Convertible Loan Agreement and Grant of Warrants

    RNS Number : 2583H
  New Media Lottery Services PLC
  03 November 2008
   

    3 November 2008
    NEW MEDIA LOTTERY SERVICES PLC
    ("NMLS" or "the Company")
    (Ticker:NMLS)

    Convertible Loan Agreement and Grant of Warrants

    The Board of New Media Lottery Services PLC, the gaming content and systems provider, today announces that it has raised EUR1.15 million
(before expenses) by way of a secured convertible loan ("Convertible Loan") from Trafalgar Capital Specialized Investment Fund (the
"Participant"). Pursuant to the terms of the convertible loan agreement ("Convertible Loan Agreement") the Participant has also been granted
a warrant ("Warrant") to purchase up to 3,000,000 Ordinary Shares in the Company ("Warrant Shares"). 

    The Company will use the funds to continue its marketing efforts associated with  www.rehabbingo.com,  www.rehabgames.com and
www.lonely.ie. In addition, the new funds will support the Company's projects with Inspired Broadcast Networks, additional contract
procurement and ongoing operations.  

    This summary should be read in conjunction with the full text of the following announcement.


    ---ends---

    Enquiries:

    New Media Lottery Services PLC                    (001) 540 437 1688
    John Carson                                   
    www.nmlsplc.com

    Bishopsgate Communications Ltd                       020 7562 3350
    Nick Rome
    Michael Kinirons
    www.bishopsgatecommunications.com 

    Arbuthnot Securities                                            020 7012 2000
    Paul Vanstone
    www.arbuthnotsecurities.co.uk

    The distribution of this announcement may be restricted by law and therefore persons into whose possession this announcement comes
should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation
of the securities laws of any such jurisdiction.


    Introduction

    The Board of New Media Lottery Services PLC, the gaming content and systems provider, today announces that it has raised EUR1.15 million
(before expenses) by way of a secured convertible loan ("Convertible Loan") from Trafalgar Capital Specialized Investment Fund (the
"Participant"). Pursuant to the terms of the convertible loan agreement ("Convertible Loan Agreement") the Participant has also been granted
a warrant ("Warrant") to purchase up to 3,000,000 Ordinary Shares in the Company ("Warrant Shares"). 

    The Company will use the funds to continue its marketing efforts associated with www.rehabbingo.com,  www.rehabgames.com and
www.lonely.ie. In addition, the new funds will support the Company's projects with Inspired Broadcast Networks, additional contract
procurement and ongoing operations.

    Convertible Loan Agreement

    The Convertible Loan, which is to be secured by way of fixed and floating charge over the undertaking and assets of the Company, bears
interest at a rate of 8% per annum and is repayable in equal monthly installments by 30 April 2010.  The Company is (subject to certain
exceptions) entitled to make additional repayments of the Convertible Loan at any time.  All repayments of the Convertible Loan will also be
subject to a redemption premium of 12.5%.  The maximum amount repayable under the Convertible Loan Agreement (assuming no breach) is
approximately EUR1.85 million.

    At the option of the Participant, any Convertible Loan amounts outstanding may be converted in whole or in part into Ordinary Shares
("Conversion Shares") at 2.5 pence per share. If the prevailing share price at conversion is less than 2.5 pence per share the Participant
may, with the consent of the Company, convert any Convertible Loan amounts outstanding into Conversion Shares at 85% of the lowest daily
closing volume weighted average price for the five consecutive trading days immediately prior to the notice to convert being issued by the
Participant. The Convertible Loan is a Euro denominated facility and it provides for an adjustment mechanism to protect the Participant from
dilution due adverse movements in the Euro/Sterling exchange rate that would otherwise dilute the number of Conversion Shares that it would
be entitled to in the event of conversion.  Unless the Company otherwise agrees, the Participant cannot convert such that the Participant
would hold in excess of 2.99% of the prevailing issued share capital of the Company prior to any such conversion. This restriction does not apply to the Participants right to subscribe for the
Warrant Shares as set out below. If the Company is in terminable default under the Convertible Loan Agreement then the Participant has the
option to convert all amounts outstanding into Ordinary Shares at the Conversion Price.  

    Pursuant to the Convertible Loan Agreement the Company has also granted the Warrants. The Warrants are exercisable in whole or in part
up to 30 April 2010 and entitle the Participant to acquire up to 3,000,000 Ordinary Shares at a price of 5 pence per Ordinary Share. In the
event that the Participant does not exercise its right to subscribe for any Warrant Shares the Company shall pay the Participant �120,000. 

    The trading of the Ordinary Shares is governed by the Irish Takeover Rules. In the event that the Company is in default (of the type
referred to above) under the Convertible Loan Agreement and the Participant exercised its right to convert some or all amounts outstanding
into Ordinary Shares then the Participant may have an aggregate holding of Ordinary Shares representing 30% or more of the total voting
rights in the Company. If this happened the Participant would be required (except with the consent of the Irish Takeover Panel) to make an
offer for all of the outstanding Ordinary Shares in the Company.

    If the Participant exercises in whole or in part its right to subscribe for Conversion Shares and/or Warrant Shares, the holders of the
existing Ordinary Shares could be materially diluted, the degree of such dilution will depend on the quantum of conversion, prevailing
Ordinary Share price and Euro/Pound Sterling exchange rate.  

    The Conversion Shares and the Warrant Shares will, following issue, rank pari passu in all respects with the Ordinary Shares, including
the right to receive all distributions declared, paid or made on or after issue. If and when any Conversion Shares or Warrant Shares are
issued, application(s) will be made without delay to the London Stock Exchange for such shares to be admitted to trading on AIM.

    It should be noted that the Company currently has authority to issue up to 19,888,118 further Ordinary Shares in the Company without
being required to offer those shares to all shareholders.  


    Financial Position of the Company

    The Company has existing debt owed to New Media Lottery Services, Inc, the 80.23% shareholder of the Company, Comerica Bank and Milton
Dresner (a non-executive director of the Company) and Joseph Dresner (the "Dresners"), majority shareholders in New Media Lottery Services,
Inc. and, together, direct holders of a further 7.23% of the issued share capital in the Company (collectively the "Debt Providers").

    Each of the Debt Providers (other than Comerica Bank) has confirmed to the Company that they will not require repayment of their
respective debt noted above prior to the satisfactory payment in full of the Convertible Loan by the Company, subject to certain terms and
conditions. In the case of the debt owed to Comerica Bank, Milton Dresner has agreed to guarantee all payments which are required to be made
to Comerica Bank (in respect of the existing debt) until satisfactory payment in full of the Convertible Loan, subject to certain terms and
conditions.

    The proceeds of the Convertible Loan will help finance the Company's short term capital requirements. The Directors believe that the
majority shareholders will continue to support the business should the Company require further capital in the foreseeable future.




This information is provided by RNS
The company news service from the London Stock Exchange
 
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