DX (Group) PLC Financing Update, Property Disposal, Gatemore Loan (5027R)
September 22 2017 - 1:00AM
UK Regulatory
TIDMDX.
RNS Number : 5027R
DX (Group) PLC
22 September 2017
22 September 2017
AIM: DX.
DX (Group) plc
("DX" or "the Company")
Financing Update,
Property Disposal
and
Related Party Loan
DX announces that it has exchanged contracts with ChanceryGate
(Livingston) Limited to sell and leaseback certain freehold
properties (the "Properties") for an aggregate cash consideration
of GBP4.5m (the "Property Transaction"). At the same time, the
Company has entered into an unsecured loan agreement with GCM
Partners II, a fund controlled by its major shareholder Gatemore
Capital Management LLP ("Gatemore"), for a loan to the Company of
GBP2.0m (the "Gatemore Loan").
As previously announced, the Company has been in discussions
with Gatemore and HSBC, its bankers, with regards to financing
options for the Company's standalone transformation strategy. The
proceeds of the Property Transaction and the Gatemore Loan will be
used principally to repay the Company's term loan with HSBC, which
is the first step of an essential comprehensive refinancing of the
Company. The Company is currently in close and constructive
discussions with certain key shareholders regarding this broader
refinancing. This is necessary because the Board has identified a
near term material funding requirement, over and above the
Company's existing resources, to address a working capital
shortfall, caused by the Company's recently reduced levels of
profitability, and to provide funds for the planned investment into
improving the financial performance of the DX business.
A further announcement on financing will be made within coming
weeks.
Details of the Property Transaction
The Properties subject to the sale and leaseback transaction
comprise the Company's sites at Thatcham, Basildon, Rotherham,
Northampton (Kyoto Close) and Nottingham (Woolsthorpe Close). The
aggregate sale proceeds are GBP4.5m and the Properties have an
aggregate book value of GBP5.0m. The lease terms for the Properties
provide for an aggregate rent of cGBP450k per annum with lease
terms of between 2 and 10 years.
Completion of the Property Transaction is expected on 29
September 2017.
Details of the Gatemore Loan and related party transaction
The Gatemore Loan is an unsecured GBP2.0 million bullet loan
with simple interest of 10% per annum rolling up from date of
advance, which is expected to be 29 September 2017. Repayment of
the loan is due by 30 November 2017, with no early repayment
penalties.
The Board had initially included the freight and logistics hub
at Willenhall (the "Willenhall Hub") in the portfolio for sale but,
following discussions with the proposed directors, management and
other stakeholders, it was considered that the Willenhall Hub was a
site of potential strategic value to the Company and it would be
beneficial to retain the flexibility of continuing to hold the
freehold. Gatemore, as a key supporter of the Company's
transformation strategy, has agreed to provide the Gatemore Loan,
which facilitates the repayment of the Company's term loan with
HSBC (described below).
Gatemore, as a substantial shareholder of the Company, is a
related party and therefore the Gatemore Loan constitutes a
"related party transaction" under the AIM Rules.
The Directors of the Company consider, having consulted with the
Company's nominated adviser, Zeus Capital, that the terms of the
transaction are fair and reasonable insofar as the Company's
shareholders are concerned.
Use of Proceeds
The proceeds of the Property Transaction and the Gatemore Loan
will be used to repay the Company's cGBP5.8m term loan with HSBC,
with the balance used for working capital purposes. The repayment
of the term loan is part of DX's continuing discussions with HSBC
regarding extending the term of its invoice discounting facility
and the wider financing of its business.
Bob Holt, Chairman, DX (Group) plc, commented:
"We welcome the support of our shareholder, Gatemore, alongside
that of our bank, HSBC, as we proceed with our standalone
transformation strategy, and will provide a further update on the
Company's financing arrangements within coming weeks."
Liad Meidar, CIO and Managing Partner of Gatemore Capital
Management:
"The Gatemore loan has enabled the Company to pay down HSBC's
term loan while retaining the freight hub in Willenhall. This gives
the Company greater financial and operational flexibility, setting
the stage for the refinancing. We expect to roll our loan shortly
into the new financing, positioning DX with a healthy balance sheet
and a new start under proven leadership."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Market Abuse
Regulation No. 596/2014
Enquiries
DX (Group) plc T: 020 3178 6378
(today)
Bob Holt, Chairman M: 07778 798816
Ian Gray, Non-executive Director
Zeus Capital (Financial Adviser T: 020 3829 5000
and Nominated Adviser to DX)
Nick How, Giles Balleny (Corporate
Finance)
Dominic King (Corporate Broking)
KTZ Communications T: 020 3178 6378
Katie Tzouliadis
Irene Bermont-Penn
Emma Pearson
This information is provided by RNS
The company news service from the London Stock Exchange
END
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