3rd Dec 2015 19:26
LONDON (Alliance News) - GLI Finance Ltd, which provides finance to smaller businesses, on Thursday said it wants to raise GBP40.0 million by selling new zero dividend preference shares to new and existing shareholders, with the proceeds to be used to repay debt and possibly fund growth.
As well as repaying the debt through the issue of new ZDPs, GLI is considering an issue of convertible unsecured bonds to then replace that debt in its funding structure.
The alternative finance provider is planning to sell up to 40.0 million new ZDPs at 100 pence each through a placing and open offer. The company said there will be an equal number of shares available under each of the placing and open offer. Any of the 20.0 million shares not taken up under the open offer may be sold in the placing. The open offer is open to holders of existing ordinary shares and ZDPs.
The new ZDPs will have a redemption value of 143.563 pence when they mature on December 22, 2020. Their issuance requires approval from ordinary shareholders, but not from holders of the company's existing ZDPs due in 2019. That is because the 2019 ZDPs will rank in priority to the new 2020 ZDPs.
The proceeds may be used to fund the growth of GLI's own loan portfolio, if the money raised through the sale of ZDPs exceeds what is needed to repay its debt. Panmure Gordon, the company's nominated adviser and corporate broker, is handling the placing and open offer.
GLI said it is considering an issue of convertible unsecured bonds to replace its GBP30.0 million loan facility and help fund the growth of its business. The company said GBP24.89 million of the facility is currently drawn down.
The company said the convertible instruments would be cheaper than its current loan facility, which bears interest at 11% per annum. The conversion price of the bonds would be "above the market price" of ordinary shares on the date of issue. GLI said such an option would be "less dilutive" to shareholders than issuing new shares at today's share price.
Issuing convertible unsecured bonds requires approval from ordinary shareholders, but not from owners of the company's existing ZDPs, as the proceeds of the convertible bond issue would be used to replace GLI's loan facility and borrowings would be kept below the GBP30.0 million limit agreed with the ZDP holders. The GBP300 million limit does not applied to subsidiary companies, so long as the debt is not guaranteed by GLI.
In addition, GLI said it wants to adopt the following dividend policy: "It is intended that aggregate dividends declared in respect of each annual accounting period are paid out of the net income of the company in respect of that annual accounting period, such policy to be measured at the end of each accounting period. The board may, however, exceptionally pay dividends and special dividends out of capital."
Ordinary shareholders are allowed to receive dividends, unlike holders of ZDPs who become entitled to a fixed capital return on maturity.
By Samuel Agini; [email protected]; @samuelagini
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