TIDMMHG
RNS Number : 1081G
Merchant House Group PLC
26 June 2012
26 June 2012
MERCHANT HOUSE GROUP PLC
("MHG" or "the Company")
Issue of Equity, Issue of Convertible Loan Notes, Working
Capital Facility
Directorate Changes
Related Party Transactions
MHG, the financial services group, announces an injection of
funding of up to GBP2 million through the issue of equity, an issue
of convertible loan notes and a working capital loan. Of this,
GBP250,000 has been received for the convertible loan notes and
GBP1.35 million has been guaranteed for the working capital loan.
The equity funding is subject to FSA approval. MHG has also
strengthened its management team through the appointment of two new
directors.
Issue of Equity
MHG has agreed, subject to FSA approval, to issue 1,000,000,000
new ordinary shares of 0.01 pence each at 0.04 pence per share
("Placing Shares") to Beia Investment Partners LLP ("Beia") raising
GBP400,000 (before expenses). If issued, the Placing Shares would
represent 17.57 per cent. of the enlarged issued ordinary share
capital of the Company and, consequently, FSA approval has been
applied for to allow Beia to own more than 9.99 per cent. of the
enlarged issued share capital of the Company. None of the Placing
Shares will be subscribed for and issued until FSA approval has
been obtained. Whilst agreements have been entered into, funds in
respect of the Placing Shares have not yet been transferred to the
Company pending FSA approval.
In addition, MHG will issue (irrespective of FSA approval)
86,666,666 new ordinary shares of 0.01 pence each at 0.04 pence per
share ("Fee Shares") having a value (based on the mid-market price
of an MHG ordinary share of 0.04 pence as at the close of business
on 19 April 2012 (being the date prior to which the Company's
ordinary shares were suspended from trading on AIM)) of GBP34,666.
The Fee Shares are being issued to Beia Capital Limited ("BCL") to
pay a corporate finance fee in the sum of GBP34,666 in respect of
the refinancing arrangements detailed in this announcement.
Application will be made for admission to trading on AIM of the
Fee Shares representing, in aggregate, 1.85 per cent. of the
enlarged issued share capital of the Company. The Fee Shares will,
when issued, rank pari passu with the existing ordinary shares in
the Company.
Following the issue of the Fee Shares, the issued share capital
of the Company will comprise 4,690,361,459 ordinary shares of 0.01
pence each.
Background to Beia and BCL
Beia is an investment vehicle established to manage the
investments of its principals and its investment partners.
BCL is an independent financial services firm that serves
clients from across the globe. With principals based in London and
Dubai, BCL provides its clients with strategic advice, helps raise
capital, invests its own funds in early stage and turnaround SMEs,
and provides advice and management services to investors seeking
direct investment opportunities in UK commercial real estate.
James Keane is the sole director of BCL and owns 60 per cent. of
its issued share capital. He is a non-participating member of
Beia.
Stephen Drew, Pamela Drew and Simpatico Investments Limited are
all shareholders of BCL and participating members of Beia.
Issue of Convertible Loan Notes
Beia has subscribed for a 5-year convertible loan note with a
6.5 per cent. coupon, convertible at the option of the noteholder
at 0.04 pence at any time until 10 May 2017, which provides the
Company with additional proceeds of GBP250,000 before costs. The
loan notes are convertible at Beia's option. The loan notes are
secured and transferable. The subscription monies have already been
paid to the Company by Beia. If all of the convertible loan notes
were converted, Beia and BCL would together own 11.76 per cent. of
the resulting issued share capital of the Company as it would be
following conversion and after issue of the Fee Shares (but prior
to the issue of the Placing Shares).
Issue of Non-Convertible Loan Notes and grant of Working Capital
Loan
The Company has entered into an agreement with BCL whereby the
Company will seek to issue and BCL will seek to place for
subscription GBP1,350,000 nominal value secured non-convertible
loan notes 2017 in the Company. The interest rate is negotiable and
will be announced when agreed. If not subscribed for in full, BCL
will either subscribe for the shortfall itself or be obliged to
make a loan to the Company for the shortfall. The notes, any loan
made by BCL and the 6.5 per cent. convertible loan notes will rank
pari passu as secured obligations of the Company unless the
Company, BCL and Beia agree otherwise.
Use of the funds raised
Funds will be used to provide working capital and to fund the
growth of the Company's business.
Trading update
The Company's trading has been adversely affected by the events
of the past few months. However, the Board is pleased with the
resilience of the business and with the continuing opportunities
available to us. The Company expects to update shareholders in
detail as part of the Chairman's statement accompanying the
accounts for the year ended 31 December 2011.
Publication of these results is expected on or before 31 July
2012.
Directorate changes
In conjunction with the financing detailed above, MHG is pleased
to announce the following appointments to the board of MHG with
immediate effect:
James Keane has been appointed Managing Director of the Company.
James has more than 17 years' private equity, asset management and
capital markets experience. Prior to founding BCL in 2009, he was
director of fund raising at Rasmala Investment Bank, a leading
Middle Eastern investment bank, and previously held senior sales
and capital markets positions at JPMorgan and Deutsche Bank.
James Richard Keane, aged 41, holds or has held the following
directorships and partnerships:
Current Held in past five years
---------------------------- -----------------------
Beia Capital Limited None
---------------------------- -----------------------
Beia Investment Partners LLP
---------------------------- -----------------------
Tek Capital Limited
---------------------------- -----------------------
James Keane currently owns 76,395,154 MHG ordinary shares. After
the issue of the Fee Shares detailed above (and prior to the issue
of the Placing Shares and any ordinary shares issued on conversion
of the convertible loan notes), James Keane will have a beneficial
interest in 128,395,154 ordinary shares of the Company,
representing approximately 2.74 per cent. of the enlarged issued
share capital. If all of the Placing Shares are issued, James Keane
will have a beneficial interest in 128,395,154 ordinary shares
representing 2.26 per cent. of the enlarged issued share
capital.
Stephen Drew has been appointed as Non-Executive Deputy Chairman
of the Company. Stephen has more than 30 years of asset management
experience. Stephen previously held positions at St Martins
Property Group, the UK based real estate investment vehicle of the
State of Kuwait, and Eagle Star Asset Management (now
Threadneedle). Stephen is a shareholder of BCL and a participating
member and partner of Beia.
Stephen William Drew, aged 54, holds or has held the following
directorships and partnerships:
Current Held in past five years
--------------------------------- ----------------------------------
Axe Associates Limited 39-43 Crookham Road London Limited
--------------------------------- ----------------------------------
Beia Investment Partners LLP Jel Resources Limited
--------------------------------- ----------------------------------
DBD Projects Limited
--------------------------------- ----------------------------------
Fleming Securities Limited
--------------------------------- ----------------------------------
Metalclaim Limited
--------------------------------- ----------------------------------
Mirasis Limited
--------------------------------- ----------------------------------
Stephen Drew & Company Limited
--------------------------------- ----------------------------------
The Axe Riverside Company Limited
--------------------------------- ----------------------------------
Thermonovel Limited
--------------------------------- ----------------------------------
Thermonovel (Mevagissey) Limited
--------------------------------- ----------------------------------
Wotan Securities Limited
--------------------------------- ----------------------------------
Stephen Drew currently owns 108,061,821 MHG ordinary shares.
After the issue of the Fee Shares, detailed above, and prior to the
issue of the Placing Shares and any ordinary shares issued on
conversion of the convertible loan notes, Stephen Drew will have a
beneficial interest in 121,061,821 ordinary shares of the Company,
representing approximately 2.58 per cent. of the enlarged issued
share capital of the Company. If all of the Placing Shares are
issued and prior to the issue of any ordinary shares issued on
conversion of the convertible loan notes, Stephen Drew will have a
beneficial interest in 621,061,821 ordinary shares representing
10.91 per cent. of the enlarged issued share capital.
Save as set out in this announcement, there are no other
disclosures in respect of this appointment that fall to be made
under Rule 17 or paragraph (g) of Schedule 2 to the AIM Rules for
Companies.
Related party transactions
The issue of the Placing Shares to Beia, if FSA approval is
given, and the guarantees by BCL relating to the non-convertible
loan notes, if effected, will constitute related party transactions
under AIM Rule 13 in so far as James Keane and Stephen Drew will be
directors of the Company at that time as Messrs Keane and Drew are
interested in Beia and BCL as explained above.
The MHG directors consider, having consulted with Cairn
Financial Advisers, the Company's nominated adviser, that the terms
of these transactions are fair and reasonable in so far as the
Company's shareholders are concerned.
Christopher Day, Chief Executive, commented: "We are delighted
to receive backing for the group, particularly as the Company has
faced a challenging last four months. We can now face the future
with confidence and I welcome our new directors to the board."
James Keane commented: "The Company has expanded very quickly on
a thin capital base during a challenging period. We believe that
there is great value in the Company's core business divisions and
we are pleased to provide financing to help drive future revenue
growth and shareholder value."
For further information:
Merchant House Group plc
James Holmes, Chairman
Christopher Day, CEO +44 (0) 20 7332 2200
Cairn Financial Advisers LLP
Tony Rawlinson / Avi Robinson +44 (0) 20 7148 7900
Symvan Securities
Kealan Doyle / Nicholas Nicolaides +44 (0) 20 7464 4260
This information is provided by RNS
The company news service from the London Stock Exchange
END
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