TIDMMIN
RNS Number : 6204T
Minoan Group PLC
21 July 2020
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain
21 July 2020
Minoan Group Plc
("Minoan" or "the Company")
Reorganisation of funding arrangements, placing, update and
General Meeting
The Board of Minoan is pleased to announce the successful
reorganisation of its only secured borrowings (the "Existing
Loan"), the cancellation of warrants and rights to future warrants
and a small pre funded placing to provide further working
capital.
Whilst the transaction is complicated and involves short term
cost it will result in a significant reduction in the long term
fully diluted capital for the benefit of all shareholders.
The refinancing is being undertaken by a group of existing
shareholders in the Company through a special purpose vehicle DAGG
LLP ("DAGG" or "New Lender"). As a result of agreements with the
existing and new lenders, and subject to the approval of the
shareholders at a General Meeting to be held on 6 August 2020, the
terms of the loan, warrants, and the rights attached thereto will
be as follows:
1. DAGG will effectively acquire the Existing Loan, amounting to
circa GBP1.136m at today's date, from the existing lender
("Zachary");
2. the existing security and current interest rate of 10% per
annum will remain in place and the Existing Loan will be extended
to 31 July 2021;
3. the New Lender will receive 35 million warrants to subscribe
for Ordinary Shares in the Company at 1.4p per share. The warrants
are to expire on 31 May 2022, approximately 16 months earlier than
the old warrants in 4 below;
4. the right of a company associated with the existing lender
("Silja") to receive warrants equal to 17% of the number of
Ordinary Shares issued at any time by Minoan will be cancelled as
will the existing 87,276,998 warrants exercisable at various
prices. As compensation for this, and for giving up all other
rights, the Company will pay Silja GBP250,000 which will be used to
subscribe for 25,000,000 Ordinary Shares at par;
5. in addition, the Company will issue 626,427 zero coupon
redeemable Preference Shares of 0.00001 pence each to Zachary,
redeemable at GBP1 each when a distribution or return of capital is
made to Minoan's Ordinary Shareholders.
The Company has also announced today that it is proposing to
raise approximately GBP200,000 through the issue of new Ordinary
Shares at a price of 1.1 pence per share. The Chairman, Christopher
Egleton and two directors of subsidiary company Loyalward Limited,
being David Raby and Nicholas Day, have indicated their intention
to participate in this placing.
The Board welcomes the support of DAGG and its members as the
Group will now move to accelerate the COVID delayed partnership
discussions and, accordingly, the Project start.
The Directors believe that the arrangements set out above will
achieve a strengthening of the Company's balance sheet and
significantly reduce the long term fully diluted share capital.
This will benefit existing Shareholders whilst also make it
easier for the Company to attract external investment in the
future, should it be required, by removing the need to grant
warrants amounting to 17% of any equity issue to the warrant
holder.
The transaction is complex and in order to facilitate the best
commercial terms for the Company, including the removal of the
warrants over new equity, necessitated a number of steps in order
to ensure all parties were able to reach a mutually acceptable
transaction, in terms of the commercial aspects, accounting
treatment, funding, taxation and legal protections. The more
detailed steps are described below and within the circular being
sent to shareholders today.
The various agreements relating to these proposals are
conditional on the passing of the resolutions to be proposed at the
General Meeting. Under the terms of the proposed arrangements:
1. the Company's subsidiary, Loyalward Leisure Plc, has
conditionally agreed to acquire the Existing Loan due to Zachary,
amounting to circa GBP1.136m including interest, at its face value
together with the Debenture, dated 16 October 2013, granted by the
Company and now held by Zachary. The consideration will be payable
as to GBP510,000 in cash on completion and the balance will be left
outstanding under a convertible loan agreement which will not be
interest bearing and will be repayable on 31 May 2021 unless it is
capitalised earlier;
2. the convertible loan agreement provides that it may be
novated to the Company and that immediately on such novation the
loan is to be capitalised and Zachary will receive an equivalent
number of Preference Shares at a price of GBP1 per share. It is the
Group's intention to novate the convertible loan agreement to the
Company so that the balance of the consideration is discharged by
the issue of Preference Shares at, or as soon as possible
following, completion. The rights attaching to the Preference
Shares are described in paragraph 6 below;
3. DAGG has conditionally agreed to acquire the Existing Loan
and the Debenture from Loyalward Leisure Plc for GBP510,000 payable
in cash on completion. DAGG has also conditionally agreed to extend
the date for repayment of the loan until 31 July 2021 and to soften
the terms of the loan in a number of respects. The loan is not
assignable other than to the current members of DAGG. The current
interest rate of 10% per annum will remain in place. This results
in the transaction being cash neutral to the Group at
completion;
4. on completion, and in consideration for softening the terms
of the loan, DAGG will receive warrants to subscribe for up to
35,000,000 Ordinary Shares in the Company at 1.4p per share. These
warrants represent c. 6.54 per cent of the fully diluted ordinary
share capital of the Company at the date hereof and expire on 31
May 2022, approximately 16 months earlier than the warrants
currently held by Silja;
5. Silja currently holds warrants to subscribe for up to
87,276,998 Ordinary Shares at various prices between 2.5 and 9
pence per share. These warrants are exercisable at any time prior
to 12 October 2023. It also has the right to receive further
warrants equal to 17% of any equity issue made by the Company from
time to time. Silja has conditionally agreed that on completion,
both these warrants and the right to further warrants will be
cancelled for the sum of GBP250,000 which will be settled by the
Company allotting and issuing 25,000,000 Ordinary Shares to Silja
at par (representing 5.71 per cent. of the current issued share
capital of the Company.
In the meantime, the Board has taken significant action in
reducing the ongoing running costs of the Company, including
directors deferring and/or foregoing fees, until the Group has
moved forward with the Project.
Following the reorganisation of the loan, the Company will be
better placed to manage its ongoing working capital requirements
and will be on a more stable footing. Lock-down has delayed more
detailed interactions with potential joint venturers and partners,
especially in being able to hold face to face meetings and
organising any site visits. With lock-down now easing, the support
of DAGG and its members, and the financing behind it, the Company
is able to move forward with confidence in taking the Project to
success. The Company will update shareholders as these negotiations
progress.
The transaction has a number of related parties involved. As
mentioned, Christopher Egleton, Minoan's Chairman, has indicated
his intention to participate in the placing alongside David Raby (a
substantial shareholder) and Nicholas Day (a significant
shareholder) both of whom are directors of Loyalward. Nicholas Day
is also a member of DAGG LLP with a 14.7% interest following a
GBP75,000 investment.
The Independent Directors, having consulted with the Company's
nominated adviser, WH Ireland Limited, consider that the terms of
these related party transactions are fair and reasonable insofar as
the Shareholders are concerned.
In particular, the Independent Directors believe that the
reorganisation of the secured borrowings will result in more
favourable terms for Minoan, with the repayment period extended
until 31 July 2021, the terms improved and the cancellation of
existing and rights to future warrants that have historically
diluted shareholders and the placing provides working capital for
the Company.
Shareholders' approval of the above Share and Warrant issues
will be sought at a General Meeting of the Company, the Notice of
which will available on the Minoan's website today, and be mailed
today to those shareholders who have elected to receive a hard copy
communication from the Company.
The General Meeting is to be held at 10.05a.m. on 6 August 2020
(or, if later, as soon thereafter as the reconvened Annual General
Meeting convened for 10.00 a.m. on the same day has concluded) at
St Dunstan's Church Hall, 80 London Road, Canterbury, CT2 8LS.
Please note that the evolving COVID-19 situation and the related
Government guidelines have clearly impacted the ability of
Shareholders to attend the General Meeting. The Company will
therefore hold the meeting with the minimum quorum of Shareholders
present to conduct the business of the meeting (being the Chairman
and one other Shareholder). Social distancing measures will be in
place. Shareholders should not travel to the venue as no other
Shareholders will be permitted to physically attend the meeting and
any Shareholder who attempts to attend the meeting in person will
be refused entry. As Shareholders will not be able to attend the
meeting, the Company requests that Shareholders submit their votes
by proxy.
The Company will publish its interim results for the six months
ended 30 April 2020 by the end of August 2020 at which time it will
provide a further update on the Project.
Christopher Egleton, Minoan Chairman, said
I am delighted at the successful conclusion of the discussions
with the existing lender and at the confidence shown in Minoan by
the New Lender and its members. The refinancing allows the Company
to move forward in its stated intention to generate value for
shareholders through the Project. . At the same time, I am very
pleased to announce the simultaneous launch of our new website
which we hope will give shareholders a better idea of the scale and
scope of the Project .
For further information visit www.minoangroup.com or
contact:
Minoan Group Plc
Christopher Egleton christopher.egleton@minoangroup.com
Bill Cole william.cole@minoangroup.com
WH Ireland Limited 020 7220 1666
Adrian Hadden/Lydia Zychowska
Pello Capital Limited 020 7710 9610
Mark Traherne
Sapience Communications Limited 020 3195 3240
Richard Morgan Evans
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END
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