A regulatory filing with the London Stock Exchange revealed today that London Capital Group Holdings PLC plans to raise up to £17.5 million through a proposed financing, committing to its long-term plans to return to growth. The plan will be voted on at the General shareholder meeting scheduled to take place on the 3rd of July.
According to the filing, an investment company named GLIO Holdings Ltd, which is led by Charles-Henri Sabet, has entered an agreement subject to approval by the Takeover Panel to subscribe to convertible loan notes totalling between £12.5 million and £15.0 million, and up to 75 million warrants. If the company chooses not to proceed with the deal, it will have to pay £225,000 to cover GLIO’s expenses.
LCG Holdings is seeking additional commitments by institutional investors to subscribe for another £500,000 and £2.5 million in convertible loan notes and up to 12.5 million warrants. The financing plan is subject to approval by the shareholders at the company’s general shareholder meeting on July 3rd, regulatory clearances and is pending due diligence.
The interest rates set on the convertible notes will total 5%, while the conversion price will be £0.27 per share. According to the filing document, Mr. Sabet will be appointed as an Executive Chairman of the LCG Holdings PLC and LCG and will be receiving £260,000 per year. His contract is for a period of 12 months, after which it is terminable after an advance notice of 12 months.
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According to a statement by LCG Holdings’ PLC CEO, Kevin Ashby, ”The additional funds and the involvement of Charles-Henri Sabet will enable the business to accelerate our strategy of introducing new products and growing internationally.”
Share prices of the London Capital Group closed lower by 4.76% at 25.00 pence on Tuesday, marking a fresh 15-month and a new all time low for the company’s stock.
Mr. Sabet has been long involved in the financial markets industry. He sold his banking venture, Synthesis Bank to Saxo Bank in 2008, after which he established a retail FX brokerage company named JFX, which has been merged into Traders Trust Capital Markets Ltd, run by former Chief Financial Officer of the Synthesis Bank, Nicola Bernardi.
Update: Share prices have tanked by almost 15% in London trading on Wednesday, as the market digests the increasing possibility of dilution for existing shareholders of London Capital Group Holdings PLC (LON:LCG).