LONDON (ShareCast) - (Sharecast News) - Agricultural company Agriterra announced a "significant" injection of new funds from its major shareholder on Friday.
The AIM-traded firm said it would allow for the immediate repayment of an existing, high-cost $6.1m working capital facility owed to an external banking institution.

It would also provide cheaper financing of grain purchasing in Mozambique, without making use of local external banking institution working capital and overdraft facilities which typically carry higher interest rates.

The new funding was from its majority shareholder, Magister Investments, for a total of $7.9m.

It said the Magister loans consisted of two unsecured facilities of $6.1m and $1.8m, respectively, and were being provided immediately and in full.

That would facilitate its wholly owned subsidiary, Desenvolvimento E Comercialização Agrícola (DECA), in financing the full repayment of DECA's existing $6.1m facilities with First Capital Bank, as well as its grain purchasing in Mozambique.

Agriterra estimated that the refinancing would enable it to save around approximately $0.6m in annual interest and fee costs during the first year.

"We are delighted to be in a position to repay DECA's external funding and benefit from cheaper working capital to fund grain purchasing, with the continued support of Magister," said chair Caroline Havers.

"This balance sheet realignment should enable DECA to develop and benefit from a strengthened purchasing position, free from the high local costs of the previous borrowing in Mozambique.

"Again, we thank our majority shareholder, Magister, for their support in providing this new debt funding, which demonstrates their ongoing commitment to and faith in our operational plans and management team."

At 0855 BST, shares in Agriterra were up 23.95% at 5.9p.

Reporting by Josh White at Sharecast.com.

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