Fundraising and Update
May 01 2009 - 2:00AM
UK Regulatory
TIDMCTNO
RNS Number : 5562R
Cantono PLC
01 May 2009
Cantono PLC ("Cantono" or the "Company")
1 May 2009
Fundraising and Update
In the Chairman's Statement in the interim announcement made in February,
Shareholders were informed that the Company was looking at the best options in
order to maximize shareholder value. The Board has subsequently concluded that
the best means of achieving this is to seek to dispose of the Company's data
centre business which the Company and its advisers believe has significant
value. Advisers have been appointed to manage this process, and significant
preliminary interest has already been received from a number of parties. Any
such disposal would be subject to shareholders' approval in a general meeting.
The Company is pleased to announce that it has today set out the terms of a
further facility of up to GBP1.25m to underpin its working capital requirements
as set out below. An agreement has been reached for up to GBP890,000 under this
facility to be issued to institutional investors and Cantono's management.
Following the failure on 15th March of Xploite plc to pay to the Company the
deferred consideration due following the sale of Blue River Systems Limited,
your Board recognised the need to find an alternative source of working capital
and has raised the above facility primarily from the Company's institutional
shareholders, including the same institutions that supported the GBP2m
fundraising in December 2008. The Board is pleased by this further demonstration
of continuing support from the Company's institutional investors.
The facility will be drawn in tranches on specified dates in the form of secured
loan notes, on terms similar to those of the December 2008 fundraising, other
than that the notes carry no rights to convert into shares in the Company. In
summary the key terms are:
* redeemable in December 2011 or earlier in the event of (i) a change of control;
(ii) a sale of a material part of the business of the Company; or (iii) an event
of default
* secured pari-passu to the existing A and B loan notes issued in December 2008
but ranking behind facilities provided by Barclays, the Company's bankers
* no rights to convert into shares
* interest free but with a redemption premium of 200% (plus repayment of
principal) if repaid within 12 months and a premium of 300% (plus repayment of
principal) thereafter
* each further tranche drawdown requires the consent of the majority of investors
in this investment
The first tranche, of GBP340,000, which includes all the loan notes ("Loan
Notes") issued to Cantono management, GBP28,106 to Troon Management Services
Limited ("Troon") and GBP56,211 to Noble AIM VCT plc managed by Noble Fund
Managers ("Noble"), will be drawn down immediately. Subsequent drawdowns will be
made to the extent that Cantono's Board request drawdown under the facility, and
the majority of investors accept the request.
Rationale for the Fundraising and use of Proceeds
For some time the Company has been attempting to raise new finance to allow the
Company's Data Centre division to be developed. The Company and its advisers
have approached a number of potential debt providers and existing and potential
institutional investors. It became clear that, given the Company's funding
requirements, the issue of loan notes under the facility was the only
deliverable source of funds in the timeframe.
Related Party Transactions
The subscription for Loan Notes by Michael Northall (GBP50,000) and Ian Williams
(GBP25,000), both directors of the Company, will constitute a "related party
transaction" under the AIM Rules.
Further, the subscribers for Loan Notes comprise a number of institutions, one
of which, Troon, is a "substantial shareholder" in the Company as defined in the
AIM Rules. As such, the subscription by Troon for up to GBP105,396 of Loan
Notes, also represents a "related party transaction". Noble AIM VCT plc, another
of the subscribing institutions, is managed by Noble. Dr. Paul Jourdan, an
employee of Noble, is a non-executive director of Cantono plc. Noble AIM VCT plc
is subscribing for up to GBP210,793 of Loan Notes.
Eamus Halpin, the only Independent Director, having consulted with the Company's
nominated adviser, Brewin Dolphin Limited, considers that the terms of these
subscriptions by related parties are fair and reasonable insofar as the
Company's shareholders are concerned.
Litigation update
With regard to the dispute and potential litigation with certain subsidiaries of
Xploite plc, the Board has considered its position, and following consultation
with its legal advisers, remains firmly of the view that the Company has a
strong case to pursue for breach of contract. Assisted by the proceeds available
from this fundraising the Board is resolved to fully enforce the Company's legal
rights in this matter.
Further announcements will be made as appropriate.
For further information please contact:
Cantono PLC
Eamus Halpin, Chief Executive 01895 444 420
Brewin Dolphin Investment Banking
Neil Baldwin, Director 0845 270 8612
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
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