Timber company pours $5m into production as restructuring plans take shape
A UK timber company has announced that it will be restructuring as it pours up to $5m into increasing its production capacity.
Woodbois, which has headquarters in London and operations in Africa, will be prioritising additional capital expenditure of approximately $3m to $5m to increase the capacity at its existing operations in Gabon.
The company is specifically looking to increase its veneer production, which it intends to increase current gross production capacity by approximately a further 50 per cent, as well as improving its gross margin from the 24 per cent achieved in 2019.
This comes as the firm announces its plans to restructure its balance sheet.
Woodbois commented: “Discussions with the majority holder of the company’s 2024 convertible bonds have continued, and the company is pleased to have now reached an agreement in principle with the major bondholder such that not less than 75 per cent of the $30m notional outstanding of the convertible will be exchanged into voting and non-voting equity and with the balance restructured into a zero coupon convertible bond.
“Such agreement in principle will be conditional upon the company raising additional equity and finalisation of the definitive legal documentation to enable it to continue to build on the substantial investments made over the last couple of years and is intended to hasten sustained positive operating cash flow.
“Further announcement regarding the restructuring and potential equity fundraising will be made in due course.
“The company also intends to materially expand its trading operations where it believes it can become a leading operator through its extensive network and deployment of proprietary trading technology.
“The directors believe that sustainable forestry and the production of sawn timber and veneer is a market with strong structural support, underpinned by population growth in our target markets.
“The current crisis has exaggerated the scarcity of capital available to support the production cycle, and Woodbois believes it would be ideally placed to increase not only its own sustainable production but to source and secure dedicated third party supply throughout West Africa without the operational constraints to growth that proprietary production can face when scaling up.
“The directors believe that timber is the perhaps last natural resource largely unrepresented on global exchanges or capital markets.
“The directors believe that Woodbois’ restructured balance sheet will provide a fundamental step towards a leading position within a sector suitable for consolidation and disruption through the introduction of innovative sales and trading technology for sustainably sourced and traceable timber which the company is developing.”
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