Prime Active Capital PLC Discussions with Lenders (9803H)
24 5월 2014 - 12:30AM
UK Regulatory
TIDMPACC
RNS Number : 9803H
Prime Active Capital PLC
23 May 2014
Prime Active Capital plc
23 May, 2014
Discussions with Lenders, Proposed Disposals Initiative and
Resignation from the Board
Prime Active Capital plc ('PAC" or "the Company") announces that
it is in discussions with its principal lender, Mosaic Print
Management Limited in relation to the one year secured loan
facility made available to PAC in May 2013 and that it is now
seeking to advance the disposal of part or all of its 56 stores.
With the decision to make these disposals, Peter E. Lynch has
tendered his resignation from the Board and stepped down from an
executive capacity.
Background to the Discussions
In May, 2013 the Company announced that it had entered into a 1
year StgGBP1.00 million (EUR1.225 million) loan facility with
Mosaic Print Management Limited ("Mosaic"), ("Mosaic Loan
Facility"), a UK company owned by Mr. Anthony Gill and Mr. Steve
Smith. Mr. Gill is the largest shareholder in PAC with a
shareholding representing 22% of the existing issued share capital
of the Company. The Mosaic Loan Facility, which is secured on
certain of the US subsidiaries of PAC (representing substantially
all of the business of the PAC Group), and which carries a 15%
coupon with monthly interest payments, was required to address the
working capital requirements of the business following a sustained
period of trading losses in 2012 and into 2013 as the Company
struggled to adjust to changes in the sector.
In particular the emergence and increasing prevalence of more
expensive smartphones and of subsidies to customers to sign
contracts resulted in a dramatic fall in gross margin for sales
agents such as PAC, together with an increased investment in
inventory. PAC's response to these difficulties included the launch
of 2 new businesses, one of which buys and sells recycled devices,
partly through the internet, and the other providing replacement
devices and ancillary activities for customers that have had their
handsets lost, broken or stolen. While these businesses have helped
to counteract the decline in volume and gross margin which has
characterized trading in the US telecommunications retail market in
recent years, progress on these business activities have not been
sufficient to compensate for further changes to the core
business.
As part of the terms of the Mosaic Loan Facility Mr. Gill and
Mr. Smith joined the board of PAC as non-executive directors, with
the Board position of Mr. Smith being co-terminus with repayment of
the loan.
Other than the Mosaic Loan Facility, there are no additional
material loans outstanding in the PAC Group.
The Directors have previously noted that the repayment of the
Mosaic Loan Facility would be dependent on the trading performance
of the Group, the availability of other facilities or the support
of shareholders. While trading conditions had improved in the
aftermath of the availability of the facility, this improvement was
not been sustained due to changes in contract periods towards the
end of last year and the business has not generated sufficient cash
to effect a repayment of the Mosaic Loan Facility, though other
loans have been repaid in full and all interest payments made as
due. It is not considered likely that any other facilities will be
available to the Group to refinance the Mosaic Loan Facility prior
to its current maturity date.
The Company has accordingly entered into discussions with Mosaic
in respect of the Mosaic Loan Facility and these discussions are
continuing. In parallel the Company has been engaged in discussions
with a number of parties with respect to a disposal of part or all
of its stores, with the intention of applying the proceeds of any
such disposal to the repayment in full of the Mosaic Loan Facility
as well as a further potential distribution to shareholders. While
the Company was in advanced discussion to realise part of its
business earlier this month, this did not complete as expected. The
Directors now expect that a further period will be required in
which to advance the disposal process.
A range of other remedial actions with respect to the Mosaic
Loan Facility are also being considered, including but not limited
to an extension of the term of that facility, a restructuring of
the facility and/or an issue of equity.
The immediate priority of the Board is to seek clarity from
Mosaic as to its intentions in relation to the Mosaic Loan
Facility.
Resignation from the Board
With the decision to seek to effect the disposal of potentially
all of the PAC businesses (of which decision Mr. Lynch is
supportive) Mr. Lynch has tendered his resignation from the Board
and stepped down from an executive capacity, with immediate
effect.
Mr. Lynch joined PAC in April, 2007 and subsequently developed
the business as an acquisition and development vehicle focused on
investing in, or acquiring underperforming assets in sectors where
the Board had significant experience. Acquisitions completed
include, in 2009, the business and assets of Freedom Wireless Inc.,
an exclusive agent for Verizon Wireless selling mobile phones and
related accessories in its 47 retail stores in Pennsylvania, Ohio
and New Jersey and, in 2008, the business of In2Wireless, an
exclusive agent for Verizon Wireless selling mobile phones and
related accessories in its 27 retail stores in Alabama.
Following his resignation the Board will be comprised of Mr.
Dermot Martin, Mr. Anthony Gill and Mr. Stephen Smith. It has been
agreed that Mr. Martin will, with immediate effect, assume an
Executive role and will be delegated the board's powers to conduct
the sale process. The approval of any sale is likely, under the ESM
and AIM rules, to be subject to shareholder approval.
Further announcements in relation to the outcome of discussions
with Mosaic, the prospects for the sale process and any further
potential initiatives to address the debt obligations of the
Company will be made as soon as possible. There can be no certainty
at this time that PAC will be able to reach agreement with Mosaic
nor that disposals will be capable of being implemented on
satisfactory terms within any required timeframe.
For further information, contact:
Prime Active Capital plc Tel: + 353 1 295 9895
Dermot Martin
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Nominated Adviser Tel: + 353 1 6796363
Davy Corporate Finance
Eugenée Mulhern/Anthony
Farrell
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This information is provided by RNS
The company news service from the London Stock Exchange
END
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