4th Oct 2007 07:01
XL TechGroup, Inc.04 October 2007 Press Release 4 October 2007 XL TechGroup, Inc. ("XL TechGroup" or "the Company") XL TechGroup arranges new US$25 million borrowing facility XL TechGroup (AIM: XLT), the systematic architect and builder of an ongoingstream of high value new companies, announces that it has arranged a newborrowing facility totalling US$25 million with Laurus Master Fund Ltd ("Laurus"), and affiliates of Laurus, a New York based institutional equity fund thatspecialises in making direct investments in growing public companies. This new facility is divided into two tranches. The first is a US$12 millionthree year loan at the US Prime Rate (currently 7.75%) plus 2% per annum, thatwill be used to fund the development of XL TechGroup portfolio companies,including PetroAlgae LLC ("PetroAlgae") which is commercialisingenvironmentally-friendly algae to produce biodiesel. Laurus will receive anoption for up to 9% of PetroAlgae's issued shares, and XL TechGroup's equitystake in PetroAlgae would reduce to 85.4% after the fully dilutive effect ofthis transaction. However, if XL TechGroup repays this tranche within 14months, Laurus' equity stake in PetroAlgae will reduce to 7%. In addition, XLTechGroup has call options that enable it to buy back 66.7% of Laurus' optionsin PetroAlgae at varying prices, being US$3 million for the first 22.3%, US$6million for the next 22.2% and US$12 million for the last 22.2%. All of theseoptions must be exercised no later than six months after any PetroAlgae IPO andprior to the three year maturity of this tranche. The second tranche is a US$13 million three year loan that will be used toprovide XL TechGroup with US$3 million of additional working capital and torefinance, without penalty, US$10 million of the US$35 million Laurus facilitythat was announced on 3 January 2006. The interest rate on this second trancheis the US Prime Rate, which is currently 7.75% per annum, and comparesfavourably with the US Prime Rate plus 2% applicable to the original US$35million facility. At XL TechGroup's election, Laurus is also entitled, on anannual basis, to receive either cash or shares in XL TechGroup's portfoliocompanies or in XL TechGroup itself, with a value equivalent to 12% of theoutstanding principal under this facility at the time. In line with previous Laurus facilities, collateral for this new facilityconsists of a charge against XL TechGroup's assets, including shares inportfolio companies. With regard to its holding in TyraTech, XL TechGroup willretain at all times beneficial interest in its TyraTech stock until 1 June 2008. After this date, should Laurus receive TyraTech stock under the terms of thisloan, it is bound to adhere to any lock-in restrictions currently in place afterthat date. The only circumstances under which Laurus could realise on itscollateral are in the event of a default by XL TechGroup, and Laurus would inany event be bound by the current terms of the XL TechGroup lock-inrestrictions. This new facility is in line with XL TechGroup's stated business strategy, whichhas been successfully developed over fourteen years. The Company's aim is toachieve periodic large-scale liquidity events from the managed sale of itsinterests in XL TechGroup portfolio companies and, as recently advised, it iscurrently anticipated that the first of a number of significant cashdistributions to shareholders would occur during 2008. In the meantime, XLTechGroup raises working capital funds by leveraging its company assets tosecure reliable, cost-effective financing for the development and scaling needsof both existing XL TechGroup portfolio companies and future prospects in thepipeline. John Scott, Chief Executive Officer of XL TechGroup, said: "This is the thirdfacility that we have arranged with Laurus, and we are pleased with theirongoing support for our overall business model and the underlying potentialvalue of our portfolio companies. We are also pleased with the terms of thislatest facility which provides both additional working capital for XL TechGroup,as well as specific funding for PetroAlgae, while enabling us to refinance partof our previous Laurus debt on improved terms." - Ends - For further information:XL TechGroup Inc. Jonn Scott / Harold Gubnitsky Tel: +1 321 409 [email protected] Munden, Director of Investor Relations Tel: +44 (0) 20 7398 [email protected] www.xltechgroup.com Nomura Code SecuritiesRichard Potts, Corporate Finance Tel: +44 (0) 20 7776 1200 www.nomuracode.com XL TechGroup media enquiries:Abchurch CommunicationsHeather Salmond / Gareth Mead Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com NOTES TO EDITORS About XL TechGroup XL TechGroup is in the business of significant value creation. Working withmajor international corporate and technology partners such as AES, Procter &Gamble and leading universities, XL TechGroup first identifies global unmetmarket needs and then targets and exploits these by the systematic creation ofsuccessful, disruptive technology businesses. These new companies are builtfrom scratch, and are then managed, developed and funded by XL TechGroup throughto the point of a trade sale or a stock market listing. XL TechGroup's unique and proven methodology selects the best opportunities inorder to create one-to-two new companies annually, where each company isexpected to achieve a realisable valuation of at least US$400 million withinfour years from its creation. While an XL TechGroup company might perform astock market listing at an earlier point in this four year timeframe, XLTechGroup would retain a controlling interest and would continue to assist withthe company's development. It is XL TechGroup's aim to deliver significantshareholder distributions at the final exit from each company. XL TechGroup's companies to date are: • AgCert International plc (LSE: AGC, www.agcert.com)• TyraTech Inc. (AIM: TYR, www.tyratech.com)• DxTech LLC (www.dxtech.com)• PetroAlgae LLC (www.petroalgae.com)• QuoNova LLC (www.quonova.com) XL TechGroup has also established GenXL LLC as a joint venture to capture thevalue of those prospects that do not fully meet XL TechGroup's US$400 million,four year criteria but still demonstrate considerable potential worth. Over andabove XL TechGroup's core business model, GenXL is reviewing a significant flowof opportunities from both XL TechGroup and GEN3 in order to generate newcompanies, standalone product lines and technology licensing opportunities or anappropriate mix of these. For further information, see www.xltechgroup.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Tyratech