed with the contemplated reduction of capital will be
made in September 2025, when the half yearly results of the group become available. If the decision is to proceed, it
is currently intended that a circular regarding the proposed reduction would be posted to shareholders concurrently
with, or shortly after, the publication of the half yearly results (due to be published in the second half of
September).
To minimise the possibility of any need for a further meeting of noteholders at any such time, the directors are
proposing to take the opportunity now to seek the consent of noteholders to the contemplated reduction of capital,
subject only to the necessary confirmation of the Court and provided always that such reduction would not result in the
company being in breach of the borrowing restriction set out in condition 9 attaching to the dollar notes.
Conditions
The proposed extension of the redemption date for the dollar notes is conditional upon:
i. the passing of the first and third extraordinary resolutions set out in the notice of meeting of the holders of the
dollar notes included at the end of the circular; and
ii. the execution of the applicable supplemental trust deed referred to in the third extraordinary resolution
in each case by 31 October 2025.
The sale facility is conditional upon the proposed extension of the redemption date for the dollar notes becoming
effective.
The consent of noteholders to the contemplated reduction of capital and the sanction of noteholders to amendments to
the trust deed to incorporate express provisions as regards such consent is conditional upon:
i. the passing of the second and third extraordinary resolutions set out in the notice of meeting of the holders of
the dollar notes included at the end of the circular; and
ii. the execution of the applicable supplemental trust deed referred to in the third extraordinary resolution
in each case by 31 October 2025.
Recommendation
Each of the directors of the company is of the opinion that both:
i. the proposed extension of the redemption date for the dollar notes, with the attendant sale facility; and
ii. the proposal to seek, at this stage, the consent of noteholders to the contemplated reduction of capital
are in the best interests of the company, its shareholders and the holders of the group's debt securities (including
the dollar notes) as a whole.
However, none of the directors considers it appropriate to make a recommendation to noteholders as to whether or not
noteholders should vote in favour of all or any of the resolutions set out in the notice of meeting of the holders of
the dollar notes convened for 4 September 2025 and/or as to whether or not noteholders should elect to sell dollar
notes pursuant to the sale facility. A decision as to whether or not to vote in favour of a resolution and/or as to
whether or not to elect to sell pursuant to the sale facility will depend on the personal circumstances of each
noteholder. Holders of dollar notes who are in any doubt as to what action they should take are recommended to consult
their appropriate independent financial adviser duly authorised, if the holder is resident in the United Kingdom, under
the Financial Services and Markets Act 2000 or, if the holder is not so resident, under the relevant applicable local
law.
Undertakings as regards voting
Kuala Lumpur Kepong Berhad, holding in aggregate, through two subsidiaries, USD17,570,000 nominal of the USD27,035,218
nominal of the outstanding dollar notes, has undertaken to the company that it will procure that its subsidiaries vote
in favour of the extraordinary resolutions to be proposed at the meeting of noteholders convened for 4 September 2025,
and will not elect to take advantage of the sale facility.
Expected timetable
A meeting of the holders of dollar notes has been convened for 4 September 2025 to consider the three extraordinary
resolutions as noted above, and to authorise and request the trustee for the noteholders to enter into a supplemental
trust deed for the purposes of effecting the necessary amendments to the trust deed, and re-stating the same as
amended.
It is expected that the results of the meeting will be announced on 4 September 2025 and that the extension of the
redemption date for the dollar notes will become effective the same day.
Enquiries:
David Blackett Carol Gysin
Chairman Managing director
R.E.A Holdings plc R.E.A. Holdings plc
Tel: 020 7436 7877 Tel: 020 7436 7877
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Dissemination of a Regulatory Announcement that contains inside information in accordance with the Market Abuse Regulation (MAR), transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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ISIN: GB00BD8BTF36 Category Code: CIR TIDM: RE. LEI Code: 213800YXL94R94RYG150 Sequence No.: 398413 EQS News ID: 2181850 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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