Financing Arrangements

RNS Number : 5234W

Mavinwood PLC

29 July 2009

 



Mavinwood plc

Financing Arrangements and Board Resignations

Mavinwood plc announces that further to its trading update on 19 June it has reached agreement to refinance its existing debt and has today entered into a facility agreement with Lloyds TSB Bank plc ('Lloyds'). 

The new facility agreement provides three year amortising facilities of up to £19.5m and will provide the Company with term, revolving and overdraft facilities part of which will be used to refinance the Company's existing borrowings. 

The facility documents contain covenants, representations and warranties and events of default which are standard for these types of facilities.  There is an additional requirement that the Geraldton Underwriting Commitment (as referred to below) be complied with and that the Company raises a minimum of £6m in cash by 30 September 2009. There are also a number of financial covenants the Company is required to comply with on an ongoing basis.

In connection with the new banking arrangements, Geraldton Services, Inc. ('Geraldton'), the Company's principal shareholder, has agreed to extend its commitment to provide additional equity to the Company and to vary the terms of its underwriting commitment given to the Company in February 2009 (as previously extended and varied in June 2009) (the 'Geraldton Underwriting Commitment').

Geraldton remains committed to increase its investment in the Company by up to £10m (less any amounts raised by the Company pursuant to the issue of ordinary shares to persons other than Geraldton) by subscribing for new shares in the Company.  Geraldton has agreed to vary the Geraldton Underwriting Commitment so as to invest £6m (less any amounts raised by the issue of shares to other persons) on or before 30 September 2009.  Geraldton has agreed to invest a further sum of up to £4m on or before 31 January 2010 if the ratio of net debt to EBITDA on 31 December 2009 as tested under the Company's new facility agreement with Lloyds exceeds an agreed level. If the ratio does exceed the agreed level, Geraldton will invest such further amount (less any amounts raised by the issue of shares to other persons) as would ensure that the ratio would not have exceeded the agreed level if such amounts had been held by the Company on 31 December 2009 and would not be exceeded as retested as at 31 January 2010.  If and to the extent Geraldton cannot increase its investment as described above by way of subscriptions for shares, Geraldton has agreed to provide such sums by way of loan.

The previously announced fee of £900,000 payable by the Company to Geraldton in connection with the Geraldton Underwriting Commitment and the short term facility of £2.5m made available to the Company by Geraldton remains payable whether or not they are called upon by the Company. The Company has drawn down approximately £2 million in relation to the short term facility to date.

Geraldton is a related party (as defined in the AIM Rules) and the variation of the Geraldton Underwriting Commitment constitutes a related party transaction under the AIM Rules. The Board considers, having consulted with its nominated adviser, Collins Stewart, the terms of the variation to the Geraldton Underwriting Commitment to be fair and reasonable in so far as the Company's shareholders are concerned. For the purpose of the variation to the Geraldton Underwriting Commitment, Mr Wilson is not regarded as an 'independent' director because of his informal links to Lord Ashcroft KCMG, who controls Geraldton. It was therefore agreed that Mr Wilson would not vote, and did not vote, at the Board meeting when the above related party transaction was voted on.

Resignation of Directors

Mavinwood has also announced that Kevin Mahoney, Executive Director, and Mike Vincent, Finance Director, have resigned from the Board with effect from 31 July 2009 to pursue other business interests.

Enquiries to

Mavinwood plc

Charles Skinner                                      07966 234 075

Threadneedle Communications

John Coles                                              020 7653 9848

Collins Stewart Europe Limited

Adrian Hadden/Jon Drage                    020 7523 8350

 

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