Interra Resources and VibroPower Corp have formed a joint venture to build a solar farm in Sabah, Malaysia for $3 million. As part of this deal, Interra Resources will subscribe for a $1.5 million convertible bond to be issued by VibroPower.
The bond, which is for a three-year term, carries an interest rate of 8.5%.
If the bond is to be converted into shares, the conversion shares will be issued at 90% of the weighted average trading price of VibroPower shares in the last preceeding 30 market days.
Proceeds from the solar farm will be shared equally between the two listed companies.
Benedict Chen, VibroPower's executive director and CEO is providing a personal guarantee for the convertible bond agreement.
Interra Resources, whose main business now is to produce crude oil, is keen to diversify into renewable energy.
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The deal with VibroPower allows it to do so at "minimum risk" while providing "a steady return" on its investment.
"The solar farm sector is an important part of the company’s efforts to move in the direction of clean and renewable energy," says Interra Resources.
Assuming the conversion price is pegged to VibroPower's last traded price of 3.1 cents, Interra Resources will own up to 15% of the former.
