19th Aug 2020 10:58
(Alliance News) -Â Shares in Challenger Acquisitions Ltd were suspended on Wednesday as it unveiled a potential reverse takeover.
The investment company said it has entered into a letter of intent with Cindrigo Ltd and Cindrigo Energy Ltd, which are part of a group of companies pursuing renewable energy projects.
The letter envisages Challenger making an offer to buy all of Cindrigo's shares, subject to a reorganisation between Cindrigo and its holding company, Cindrigo Energy, which requires court approval in Canada.
The offer would mean Cindrigo assumes the costs of implementing the transaction and obtaining readmission of Challenger's shares to the London Stock Exchange, subject to a cap of GBP560,000. To support this, Cindrigo will be obliged to make an initial payment of GBP450,000 into the client account of the lawyers for Challenger.
Challenger said: "The consideration payable under the offer will be the issue to Cindrigo shareholders of shares and/or convertible loan notes of Challenger such that, following completion, and conversion of the convertible notes issued as part of the consideration, the existing shareholders of Challenger together with the company's existing holders of convertible notes will between them hold 3% of the share capital."
Challenger's board has unanimously approved the letter of intent. There is also, subject-to-contract, agreement between the company and convertible noteholders to facilitate the transaction.
Should the offer complete, it would constitute a reverse takeover under listing rules. Thus, Challenger shares have been suspended on the Main Market pending either a further announcement on specific details of the reverse takeover, the publication of a prospectus, or an announcement that the deal is not proceeding.
Mark Gustafson, Challenger's chief executive officer, said: "This is a very positive development for the company. Our board has worked relentlessly throughout late 2019 and this year to secure an appropriate RTO opportunity. We will now work actively with Cindrigo towards the making and completion of the offer."
By Lucy Heming;Â [email protected]
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