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VIVOPOWER SECURES EXTENSION FOR US$34M LOAN FINANCING FACILITY AGREEMENT

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VivoPower International (Nasdaq: VVPR) has successfully secured an amendment and extension to its US$34 million shareholder loan financing agreement with AWN Holdings. This agreement consolidates all existing shareholder loans into a single tranche and reclassifies them as non-current liabilities, enhancing VivoPower's balance sheet. Additionally, AWN Holdings is granted an option to buy 1,150,000 Tembo shares at $1.35 per share, which will be locked up for at least six months post-business combination with Cactus Acquisition Corp 1. The extension affirms shareholder confidence in VivoPower's strategy and the Tembo transaction.

Positive
  • Secured an extension for US$34 million shareholder loan, reflecting strong financial support.
  • Consolidated multiple loans into a single tranche, simplifying debt structure.
  • Reclassified loans as non-current liabilities, improving balance sheet stability.
  • Granted AWN an option to acquire 1,150,000 Tembo shares at $1.35 per share, reflecting shareholder confidence.
Negative
  • Potential dilution risk as AWN Holdings has an option to acquire 1,150,000 Tembo shares.

VivoPower's extension of its US$34 million loan financing facility is a noteworthy move for several reasons. Firstly, consolidating all shareholder loans into a single tranche simplifies the financial structure and can lead to more predictable debt servicing. This is particularly important for a company like VivoPower, which operates in the energy sector, where capital intensity is high. The shift to non-current status for the loans also means that these debts won't be due within the next year, thereby improving the liquidity profile of the company.

The agreement also reflects significant shareholder confidence in VivoPower’s ongoing operations and its future, particularly regarding the Tembo transaction. This continued support is a positive signal for retail investors because it indicates that major stakeholders are willing to back the company through their financial commitments. Moreover, the non-dilutive nature of the financing is an advantage because it avoids shareholder dilution, which is often a concern when new equity is issued.

However, investors should remain cautious. While the immediate financial stability is a plus, the long-term ability to repay these obligations remains critical. The exercise price for the Tembo shares at $1.35 could be seen as a premium, reflecting potential confidence in Tembo's valuation post-transaction, but the actual future performance will need to justify this pricing.

The US$34 million loan extension for VivoPower also has particular implications in the context of market trends. Energy companies frequently face volatility due to fluctuating commodity prices, regulatory changes and technological advancements. Securing non-dilutive financing can be a strategic move to safeguard against these market uncertainties. Additionally, the consolidation of debt could be interpreted as VivoPower streamlining its operations to focus more effectively on future growth opportunities, particularly the Tembo transaction.

For retail investors, it’s important to understand that non-current liabilities are debts payable after one year. This restructuring can make the company seem financially stronger in the short term. However, it also pushes a substantial financial obligation into the future, requiring sustained or improved revenue streams to ensure repayment capability. The option for AWN to acquire Tembo shares at a predefined price indicates confidence in the Tembo transaction, but market conditions and execution risks will ultimately influence the success of this deal.

Investors should also note the geopolitical aspect. With a member of the ruling Al Maktoum family involved, there may be increased visibility and credibility in international markets for VivoPower, potentially opening additional opportunities.

From an energy sector perspective, VivoPower’s financial maneuver secures a valuable cushion as it advances into its next phase with Tembo. In an industry where capital reliability is paramount, having a major shareholder like AWN demonstrate confidence through extended financial support is pivotal. This could signal to other potential investors and partners that VivoPower is a stable and viable entity within the renewable energy landscape.

Non-current loans suggest a degree of financial resilience, giving VivoPower more time to execute its strategic initiatives, particularly the Tembo transaction. The agreement to allow AWN to purchase shares in Tembo post-deSPAC also suggests that there is an anticipated value realization from this combination, though the market will ultimately decide the actual outcome.

For retail investors, understanding the dynamics within the energy sector is crucial. Securing non-dilutive financing provides a degree of operational stability, but the overarching success will depend on how effectively VivoPower and Tembo can leverage this financial structure to drive growth and profitability. The renewable energy market is competitive and although this financial extension is a positive, operational execution remains the key to unlocking long-term value.

Agreement consolidates major shareholder loan into single US$34m tranche

Extends tenure of non-dilutive financing at VivoPower level

Loan amended to be all non-current status, improving VivoPower’s balance sheet profile

Agreement confirms continued major shareholder support for VivoPower and confidence in the Tembo transaction

LONDON, July 09, 2024 (GLOBE NEWSWIRE) -- Nasdaq-listed B Corp VivoPower International PLC (Nasdaq: VVPR, “VivoPower”) announced today that its independent directors have secured an amendment and extension to its US$34m shareholder loan financing agreement following the conclusion of negotiations with the independent directors of its major shareholder, AWN Holdings Limited (“AWN”).

As part of the amended terms, VivoPower has consolidated all of its shareholder loans at VivoPower International PLC level, as well as amending all of the outstanding loans to non-current status. This improves the balance sheet profile of VivoPower.

AWN will also receive an option to acquire 1,150,000 Tembo shares (the “Options”) from VivoPower post business combination with Cactus Acquisition Corp 1 Limited (“CCTS”) at an exercise price of $1.35 per share. This replaces a previous agreement to issue warrants on VivoPower shares. The exercise price reflects the valuation at which the private investment office backed by a member of the ruling Al Maktoum family of Dubai agreed to invest an advance as announced in June 2023, and takes into account AWN’s continued financial support since 2017. It is anticipated that the underlying shares to the Option will represent less than 1.3% of the estimated total number of shares in newly listed Tembo post-deSPAC and these underlying shares will be subject to lock up for at least 6 months.

About VivoPower

VivoPower is an award-winning global sustainable energy solutions B Corporation company focused on electric solutions for off-road and on-road customised and ruggedised fleet applications as well as ancillary financing, charging, battery and microgrids solutions. The Company’s core purpose is to provide its customers with turnkey decarbonisation solutions that enable them to move toward net-zero carbon status. VivoPower has operations and personnel covering Australia, Canada, the Netherlands, the United Kingdom, the United States, the Philippines, and the United Arab Emirates.

Forward-Looking Statements

This communication includes certain statements that may constitute “forward-looking statements” for purposes of the U.S. federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterisations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements may include, for example, statements about the achievement of performance hurdles, or the benefits of the events or transactions described in this communication and the expected returns therefrom. These statements are based on VivoPower’s management’s current expectations or beliefs and are subject to risk, uncertainty, and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive and/or regulatory factors, and other risks and uncertainties affecting the operation of VivoPower’s business. These risks, uncertainties and contingencies include changes in business conditions, fluctuations in customer demand, changes in accounting interpretations, management of rapid growth, intensity of competition from other providers of products and services, changes in general economic conditions, geopolitical events and regulatory changes, and other factors set forth in VivoPower’s filings with the United States Securities and Exchange Commission. The information set forth herein should be read in light of such risks. VivoPower is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of new information, future events, changes in assumptions or otherwise.

Contact
Shareholder Enquiries
shareholders@vivopower.com


FAQ

What recent loan agreement has VivoPower International (VVPR) secured?

VivoPower International has secured an extension and amendment for a US$34 million shareholder loan financing agreement.

How does the new loan agreement affect VivoPower's balance sheet?

The loan agreement consolidates all loans into a single tranche and reclassifies them as non-current liabilities, improving the balance sheet.

What options does AWN Holdings have under the new agreement with VivoPower (VVPR)?

AWN Holdings has the option to buy 1,150,000 Tembo shares at $1.35 per share, which will be subject to a six-month lockup period.

What was the exercise price for the Tembo shares option granted to AWN Holdings?

The exercise price for the Tembo shares option granted to AWN Holdings is $1.35 per share.

How does the new loan agreement reflect the relationship between VivoPower and AWN Holdings?

The agreement reflects continued strong financial support and confidence from AWN Holdings in VivoPower's strategy and the Tembo transaction.

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