10th Jun 2015 07:35
LONDON (Alliance News) - Reach4entertainment Enterprises PLC saw its shares rise sharply early Wednesday after it said it had reached a deal with AIB Group to restructure and payoff its GBP14.8 million loan facility with the bank, and will replace it in part with new debt from new lenders at lower cost.
The media and entertainment marketing company said AIB will convert GBP5.2 million of the outstanding debt into new reach4entertainment shares. Those shares will be equivalent to 12.5% of its fully diluted issued share capital the completion date for the deal, which is no later than October 31. Reach4entertainment will also grant AIB a European five-year put option over the settlement shares, which, if exercised, will mean the company buys the shares from the bank for GBP2 million in cash.
The company had already repaid GBP200,000 of the GBP14.8 million facility in April, and will now make a final cash repayment of GBP9.4 million to settle the facility by October 31.
However, the final settlement is dependent on reach4entertainment securing the funding to fulfill the repayment obligations by the end of September. The company said it expects to do this through a combination of new debt facilities and by issuing new shares. It said it has already started talks with potential lenders and investors about this.
Reach4entertainment will pay the costs incurred by both sides in connection with the deal, whether or not it proceeds.
"Having entered into initial discussions with new lenders, we are confident we can secure debt facilities which will necessarily be at a lower cost to our current loan facilities, and we are exploring our options for equity funding. Reducing our borrowing costs will assist us in establishing a new platform for growth and allow us to allocate capital to invest in the fast growing areas of our business," reach4entertainment Chairman David Stoller said in a statement.
Reach4entertainment shares were up 70.2% at 2.42 pence early Wednesday, the best-performing stock on the AIM All-Share index.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
R4E.L