13th Nov 2015 12:33
LONDON (Alliance News) - Reach4entertainment Enterprises PLC said Friday it has raised GBP4 million in a discounted placing of 400 million shares at 1 pence each, as part of plans to re-capitalise the group.
Shares in the company were down 33% at 1.51 pence Friday afternoon.
The company is proposing to undertake a capital reorganisation so that the par value of its ordinary shares are reduced to below the placing price. This would involved splitting each of its existing shares into one new share of around 0.5 pence, and one deferred share of 2 pence.
Elsewhere, it is also seeking to refinance its existing loan facility agreement of GBP14.8 million with AIB Group UK PLC. Under the agreement, Reach4entertainment will pay a cash settlement of GBP9 million to AIB against the termination of the facility agreement and release the security granted in connection with the agreement.
Then it will grant warrants to AIB which will represent around 5% of the company's enlarged share capital, exercisable for five years, only when the closing mid-market price of a new share reaches 5 pence or more on any trading day in that five year period.
The company has got an offer letter for a new three year debt facility of GBP9.5 million with PNC Business Credit Services, consisting of a GBP1 million term loan, and a revolving credit facility of up to GBP8.5 million. This will be used to refinance the AIB loan and provide the company with working capital.
"r4e is the market leader in theatre promotion in both the West End and Broadway. It is a unique business and one which has significant potential to develop. Historically the company has been prevented from pursuing opportunities due to capital constraints. This recapitalisation will lift those constraints and therefore marks the start of a new phase in the development of the group," said Chairman David Stoller in a statement.
The capital reorganisation and placing is subject to shareholder approval.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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