TIDMESG
RNS Number : 1612B
eServGlobal Limited
05 October 2015
eServGlobal Limited ("eServGlobal" or the "Company")
Loan from Substantial Shareholder
5 October 2015
eServGlobal (AIM:ESG & ASX:ESV), the provider of end-to-end
mobile financial services to emerging markets, announces that,
further to its announcement of 28 September 2015, the Company has
today entered into an agreement for a loan facility of up to
GBP5.0M (the "Loan Facility" or "Loan Agreement"), drawable in two
tranches.
The Loan Facility allows for GBP2.5M to be drawn down before the
end of the year and an additional GBP2.5M available for drawdown
prior to 30 June 2016. The second drawdown would be subject to both
shareholder approval of the security discussed below and the
approval of the Lenders, at their discretion. The Company intends
to drawdown the first tranche prior to the end of October 2015.
The Loan will be provided equally by the Alphagen Volantis Fund
Limited and the Alphagen Volantis Catalyst Fund Limited, acting
through its investment manager, Alphagen Capital Limited (formerly
known as Henderson Alternative Investment Advisor Limited), part of
Henderson Global Investors ("Henderson", or the "Lenders").
The Company is presently indebted to the Lenders for GBP5.0M
under the loan announced on 4 June 2015 (the "Existing Loan"). As a
condition to the new Loan Facility, the terms of the Existing Loan
will be amended to provide for a 10% premium payable on repayment
of the loan. If repaid early, the repayment premium will be
adjusted to give an annualised return to the Lenders of 15% on the
principal (excluding the drawdown fee of 2.5%).
Pursuant to the announcement of 28 September 2015, the Company
expects to agree to subscribe for shares in HomeSend shortly. As
announced, the pro rata offer to eServGlobal is for partly paid
shares, with full voting rights, with EUR875K payable in
mid-October 2015 and EUR2.625M in April 2016 out of a total capital
raise of EUR10M.
The proceeds of the Loan Facility will provide the Company with
additional working capital and enable its pro rata investment in
HomeSend, as set out above. The Company expects to make a further
announcement shortly to confirm when this proposed investment in
HomeSend has been completed.
Terms of the Loan Facility
The Loan Facility has a two-year term. An establishment fee of
2.5% is due upon commencement of the agreement and will bear
interest at the rate of 0.8% per month compound payable at the end
of the term.
In addition, 39,866,107 options shall be issued to the Lenders
on execution of the Loan Agreement (the "Options"). The exercise
period for the Options is two years from execution of the Loan
Agreement; therefore the Options will expire on 5 October 2017. The
exercise price shall be the lesser of the closing share price of
the Company's depository interests trading on AIM on the trading
day prior to the execution of the Loan Agreement, being 7.75 pence
per share (the closing price on 2 October 2015), or a 20% discount
to the 60 day Volume Weighted Average Price for the Company's
depository interests trading on AIM for the period commencing on 28
September 2015.
The Options represent 15% of the Company's current issued share
capital. In order to facilitate the issue of these Options, within
the Company's present capacity under ASX Listing Rule 7.1, the
Lenders have today forfeited their existing 2,777,778 options, with
an exercise price of 18 pence, which were issued to the Lenders on
4 June 2015 under the terms of the Existing Loan; these options
will be cancelled unexercised.
A condition precedent to the first tranche of the Loan Facility
is that the Company undertakes, on a best endeavours basis, to
provide the Lenders with security, capped at A$2,650,000 as
permitted by ASX Listing Rule 10.1, over all the assets of
eServGlobal Limited and its subsidiaries, including the Company's
share of HomeSend. The granting of any security by the Company
requires the consent of the National Australia Bank, as the
Company's existing secured creditor, and no security will be
granted until their consent is obtained. The drawdown of the second
tranche of the Loan Facility is conditional on the uncapped
security over all the assets of the Company being granted to the
Lenders, which would require the approval of the Company's
shareholders. In practice, therefore, any drawdown of the second
tranche of the Loan Facility and the corresponding grant to the
Lenders of security over all of the Company's assets could only
occur with the approval of the Company's shareholders, the National
Australia Bank and the approval of the Lenders. eServGlobal is in
the process of moving its interest in the HomeSend JV to being held
directly by eServGlobal Limited.
Once established, the security referred to above will also
secure the Company's indebtedness under the Existing Loan, thus the
Lender will be a secured creditor for the amount outstanding under
the Existing Loan and the new Loan Facility . In respect of the
security for each tranche, the Lender ranks behind the National
Australia Bank. There are no loan covenants regarding financial
measures in respect of the Loan Facility and the Loan Facility
includes a negative pledge by the Company not to grant security
over any of the Company's assets (other than the existing security
provided to National Australia Bank) without the approval of
Henderson. The Board confirms that the provision of the security
referred to above does not negatively impact the Company's ongoing
operations, except for the fact that it limits the ability of the
Company to offer its assets as security for other financial
accommodations.
At any time during the term of the Loan Facility, the Lender may
appoint an observer to the Board, subject to the observer agreeing
to abide by reasonable confidentiality obligations.
Related Party Transaction
Henderson and its associates are substantial shareholders in
eServGlobal, holding in aggregate 46,549,213 ordinary shares of the
Company, representing 17.5% of the issued share capital and total
voting rights of the Company, and CFDs over 9,041,951 shares, and
as such Henderson is considered to be a related party of the
Company pursuant to Rule 13 of the AIM Rules for Companies. If the
Options are exercised in full (and assuming that the Options under
the Existing Loan are forfeited, as set out above). Henderson will
hold 86,415,320 ordinary shares of the Company, representing 28.3%
of the enlarged issued share capital and enlarged total voting
rights. As eServGlobal is an Australian incorporated company, there
are limitations under the Corporations Act of Australia as to the
speed at which any shareholder can obtain voting power in the
Company of more than 20%.
The issue of the Loan Facility and the Options is a related
party transaction pursuant to AIM Rule 13. The directors of the
Company, having consulted with the Company's nominated adviser,
Canaccord Genuity Limited, consider that the terms of the Loan
Facility are fair and reasonable insofar as the Company's
shareholders are concerned.
Debt Structure and Profile
Upon the first drawdown of the new facility, the company will
have the following interest bearing liabilities:
Lender Amount Interest Rate Maturity Date
------------------- -------- ------------------------- ---------------
National Australia A$3M Floating rate, currently 31 March 2016
Bank 6.85%
------------------- -------- ------------------------- ---------------
Henderson GBP5M Effective 15% per annum 4 June 2017
including repayment
premium
------------------- -------- ------------------------- ---------------
Henderson GBP2.5M 9.6% per annum 5 October 2017
------------------- -------- ------------------------- ---------------
A condition of the Loan Facility is that the Loan Facility must
be discharged before any early repayment is made on the Existing
Loan.
The Company retains its entitlement to EUR3.5M held in escrow
from the sale of intellectual property to the HomeSend JV (the
"Escrow Funds"). The Escrow Funds are due to be released on 3 April
2016, subject to any claims that may be made by MasterCard. To date
the Company is not aware of any claims or any potential for a claim
to be made against the Escrow Funds.
For further information, please contact:
eServGlobal www.eservglobal.com
Tom Rowe, Company Secretary T: +61 2 8014 5050
investors@eservglobal.com
Canaccord Genuity Limited (Nomad and Broker) www.canaccordgenuity.com
Simon Bridges / Cameron Duncan / Emma Gabriel T: +44 (0) 20 7523 8000
Newgate www.newgatecomms.com
Adam Lloyd / Helena Bogle T: +44 (0) 20 7653 9850
About eServGlobal
eServGlobal (AIM:ESG, ASX:ESV) offers mobile money solutions
which put feature-rich services at the fingertips of users
worldwide, covering the full spectrum of mobile financial services,
mobile wallet, mobile commerce, recharge, promotions and agent
management features. eServGlobal invests heavily in product
development, using carrier-grade, next-generation technology and
aligning with the requirements of more than 65 customers in over 50
countries.
Together with MasterCard and BICS, eServGlobal is a joint
venture partner of the HomeSend global payment hub, a market
leading solution based on eServGlobal technology and enabling
cross-border money transfer between mobile money accounts, payment
cards, bank accounts or cash outlets from anywhere in the world
regardless of the users location.
eServGlobal has been a source of innovative solutions for mobile
and financial service providers for 30 years.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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