SHAFT SINKERS HOLDINGS PLC
22 August 2014
Shaft Sinkers Holdings plc (the "Company")
Loan and Proposed Convertible Loan Note Offer
The Company has today entered into a loan agreement with Hillside International Holdings Limited ("Hillside") pursuant to which Hillside has agreed to make immediately available to the Company a non-interest bearing loan facility of £3,500,000 (the "Hillside Loan"). This loan aims to provide the Company with adequate working capital to secure a funding package appropriate to its longer term financing requirements. In this regard the Company's board has commenced preparations to raise up to £9,200,000 by way of a proposed issue of convertible loan notes (the "Convertible Loan Notes"). It is intended that part of the proceeds of the Convertible Loan Notes will be used to repay the Hillside Loan and that Hillside will, accordingly, subscribe £3,500,000 for Convertible Loan Notes. The proposals relating to the Hillside Loan and Convertible Loan Notes are subject to regulatory and shareholder approvals and the proposed terms are summarised below.
The Hillside Loan
The Hillside Loan is repayable on 21 November 2014 or, if the Convertible Loan Notes are issued before 21 November 2014, the date on which funds are received pursuant to the offer of the Convertible Loan Notes.
As the Hillside Loan is non-interest bearing, the Company will pay Hillside a fee of 2% of the whole of any part of the Hillside Loan repaid or prepaid when such payment is made.
Should the Hillside Loan not be repaid from the proceeds of the Convertible Loan Notes, the fee payable to Hillside will, subject to shareholder approval, increase to 20% of the amount prepaid or repaid (the "20% fee"). Payment of the 20% fee is, as stated above, conditional upon approval by shareholders.
The Hillside Loan will be secured, either by way of security over the assets themselves or by way of a pledge of the equity in the companies owning those assets, over the assets used in the Company's Indian, South African and DRC operations ("the Security Arrangements"). In particular the Hillside Loan is secured by:
1. Share pledges over the shares of Shaft Sinkers Management Co Ltd, Shaft Sinkers Belgium BVBA and Shaft Sinkers Mauritius;
2. Second ranking security over the assets of Shaft Sinkers (Pty) Ltd (subject to approval by Standard Bank of South Africa and regulatory consent being obtained). Security over the assets of Shaft Sinkers Mauritius not otherwise pledged in favour of creditors and security over receivables owing to Shaft Sinkers Belgium BVBA to the extent it is practicable; and
3. Guarantees from Shaft Sinkers Management Co Ltd, Shaft Sinkers Mauritius, Shaft Sinkers International BV, Shaft Sinkers Belgium BV (up to £500,000), Capstone 615 (Pty) Ltd, Rossal 126 (Pty) Ltd and Shaft Sinkers (Pty) Ltd (subject, in the case of the guarantees to be given by Capstone 615 (Pty) Limited, Rossal 126 Limited and Shaft Sinkers (Pty) Limited) to approval by Standard Bank of South Africa and regulatory consent being obtained).
The Hillside Loan is subject to typical covenants and representations and, in addition, the Company has agreed to:
1. call the general meeting required in order to issue the Convertible Loan Notes within 60 days of today's date (the "GM") and shall use reasonable endeavours to procure that the directors of the Company shall recommend to shareholders that they vote in favour of the resolutions required to be proposed at the GM (the "Resolutions");
2. use reasonable endeavours to procure that International Mineral Resources BV ("IMR") will provide a written irrevocable undertaking by 22 September 2014 to vote in favour of the Resolutions;
3. enter into the Security Arrangements under the Hillside Loan as soon as reasonably practicable;
4. use its best endeavours to procure the passing of the Resolutions and the issue to Hillside of not less than £3,500,000 of the Convertible Loan Notes on or before 22 November 2014; and
5. use reasonable endeavours to (i) put the resolution relating to the 20% fee to its shareholders as soon as is reasonably practicable and (ii) procure that the directors of the Company shall recommend to its shareholders that they vote in favour of such resolution.
Until such time as the Hillside Loan is repaid in full (the "Relevant Date"), Hillside shall have the right to appoint two directors to the board of the Company ("the Hillside Directors"). In this regard, Hillside and the Company have today entered into a relationship agreement (the "Relationship Agreement"). The Hillside Directors shall remain on the board until the earlier of (i) the Relevant Date, (ii) their replacement at Hillside's discretion, (iii) such director's resignation and (iv) the termination of the Relationship Agreement. The Hillside Directors are Mr. Robin Haller and Mr. Alexander Hallerwho are principals at Zachary Capital Management, a group that invests in equity, senior debt, mezzanine financing and asset-based loans and provides investment advisory services to Hillside.
Hillside is a Jersey-based investment company that provides tailored debt and equity financing solutions to small and medium-sized enterprises.
Proposed Convertible Loan Notes
As mentioned above, the Company is proposing to raise up to £9,200,000 by way of an issue of Convertible Loan Notes and intends to launch the issue by 22 October 2014. It is intended that Hillside will be invited to subscribe £3,500,000 for Convertible Loan Notes by way of a private placing. Shareholders will be invited to subscribe the sterling equivalent of €5,000,000 for Convertible Loan Notes on a pre-emptive basis with an excess application facility by way of an open offer (the "Open Offer") and (ii) the balance (if any) will be privately placed.
The issue of the Convertible Loan Notes is subject to shareholder approval. The Company intends to post a circular to shareholders by 22 October 2014 inviting them to participate in the Open Offer and convening a general meeting to approve the Convertible Loan Notes.
It is currently envisaged that the Convertible Loan Notes will be non-interest bearing and denominated in notes of £10,000 with an issue price of £7,200 per note and a redemption price per note of £10,000. The Convertible Loan Notes will have a maturity date of three years following from the date of issue.
The minimum amount to be raised under the Convertible Loan Notes will be £3,500,000 plus the sterling equivalent of €2,400,000 and the maximum amount is anticipated to be £9,200,000. In the event that £9,200,000 is raised by way of an issue of Convertible Loan Notes and in the event that all Convertible Loan Notes are converted into ordinary shares in the Company, the percentage of voting rights represented by these shares would be equivalent to approximately 78%.
The conversion price under the Convertible Loan Notes will be equal to 7.639 pence per ordinary share in the capital of the Company ("Ordinary Share") and it is anticipated that each note will, therefore, be convertible into 130,910 Ordinary Shares. The effective subscription price in the event of conversion is therefore approximately 5.5 pence.
The Convertible Loan Notes will not be convertible for a period of 12 months from the date of issue.
Subject to the restriction on conversion during the first twelve months after issue, it is envisaged that if holders of at least 66% of the Convertible Loan Notes by value voting at a relevant meeting, vote for conversion at a meeting of holders or by written resolution, then all holders shall be required to convert.
The security offered will be on substantially the same basis as the security offered on the Hillside Loan.
Hillside's commitment to subscribe £3,500,000 for Convertible Loan Notes will be conditional on existing shareholders subscribing under the Open Offer for not less than the sterling equivalent of €2,400,000 for the appropriate number of Convertible Loan Notes and Hillside having the right to appoint upto two directors to the board of directors of the Company.
The issue of the Convertible Loan Note will be conditional on, inter alia, the passing of requisite approvals by Shareholders of the Company and, if required, the Panel on Takeover and Mergers waiving any requirement on Hillside or any of its concert parties under Rule 9 of the Takeover Code to make a general offer as a result of Hillside converting all or part of its holding of Convertible Loan Notes.
The Convertible Loan Notes will be freely transferable and shall constitute "transferable securities" as defined in section 102A of the Financial Services and Markets Act 2000, being anything which is a transferable security for the purposes of The European Parliament and Council Directive on markets in financial instruments (No. 2004/39/EC).
The Convertible Loan Notes will not be admitted to trading or otherwise listed on any exchange or market.
The holders of Convertible Loan Notes will be entitled to participate in any future placing, open offer, rights issue or similar pro rata to the holding of shares they would have if their Convertible Loan Notes were fully converted.
Proposed Board Changes
The Company appreciates the significant contribution which the Chairman and independent Non- Executive Directors have made since the IPO and, in particular, their work to secure financing and to put in place a structure which aims to ensure the long term viability of the Company. As the Company has now entered into agreements regarding the Hillside Loan and Convertible Loan Notes, the Chairman, Stephen Oke, and independent non-executive director, Roger Williams, have today resigned from the Board with immediate effect. Ian Watson continues as an independent Non-Executive Director of the Company.
The company is finalizing the appointment of a new independent Director and Chairman and an announcement will follow shortly.
With regards to Listing Rule 9.6.13 the following disclosures are made in relation to the Hillside Directors:
Mr Robin Zachary Haller | |
Current Directorships | Former directorships held within previous five years |
Zachary Capital L.P. | |
Zachary Capital Asset Management Ltd | |
Motherwell Investment GP Ltd | |
Mr Alexander Zachary Haller | |
Current Directorships | Former directorships held within previous five years |
Orion Gold NL | Zachary Capital Management Ltd |
Motherwell Investment GP Ltd | |
Sira Truck Holdings LLLP | |
Truck Inn Holdings LLLP | |
Zachary Capital LLC |
Timetable
The Company will be announcing its half year results for the six months ended 30 June 2014 on 29 August 2014 at which time it will provide an update on its current trading.
ENDS
For further information:
Shaft Sinkers Holdings plc+44 (0) 787 595 1362
Alon Davidov, Chief Executive Officer
Chris Hall, Chief Financial Officer
Aura Financial +44 (0) 207 321 0000
Michael Oke
Notes to editors
Shaft Sinkers Holdings plc
Shaft Sinkers Holdings plc specialises in the sinking of particularly deep and wide vertical and decline shafts and the development of underground infrastructure, used primarily in mining and hydropower applications.
The Group is a world leader in vertical shaft sinking with a focus on particularly deep and/or wide vertical shafts. It has the capability to sink shafts through all types of rock strata, including running sands and clay. The Group works principally for established mining and infrastructure companies.
Historically, the Group has completed projects in over 20 countries worldwide across Africa, Europe, South America, the Middle East, Asia and Australia. The Group was responsible for sinking one of the deepest ever man and material South African shafts, a secondary shaft at the Western Deep Levels to a depth of 3,131 metres below bank.
Hillside International Holdings Limited
Hillside International Holdings Limited is a Jersey-based investment company that provides tailored debt and equity financing solutions to small and medium-sized enterprises.
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