Proposed Placings, Open Offer and Debt Restructure

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION MAY CONTRAVENE LOCAL SECURITIES LAWS OR REGULATIONS.

7 June 2016

eServGlobal Limited (AIM: ESG, ASX: ESV) ("eServGlobal" or the "Company")

Proposed Placings of 300,000,000 new Ordinary Shares at 4 pence per Share, Open Offer of up to 74,410,039 new Ordinary Shares at 4 pence per Share, Debt Restructure, Issue of Options and intention to convene an Extraordinary General Meeting

1. Introduction

The Company is pleased to announce its proposals to raise up to £14.98 million (before expenses) by way of a placing of 300,000,000 new Ordinary Shares at a price of 4 pence per new Ordinary Share (or, for placees in Australia, AUS$0.08 per new Ordinary Share) which is expected to raise £12 million (before expenses), and its intention to make an open offer (non-renounceable rights issue under Australian Law) of up to 74,410,039 new Ordinary Shares at 4 pence per new Ordinary Share (or, for Qualifying Ordinary Shareholders, AUS$0.08 per new Ordinary Share) to raise up to £2.98 million (AUS$5.96 million).

The net proceeds of the Placings will be used to repay and refinance debt, accelerate sales and marketing and reduce costs in the core business and for general working capital purposes. The Placings have been structured in such a way as to allow the Company to receive part of the proceeds as quickly as possible in order to begin implementing these strategies.

Of the 300,000,000 new Ordinary Shares being placed, 31,866,107 will be placed within the existing authorities granted to the Directors under ASX Listing Rule 7.1 with the remainder being placed conditional on Shareholder approval at an Extraordinary General Meeting. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Firm Placing Shares will be issued and admitted to trading on AIM (in the form of Depository Interests) and the ASX (in CHESS) on or around 16 June 2016. 

The Conditional Placing is conditional on, inter alia, the passing by Shareholders of the Resolutions at an Extraordinary General Meeting which will give the Directors the required authority to (i) issue the Conditional Placing Shares under ASX Listing Rules and (ii) complete the Debt Restructure. Subject to all relevant conditions being satisfied (or, if applicable, waived), it is expected that the Conditional Placing Shares will be issued and admitted to trading on AIM (in the form of Depositary Interests) and the ASX (in CHESS) on or around 25 July 2016. 

The Placing Price represents a discount of 22 per cent. to the closing mid-market price on AIM of 5.125 pence per Ordinary Share as at 6 June 2016, being the latest practicable date prior to the date of this announcement.

The Company is intending to offer Qualifying Holders the opportunity to acquire New Ordinary Shares at the same price as the Placing Shares by way of an Open Offer of 74,410,039 Open Offer Shares to Qualifying Holders, on the basis of 1 Open Offer Share for every 4 Ordinary Shares in issue on the Record Date (which is expected to be 17 June 2016). If fully subscribed, the total proceeds of the Open Offer will be £2.98 million in aggregate. The proceeds of the Open Offer are intended to be retained by the Company to strengthen the balance sheet and may, subject to the Company's working capital requirements, be applied towards a further reduction to the monies owing under the Loan Facilities (or the New Loan if the Debt Restructure proceeds). Further details of the reasons for the Placings and the Open Offer and use of proceeds are set out in section 3 of this announcement.

The Placings and Open Offer are not underwritten. 

In order to minimise transaction costs and to avoid the need to publish an FCA approved prospectus, the total consideration under the Open Offer is lower than €5 million (or an equivalent amount) in aggregate. 

In connection with the Placings, the Company has entered into the Placing Agreement pursuant to which finnCap has agreed, in accordance with its terms, to use reasonable endeavours to place the Placing Shares with institutional investors, including certain existing Shareholders. Also in connection with the Placings, the Company has entered into the Mandate Letter pursuant to which Veritas has agreed, in accordance with its terms, to use best endeavours to place the Placing Shares to institutional and other investors in Australia, including certain existing Australian Shareholders.

The Company has agreed with its Lenders (Alphagen Volantis Fund Limited and Alphagen Volantis Catalyst Limited) a restructuring of its Loan Facilities, conditional on, inter alia, the passing by Shareholders of the Resolutions to (i) issue the Conditional Placing Shares and (ii) complete the Debt Restructure. Under the Debt Restructure, the existing indebtedness under the Loan Facilities will be discharged and the Loan Facilities will be replaced with a New Loan, pursuant to which the Lenders shall make available a term loan of £7 million. The Lenders have agreed to subscribe for 110,141,050 Conditional Placing Shares for a total consideration of £4.41 million and the Company and the Lenders have agreed that such amount shall be satisfied by the waiver of £4.41 million of the existing indebtedness, resulting in the Lenders holding 28.05 per cent. of the voting power of the Company (assuming no Ordinary Shares are issued pursuant to the Open Offer). The Lenders have also agreed to forfeit the Unlisted Options and the Unlisted Option B. The Lenders currently also have CFDs over a further 11,041,951 Ordinary Shares. Further details of the Debt Restructure are set out at section 6 of this announcement.

In order to incentivise and reward the Executive Chairman, the Company is also seeking approval for the issue of Options to John Conoley, further details of which are set out at section 7 of this announcement.

In addition to the Options issued to Mr Conoley, the Company is seeking authority to issue Options over 7,000,000 Ordinary Shares to its employees. The Employee Options are intended to retain staff, motivate employees to improve Company performance and align the interests of employees with those of the Company and its Shareholders. Further details of the Employee Options are set out at section 8 of this announcement.

The Notice of the Extraordinary General Meeting will accompany the Circular, which is expected to be posted to Shareholders and holders of Depositary Interests on or around 22 June 2016, at which the Resolutions will be proposed to approve the Proposals. The Extraordinary General Meeting is expected to be convened for 11.00 a.m. on 22 July 2016 and will take place in Sydney, Australia.

A summary of the arrangements relating to the Open Offer is set out in section 5 of this announcement. The Circular and, where relevant, the Application Form (which will be sent to all Qualifying Ordinary Shareholders), will contain the formal terms and conditions of the Open Offer.

John Conoley, Executive Chairman, eServGlobal, commented: "We have transformed the core business following a restructuring in late 2015, significantly reducing costs and focusing on profitable contracts. As announced in the Trading Update on 18 May, there are clear signs of improvement in the financial performance of the Company. The funds raised will enable us to continue the transformation, including adding further sales capacity to capture increased volume of opportunities."

"I am delighted with the support we have received from institutional shareholders and that we have provided the opportunity for all shareholders to participate in the Fundraising."

2. Current trading and Strategy

HomeSend

HomeSend continues to progress against its objective to facilitate the "shift to digital" in international payments and transfers. The hub addresses the existing challenges of Bilateral service agreements by offering a fully interoperable global network. The formation of the joint venture has enabled a significant expansion of end points, both sending and receiving, opening HomeSend to a larger remittance market and new market segments. The use cases for HomeSend enabled transfers continues to grow, supported by the key differentiators of providing a near instant transfer and transparency of transaction.

HomeSend is a disruptive technology that offers an alternative to the traditional international financial infrastructure. The payments hub is positioned as the centre-piece of an open and interoperable payments ecosystem with the ability to connect any PSP not just to eWallet Providers, MNOs and MTOs, but also Banks, Regulators, Disbursement Enablers, Micro-finance Institutions, Card Networks and Merchant Aggregators.

HomeSend can provide availability of funds in substantially shorter periods of time than international transfer organisations. HomeSend can perform international transfers to any account often in near real time; some transactions can take a maximum of 30 minutes. This is in comparison to Banks who typically offer international transfers in 1 - 5 working days.

HomeSend has stated publicly that they expect to reach breakeven during 2017. This is supported by the achievement of several strategic milestones, including the acquisition of a Payment Institution Licence and the move to a PCI-DSS Compliant Data Centre. These achievements will enable HomeSend to move forward on several fronts through the expansion of an ever-increasing range of use cases and reaching more and more transfer 'end points'.

Notably, HomeSend will support the international payment and transfer functionality for MasterCard Send. This MasterCard product to enable 'send-to-card' via HomeSend, is now launching in the first three markets, and an accelerated rollout is in place for the next 2.5 years, which will enable substantial coverage across MasterCard's customer base.

HomeSend can also now support end-point bank account termination and disbursement from a digital wallet. These new use cases are in addition to existing significant coverage in reaching mobile wallets in emerging markets, such as the relationship with Vodafone to reach mobile wallets MTOs and e-wallet providers such as MoneyGram, WorldRemit, Azimo and Paysafe.

Corridor progress remains on track with over 3,800 live remittance corridors at the end of April 2016, connecting 200+ sending countries and 36 receiving countries. This progress is expected to continue in 2H16, the 'network effect' of adding new corridors will support transaction volume enablement initiatives.

During 1H16 eServGlobal received the final escrow from MasterCard which enabled the completion of eServGlobal's €3.5m contribution to a capital raise in HomeSend. This ensured eServGlobal retains its 35 per cent. share in the joint venture. The continued financial focus on HomeSend has been important as it has enabled eServGlobal to retain key shareholder rights that underpin the value of this investment.

Core Business

During 1H15 the Company announced a contract to supply its PayMobile software, valued at €6.0m over five years, approximately €2.5m is forecast to be recognised within the current financial year. This is evidence of the previously stated recovery in sales that was expected to begin in 2Q16. Additionally, in May, the Company announced a new contract win with a new customer in West Africa valued at €1.6m with €1.1m to be recognised in the current financial year.

PayMobile 3, the Company's latest release of its proprietary software platform, has been key in opening up new opportunities; it enables a wider approach to the market through channel partners, in addition to a direct sales approach. The Company is now seeing more opportunities from Latin America, the Far East and other parts of Africa. Expected order flow in 2H16 and future pipeline shows a diversification of geographical presence, and an improved risk profile for orders and cash flow.

PayMobile 3 is now established with multiple live reference sites. The Company is taking steps to consolidate this progress through the addition of a richer set of modules and functions. This includes an analytics product based on Big Data principles, which is already trialling in several customer sites. This product will enable a greater focus on recurring revenue, and is also expected to bring new opportunities for the PayMobile 3 software.

Loss making contracts entered into during 2014 and 2015, have now been either completed or conservatively provisioned. The last of these will be a €900,000 provision for a project which cannot be completed due to an irrecoverable debtor.

Current Trading

Year to date revenues, work in progress, maintenance and recurring revenues indicate that the Company has approximately €12.0 million already recognisable for the year. Set out below is the profit and loss statement (not audited or reviewed) to the end of H1 FY2016:

The recovery in core business sales began in March/April 2016, evidenced by new projects and the improved sales pipeline for H2 2016. Debtor days from FY 2015 have reduced from 175 days to approximately 115 (34 per cent. reduction) days at mid year. The outcome of the previously announced restructuring is a substantially lower cost base for the year. Normalised costs have reduced from €23.8m for FY 2015 to €19.6m for FY2016.

The Company will release its half-year results on 30 June 2016.

Outlook

Based on this reduced cost base and the recovery in sales, the Company confirms it remains on track to achieve a small positive EBITDA (excludes non-operating and exceptional one-off costs, including the equity accounted share of HomeSend results, foreign exchange gains or losses and share based payments) for the core business in the current financial year. To achieve this target the Company requires a further €7.5m of additional project revenue, half of which should be from existing customers, leaving €3.75m to be sourced from new customers.

Assuming a reasonable sales mix, breakeven is now expected to be achieved with revenues in the range of €19.0 - €20.0m for FY2016. The Company expects to achieve operating cash breakeven on a monthly run rate basis in the final quarter of FY2016.

The Company is targeting 45 per cent. of planned revenue to be from recurring revenue in 2017.

3. Reasons for the Fundraising and use of proceeds

The poor performance of the core business over the last two years, combined with the additional capital required to be invested into HomeSend to maintain the Company's 35 per cent. ownership in the HomeSend joint venture and the expiry of the terms of the $3,000,000 facility with the National Australia Bank has left the core business starved of the capital it needs to achieve its potential. The Placings have been conducted to provide the Company with the capital it needs to pursue the opportunities that exist for the core business and to reduce and extend the term of its existing debt.

The aggregated net cash proceeds of the Placings are expected to be approximately £7 million. £2.40 million of the proceeds will be applied towards the fee payable for the Debt Restructure and towards the discharge of the existing indebtedness under the Loan Facilities, £0.75 million to continue to improve sales processes, namely increasing reach and channels, strengthening the sales force and accelerating customer license adoption. In line with the Company's current cost saving strategy, £1.25 million will be required to reduce workforce costs by €1.0 million and a further £2.5 million of the proceeds will provide working capital. The Lenders have agreed to subscribe for 110,141,050 Conditional Placing Shares for a total consideration of £4.41 million and this amount will be satisfied by the waiver of £4.41 million of the existing indebtedness under the Loan Facilities as part of the Debt Restructure.

The proceeds of the Open Offer (if any) are intended to be retained by the Company to strengthen the balance sheet and may, subject to the Company's working capital requirements, be applied towards a further reduction of the monies owing under the New Loan.

The Board believes that, after the Debt Restructure, primarily as a result of the extension to the maturity of the New Loan, the Company's debt level will be more commensurate with the trading profits and cash generation that can be achieved over the medium term.

As announced in the trading update released on 18 May 2016, the Company is beginning to experience the benefits of the restructuring plans implemented in late 2015. Management have focused on costs throughout the first half of 2016 such that total normalised costs are now tracking close to previous guidance. The Board intends to build on this recovery by investing further into this restructuring exercise. The Company has also seen recovery in sales as evidenced by the contract wins detailed in section 2 of this announcement. The proceeds of the Placings will also allow the Company to add additional sales capability in the core business to capture increased volume of opportunities, particularly in Latin America, the Far East and other parts of Africa.

4. Details of the Placings

The Placings comprise the Firm Placing and the Conditional Placing.

Firm Placing

The Firm Placing comprises a placing of 31,866,107 new Ordinary Shares at a price of 4 pence per new Ordinary Share to raise £1.27 million (before expenses). The Firm Placing Shares will be issued using the Company's existing authorities. The Firm Placing is conditional, inter alia, on:

• the conditions in the Placing Agreement relating to the Firm Placing being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to the Firm Placing Admission; and

• the Firm Placing Admission becoming effective by no later than 8.00 a.m. 16 June 2016 (or such later time and/or date, being no later than 8.00 a.m. on 30 June 2016 as the Company and finnCap may agree).

Application will be made for the Firm Placing Shares to be admitted to trading on AIM and the ASX. It is expected that the Firm Placing Shares will be admitted to trading on AIM and the ASX on 16 June 2016.

Conditional Placing

The Conditional Placing comprises a placing of 268,133,893 new Ordinary Shares at a price of 4 pence per new Ordinary Share to raise £10.7 million (before expenses). £4.41 million of the proceeds of the Conditional Placing will be satisfied by the waiver of £4.41 million of the existing indebtedness under the Loan Facilities as part of the Debt Restructure.

The Conditional Placing is conditional, inter alia, on:

• the passing of the Resolutions;

• the conditions in the Placing Agreement relating to the Conditional Placing being satisfied or (if applicable) waived and the Placing Agreement not having been terminated in accordance with its terms prior to Conditional Placing Admission; and

• Conditional Placing Admission becoming effective by no later than 8.00 a.m. on 25 July 2016 (or such later time and/or date, being no later than 8.00 a.m. on 8 August 2016 as the Company and finnCap may agree).

Application will be made for the Conditional Placing Shares to be admitted to trading on AIM and the ASX. On the assumption that, inter alia, the Resolutions are passed, it is expected that Conditional Placing Admission will become effective and that dealings in the Conditional Placing Shares will commence on or around 25 July 2016.

The Placing Agreement contains customary warranties given by the Company to finnCap as to matters relating to the Group and its business and a customary indemnity given by the Company to finnCap in respect of liabilities arising out of or in connection with the Fundraising. finnCap is entitled to terminate the Placing Agreement in certain circumstances prior to Conditional Placing Admission, including circumstances where any of the warranties are found not to be true or accurate in any material respect or were misleading in any material respect or the occurrence of certain force majeure events.

The Mandate Letter contains a customary indemnity given by the Company to Veritas in respect of liabilities arising out of or in connection with Veritas' appointment in relation to the Placings. Veritas is entitled to terminate the Mandate Letter in certain circumstances, including circumstances where the Company does not provide all reasonable assistance to Veritas in connection with the performance by Veritas of its functions under the Mandate Letter or where the Company undergoes a change of control, goes into liquidation, becomes insolvent or ceases to carry on its business.

The Placing Shares will represent approximately 53 per cent. of the entire issued share capital of the Company following Firm Placing Admission and Conditional Placing Admission.

The Placing Shares will be issued credited as fully paid and will rank in full for all dividends and other distributions declared, made or paid after either Firm Placing Admission or Conditional Placing Admission (as applicable) in respect of Ordinary Shares and will otherwise rank, on either Firm Placing Admission or Conditional Placing Admission (as applicable), pari passu in all respects with the existing Ordinary Shares. The Placing Shares are not being made available to the public and are not being offered or sold in any jurisdiction where it would be unlawful to do so.

5. Details of the Open Offer

The Board considers it important to provide the Company's loyal and supportive Shareholders with an opportunity to participate in the Fundraising in recognition of their continued support to the Company and is therefore proposing to implement the Open Offer. In order to minimise transaction costs and to avoid the need to publish an FCA approved prospectus, the total consideration under the Open Offer is lower than €5 million (or an equivalent amount) in aggregate. 

Qualifying Holders, on and subject to the terms and conditions of the Open Offer, will be given the opportunity under the Open Offer to apply for any number of Open Offer Shares at the Placing Price, payable in full in cash on application, pro rata to their holdings on the following basis:

1 Open Offer Share for every 4 Ordinary Shares in issue on the Record Date

held by Qualifying Holders at the Record Date and so in proportion for any other number of Ordinary Shares then held.

For clarity for those Ordinary Shareholders who are in Australia and New Zealand, the Open Offer is a non-renounceable pro rata rights offer, as that term is used in Australia, and will be offered under section 708AA of the Corporations Act 2001 and the mutual recognition laws in New Zealand.

The Open Offer Shares will rank pari passu in all respects with the Ordinary Shares in issue on the Record Date.

Fractions of Open Offer Shares will not be allotted to Qualifying Holders in the Open Offer and entitlements under the Open Offer will be rounded down to the nearest whole number of Open Offer Shares. 

The Open Offer is being structured so as to allow Qualifying Holders to subscribe for any whole number of Open Offer Shares at the Placing Price up to their maximum entitlement. Qualifying Holders may also make applications in excess of their pro rata initial entitlement pursuant to the Excess Application Facility. To the extent that pro rata entitlements to Open Offer Shares are not subscribed by Qualifying Holders, such Open Offer Shares will be available to satisfy such excess applications. 

The Company proposes to adopt the following allocation policy for excess applications:

(a) the Excess Shares will be allocated at the Company's discretion (following consultation with finnCap);

(b) no person is permitted to increase its relevant interest to more than 20 per cent. of the total number of Ordinary Shares in issue following the Open Offer through an application for Excess Shares under this mechanism;

(c) if a relevant interest of 20 per cent. or more is already held by a person, then no increase is permitted; and

(d) no person is permitted to increase its relevant interest to an interest that, immediately following the Open Offer, would be greater than its relevant interest on the Record Date for the Open Offer but excluding the effect of the dilution resulting from the Firm Placing that is expected to complete prior to the Record Date.

The Open Offer is not a rights issue, as that term is used in England and Wales. Qualifying Depositary Interest Holders should note that although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Holder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear UK & Ireland's Claims Processing Unit. Qualifying Ordinary Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Holders should be aware that in the Open Offer, unlike in a rights issue (as this term is used in England and Wales), any Open Offer Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Holders who do not apply under the Open Offer.

Option holders are not entitled to participate in the Open Offer. In order to participate they will have had to have exercised their options and be the registered holder of Depositary Interests or Ordinary Shares on or before the Record Date.

The Open Offer Shares have not been placed subject to clawback under the Open Offer nor have they been underwritten. Consequently, if no one subscribes for the Open Offer Shares, no Open Offer Shares will be issued.

In the event that the Resolutions in relation to the Conditional Placing and Debt Restructure are not passed at the Extraordinary General Meeting, the Company will have the ability to withdraw the Open Offer.

The Directors who are Qualifying Ordinary Shareholders or Qualifying Depositary Interest Holders intend to take up their entitlements under the Open Offer in full. As prescribed by the ASX Listing Rules, they are not entitled to receive any additional Open Offer Shares.

Application will be made to the London Stock Exchange for the Open Offer Shares to be admitted to trading on AIM and application will be made to the ASX for the Open Offer Shares to be admitted to trading on the ASX. It is expected that Open Offer Admission will become effective and that dealings in the Open Offer Shares will commence at 8.00 a.m. on 8 August 2016.

Further details of how to take up the Open Offer will be set out in the Circular and, in the case of Qualifying Ordinary Shareholders, the Application Form.

6. Debt Restructure

The Company is proposing to restructure its Loan Facilities with its Lenders. 

The Company and the Lenders have agreed that, conditional upon Shareholder approval of the Resolutions at the Extraordinary General Meeting and the Conditional Placing becoming unconditional in all respects, that the Loan Facilities be restated on the following terms: that the Loan Facilities are discharged and replaced with the New Loan, pursuant to which the Lenders shall make available a term loan of £7,000,000. Compounding interest on the New Loan will be charged at 1 per cent. per month commencing on 7 June 2016. The termination date of the New Loan shall be 30 June 2019. The loan amount shall be secured against the assets of the Company on the same terms as the current Loan Facilities, as approved by the Shareholders of the Company on 18 January 2016. Other than as stated above, the New Loan is on substantially the same terms and conditions as the Loan Facilities save that there is no repayment premium payable on the New Loan and the New Loan may be repaid at any time by the Company in its entirety or in part.

The Lenders have agreed to subscribe for 110,141,050 Conditional Placing Shares for a total consideration of £4,405,642 and the Company and the Lenders have agreed that such amount shall be satisfied by the waiver of £4,405,642 of the existing indebtedness. To reduce the total indebtedness to £7 million, the Company will apply £615,698 of the proceeds of the Placings to repayment of the current Loan Facilities.

The Unlisted Options and the Unlisted Options B held by the Lenders shall be forfeited and unexercised.

The Lenders will receive a fee of £1,803,201 for entering into the Debt Restructure.

On completion of the Debt Restructure as described above, the capital structure within the Company will be as follows:

As an Australian incorporated company, the Company is subject to Australian Law in respect to the acquisition of voting power in the Company. The Corporations Act provides that a person must not, without shareholder approval, obtain a relevant interest in issued voting shares where, as a result of that acquisition, that person's or someone else's voting power in the entity increases from 20 per cent. or below to more than 20 per cent. or from a starting point that is above 20 per cent. and below 90 per cent. 

The Conditional Placing and the Debt Restructure will result in the Lenders, or their nominees, being issued with 110,141,050 New Ordinary Shares, giving the Lenders voting power of 28.05 per cent. in the Company prior to the issue of any Ordinary Shares under the Open Offer. The Lenders currently also have CFDs over a further 11,041,951 Ordinary Shares.

The voting power in the Company, as notified to the Company, on completion of the Debt Restructure will be as follows:

* The Lenders currently also have CFDs over a further 11,041,951 Ordinary Shares.

The Notice of Meeting and Explanatory Memorandum will include a resolution for the approval under Item 7 of Section 611 of the Corporations Act 2001 of the acquisition by Alphagen Capital Limited and its Associates of voting power in excess of 20%. In accordance with ASIC Regulatory Guide 74 the Notice of Meeting and Explanatory Memorandum will be accompanied by an independent expert's report on whether the transaction is fair and reasonable.

If the Debt Restructure is not approved, the Company will have £11,000,000 plus accrued interest of £1,021,340 and repayment premium due for repayment by October 2017, with £6,000,000 plus accrued interest and repayment premium of that amount for repayment in June 2017. The Company will be unable to repay that amount from its cash flow and the Company will be required to refinance the debt. The existence of such current large current debt will jeopardise the Company as a going concern and may require the Directors to place the Company into administration if the current debt cannot be refinanced or renegotiated.

7. Issue of Options to John Conoley

The Company is proposing to issue Options to Mr Conoley as an incentive for performance and to further align his interests with those of the Company and its Shareholders. The Options will, subject to Shareholder approval be issued in addition to his salary or any other payments in respect of his employment with the Company and will be the long-term incentive component of Mr Conoley's remuneration package. 

The Resolutions that will be considered by Shareholders at the Extraordinary General Meeting therefore will include the authority to issue 2,000,000 Options to Mr Conoley.

Details of the terms of the proposed Options are set out below.

8. Issue of Employee Options

At the 2016 Annual General Meeting of the Company, the Shareholders approved the issue of up to 3,000,000 Employee Options. These Employee Options have not been issued.

The Board intends to seek Shareholder approval for the issue of up to 7,000,000 Employee Options on substantially the same terms as the Options to be granted to Mr Conoley, details of which can be found at section 7 of this announcement.

If the issue of Employee Options is passed, the Board intends to issue the Options within 12 months of the date of Shareholder approval. The previous approval of Employee Options will be withdrawn.

9. Related Party Transactions under the AIM Rules

Henderson is a substantial shareholder in the Company as defined in the AIM Rules for Companies, and it will maintain an interest in more than 10 per cent. of the Company's entire issued share capital prior to the issue of any Ordinary Shares under the Open Offer.

Accordingly, the Debt Restructure and the Lenders' participation in the Conditional Placing are related party transactions pursuant to the AIM Rules. The Directors consider, having consulted with the Company's nominated adviser, finnCap, that the terms of the Debt Restructure and the Lenders' participation in the Conditional Placing are fair and reasonable insofar as the Company's Shareholders are concerned.

The participation of Legal & General Investment Management Ltd ("L&G"), as a substantial shareholder in the Company, in subscribing for 36,685,297 Placing Shares, constitutes a related party transaction under the AIM Rules. The Directors consider, having consulted with finnCap, that the participation of L&G in the Placing is fair and reasonable insofar as Shareholders are concerned.

The participation of Acorn Capital Limited, as a substantial shareholder in the Company, in subscribing for 11,875,000 Placing Shares, constitutes a related party transaction under the AIM Rules. The Directors consider, having consulted with finnCap, that the participation of Acorn Capital Limited in the Placing is fair and reasonable insofar as Shareholders are concerned.

10. The Extraordinary General Meeting

The Proposals are subject to the approval of the Shareholders at an Extraordinary General Meeting that is expected to be held in Sydney, Australia on 22 July 2016 at 11.00 a.m. The Notice of Meeting and Explanatory Memorandum convening the Extraordinary General Meeting will accompany the Circular.

Shareholders should note that the Resolutions in relation to the Conditional Placing and the Debt Restructure to be proposed at the Extraordinary General Meeting are inter-conditional and if any one of them is not passed the Conditional Placing will not proceed. If the Conditional Placing does not proceed, the Company shall have the ability to withdraw the Open Offer.

Each of the Resolutions will be proposed as ordinary resolutions and the majority required for the passing of such Resolutions at the Extraordinary General Meeting is more than 50 per cent. of the votes cast. The votes of Shareholders who are participating in the Conditional Placing will be disregarded when calculating the votes cast on the Resolution to approve the Conditional Placing. Further details of the Resolutions and voting arrangements will be set out in the Circular and the Explanatory Memorandum convening the Extraordinary General Meeting.

11. Admission, Settlement and CREST

Application will be made to the London Stock Exchange for each of the Firm Placing Shares, the Conditional Placing Shares and the Open Offer Shares to be admitted to trading on AIM and to the ASX for each of the Firm Placing Shares, the Conditional Placing Shares and the Open Offer Shares to be admitted to trading on the ASX. It is expected that Firm Placing Admission will become effective on 16 June 2016 and that dealings in the Firm Placing Shares will commence at 8.00 a.m. on that date. It is expected that Conditional Placing Admission will become effective on 25 July 2016 and that dealings in the Conditional Placing Shares will commence at 8.00 a.m. on that date. It is expected that Open Offer Admission will become effective on 8 August 2016 and that dealings in the Open Offer Shares will commence at 8:00 a.m. on that date.

If the Conditional Placing or Open Offer do not proceed, the existing Ordinary Shares and the Firm Placing Shares will continue to be traded on AIM and the ASX. 

The Depositary Interests are already admitted to CREST. No further applications will need to be made in respect of the admission to CREST of the Depositary Interests representing the New Ordinary Shares. All such Depositary Interests, when issued and fully paid, may be held and transferred by means of CREST.

Settlement on the Australian register will be conducted under the ASX's electronic CHESS system.

12. Importance of Vote

Shareholders should be aware that, if the Resolutions relating to the Conditional Placing and the Debt Restructure are not approved at the Extraordinary General Meeting, the net proceeds of the Conditional Placing will not be received by the Company and the Debt Restructure will not take place.

The Company will then seek to arrange a refinancing of the Loan Facilities, which may not be possible, or may not be possible on reasonable commercial terms.

In the event that the Resolutions in relation to the Conditional Placing and Debt Restructure are not passed at the Extraordinary General Meeting, the Company will have the ability to withdraw the Open Offer.

The Directors urge all Shareholders and holders of Depository Interests to participate in the Extraordinary General Meeting, either by being present in person or by proxy for Shareholders, or by completing their Form of Instruction for holders of Depository Interests.

Expected Timetable of Principal Events

________________

Notes:

(1) The times and dates set out in the expected timetable of principal events above and mentioned throughout this announcement may be adjusted by the Company, subject to the ASX Listing Rules, in which event details of the new times and dates will be notified by means of an announcement through a Regulatory Information Service and on the company announcements platform of the ASX.

(2) Unless otherwise state, references to times in this announcement are to times in London for holders of Depositary Interests and to times in Sydney, Australia for holders of Ordinary Shares.

(3) Different deadlines and procedures for return of forms may apply in certain cases.

Statistics

________________

Notes:

(1) Assuming full take up of Open Offer Shares under the Open Offer.

Definitions

In this announcement the following terms and expressions have the following meanings unless the context requires otherwise. References to the singular shall include references to the plural, where applicable, and vice versa.

"£", "pounds", "pence" the legal currency for the time being of the United and "sterling" Kingdom

"AIM" AIM, the market of that name operated by the London Stock Exchange

"AIM Rules for Companies" the rules and guidance for companies whose shares are admitted to trading on AIM published by the London Stock Exchange, as amended from time to time

"Allottee" a person to whom Options or Employee Options are allotted

"Application Form" the application form accompanying the Circular (where appropriate) to be used by Qualifying Ordinary Shareholders in connection with the Open Offer

"ASX" ASX Limited or, where the context requires, the Australian Securities Exchange operated by ASX Limited

"ASX Listing Rules" the listing rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the official list of ASX

"AUS$" or "A$" Australian dollars

"Board" the directors of the Company from time to time

"Constitution" the existing constitution of the Company

"CHESS" Australian Clearing House Electronic Subregister System

"Circular" the circular to be published on or around 22 June 2016 in relating to the Proposals

"Company" or "eServGlobal" eServGlobal Limited (ABN 59 052 947 743)

"Conditional Placing" the placing of the Conditional Placing Shares pursuant to the Placing Agreement or the Mandate Letter

"Conditional Placing Admission" means admission of the Conditional Placing Shares to trading on AIM becoming effective in accordance with Rule 29 of the AIM Rules

"Conditional Placing Shares" the 268,133,893 Ordinary Shares conditionally placed pursuant to the Conditional Placing which will be allotted following the General Meeting subject to the passing of the Resolutions

"Control" has the meaning given in section 50AA of the Corporations Act.

"Corporations Act" the Corporations Act 2001 (Cth)

"CREST" the computerised settlement system operated by Euroclear, which facilitates the transfer of title to securities in uncertificated form

"CREST Voting Instruction" a message by or on behalf of the holders of Depositary Interests in connection with the Extraordinary General Meeting transmitted through CREST properly authenticated in accordance with Euroclear's specifications and containing the information required for such instructions in the CREST Manual

"Debt Restructure" the restructuring of the Loan Facilities and the entering into the New Loan agreement by the Lenders and the Company

"Depositary" Computershare Investor Services PLC acting in its capacity as Depositary pursuant to the terms of the agreement for the provision of depositing services entered into between the Company and Computershare Investor Services PLC and, as relevant, includes its nominee on the Company's register of members

"Depositary Interests" or "DIs" the Depositary interests issued by the Depositary representing an entitlement to an Ordinary Share which may be traded through CREST in dematerialised form

"Directors" the directors of the Company

"Employee Options" the options to be issued to employees, pursuant to approval of the relevant Resolution by Shareholders at the Extraordinary General Meeting

"Enlarged Issued Share Capital" the entire issued Ordinary Share capital of the Company immediately following Open Offer Admission comprising the existing Ordinary Shares, the Firm Placing Shares, the Conditional Placing Shares and the Open Offer Shares (assuming full take up of Open Offer Shares under the Open Offer)

"Euroclear" Euroclear UK & Ireland Limited, the operator of CREST

"Excess Application Facility" the arrangement pursuant to which Qualifying Holders may apply for any number of Open Offer Shares in excess of their Open Offer Entitlement provided they have agreed to take up their Open Offer Entitlement in full

"Ex-Entitlement Date" 16 June 2016

"FCA" the Financial Conduct Authority, acting in its capacity as competent authority in the United Kingdom pursuant to Part VI of FSMA

"finnCap" finnCap Limited, which is authorised and regulated by the FCA, the Company's nominated adviser and broker

"Firm Placing" the placing of the Firm Placing Shares pursuant to the Placing Agreement or the Mandate Letter

"Firm Placing Admission" means the admission of the Firm Placing Shares to trading on AIM becoming effective in accordance with Rule 29 of the AIM Rules

"Firm Placing Shares" the 31,866,107 Ordinary Shares conditionally placed firm pursuant to the Firm Placing pursuant to the Placing Agreement and Mandate Letter

"Form of Instruction" the form of instruction for use by holders of Depositary Interests in connection with the Extraordinary General Meeting

"Form of Proxy" the proxy form for use by Shareholders in connection with the Extraordinary General Meeting

"FSMA" the UK Financial Services and Markets Act 2000, as amended from time to time

"Fundraising" the Placings and Open Offer

"Group" the Company and its subsidiaries

"HomeSend" HomeSend CVBA, a limited cooperative company incorporated in Belgium

"Independent Expert" the independent expert appointed in relation to the Debt Restructure in accordance with ASIC Regulatory Guide 74, being Hall Chadwick Corporate (NSW) Limited

"ISIN" International Securities Identification Number

"Lenders" Alphagen Volantis Fund Limited, acting through its investment manager Alphagen Capital Limited and Alphagen Volantis Catalyst Fund Limited acting through its investment manager Alphagen Capital Limited

"Loan Facilities" means the following existing loans from the Lenders, being entities controlled by Henderson Global Investors, to the Company as follows:

- the fully drawn loan agreement executed on 4 June 2015 for £5 million;

- the fully drawn loan agreement executed on 5 October 2015 for £5 million; and

- the fully drawn loan agreement executed on 22 March 2016 for £1million

together with all capitalised interest and repayment premiums.

"London Stock Exchange" London Stock Exchange plc

"Mandate Letter" the mandate letter dated 26 May 2016 between Veritas and the Company relating to the Placings

"New Loan" the conditional facility agreement entered into between the Lenders and the Company, completion of which is conditional on the passing of the Resolutions at the Extraordinary General Meeting

"New Ordinary Shares" the new ordinary shares to be issued by the Company in accordance with the Placings and the Open Offer and "New Ordinary Share" means one of them

"Options" the options to be issued to John Conoley, pursuant to approval of the relevant Resolution at the Extraordinary General Meeting

"Open Offer" the offer made by the Company to Qualifying Holders inviting them to apply to subscribe for the Open Offer Shares based on their Open Offer Entitlements on the terms and subject to the conditions to be set out in the Circular and, where relevant, in the Application Form

"Open Offer Entitlements" an entitlement of a Qualifying Holder, pursuant to the Open Offer, to apply for 1 Open Offer Share for every 4 existing Ordinary Shares held by the Qualifying Holder at the Record Date (and, to the extent that a Qualifying Holder holds such Ordinary Shares through a Depositary, the Depositary shall ensure that the relevant Qualifying Holder is able to take up its entitlement under the Open Offer in Depositary Interest form)

"Open Offer Shares" up to 74,410,039 New Ordinary Shares which are subject to the Open Offer

"Ordinary Shares" ordinary shares in the capital of the Company

"Overseas Shareholders" Shareholders and holders of Depositary Interests who are resident in or a citizen or national of any country outside the United Kingdom, Australia or New Zealand

"Placing Agreement" the conditional placing agreement dated 7 June 2016 entered into between the Company and finnCap relating to the Placings

"Placing Price" 4 pence per New Ordinary Share or, for placees procured by Veritas, AUS$0.08

"Placing Shares" the Firm Placing Shares and the Conditional Placing Shares

"Placings" the placing of the Placing Shares pursuant to the Placing Agreement and Mandate Letter

"Proposals" collectively, the issue of the Placing Shares, the Debt Restructure, the Rule 7.4 Approval, the issue of Options to John Conoley and the issue of Employee Options

"Record Date" the record date for the Open Offer, currently expected to be 17 June 2016 in respect of Qualifying Ordinary Shareholders

"Resolutions" the resolutions to be passed by the Shareholders to be set out in the Notice of Extraordinary General Meeting

"Rule 7.4 Approval" the approval by the Shareholders of the issue of the Firm Placing Shares and the 8,000,000 Unlisted Option Bs

"Shareholders" the holders of existing Ordinary Shares

"Trigger Event" means:

· a sale of substantially all of the business, or substantially all of the assets, of the Company; or

· a change of Control of the Company,

as determined by the Directors, acting reasonably

"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland

"Unlisted Options" the 39,866,107 options to acquire ordinary fully paid shares in the Company under an instrument dated 5 October 2015 with an exercise price of £0.0456

"Unlisted Options B" the 8,000,000 options to acquire ordinary fully paid shares in the Company under an instrument dated 22 March 2016 with an exercise price of the lesser of £0.04375 or a 20 per cent. discount to the 60 day volume weighted average price for the Company's Depository Interests trading on AIM for the period commencing on 22 March 2016 for 60 trading days.

"US" or "United States" the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia and any other area subject to its jurisdiction

"Veritas" Veritas Securities Limited

EXCHANGE RATE

Unless otherwise stated, the rates of exchange used for the purpose of this announcement are:

Enquiries:

This announcement is for information purposes only and is not intended to and does not constitute or form part of an offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of an offer to buy any securities, pursuant to the Proposals or otherwise. The Open Offer will be implemented solely by means of the Circular. The Circular, and, where relevant, the Application Form, will contain the full terms and conditions of the Open Offer. The Circular will contain details of the Proposals and is expected to be posted to Shareholders and holders of Depository Interests on or around 22 June 2016. The Notice of Extraordinary General Meeting and Explanatory Memorandum, including details of how to vote in respect of the Resolutions, will be sent to Shareholders and holders of Depository Interests together with the Circular.

The distribution of this announcement in or into jurisdictions other than the United Kingdom or Australia may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the United Kingdom or Australia should inform themselves about, and observe, such restrictions. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws of any such jurisdiction. Subject to certain exceptions, this announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, the Republic of South Africa, Japan or any jurisdiction where to do so might constitute a violation of local securities laws or regulations.

finnCap Limited, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting as nominated adviser and joint broker to eServGlobal Limited and is acting for no-one else in connection with the contents of this announcement, and will not be responsible to anyone other than to eServGlobal Limited for providing the protections afforded to clients of finnCap Limited nor for providing advice in connection with the contents of this announcement or any other matter referred to herein. finnCap Limited is not responsible for the contents of this announcement. This does not exclude or limit the responsibilities, if any, which finnCap Limited may have under the Financial Services and Markets Act 2000 or the regulatory regime established thereunder.

Veritas Securities Limited is acting as broker to eServGlobal Limited and is acting for no-one else in connection with the contents of this announcement, and will not be responsible to anyone other than to eServGlobal Limited for providing the protections afforded to clients of Veritas Securities Limited nor for providing advice in connection with the contents of this announcement or any other matter referred to herein. Veritas Securities Limited is not responsible for the contents of this announcement.

Forward Looking Statements

This announcement contains certain forward looking statements relating to the Company's future prospects, developments and business strategies.

Forward looking statements are identified by their use of terms and phrases such as "targets" "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative of those, variations or comparable expressions, including references to assumptions.

These forward looking statements are based on current expectations and are subject to risks and uncertainties which could cause actual results to differ materially from those expressed or implied by those statements. If one or more of these risk factors or uncertainties materialises, or if the underlying assumptions prove incorrect, the Company's actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward looking statements.

These forward looking statements relate only to the position as at the date of this announcement. Neither the Directors nor the Company undertake any obligation to update forward looking statements or risk factors, other than as required by the AIM Rules for Companies or by the rules of any other applicable securities regulatory authority, whether as a result of the information, future events or otherwise.