11 November 2019
("Brady", the "Company" or the "Group")
Brady plc, the leading global provider of trading, risk management and settlement solutions to the energy and commodities sectors, announces that it has (through its subsidiary, Brady Trading Limited ("Brady Trading")) entered into an uncommitted secured loan agreement (the "Facility") with Hanover Acquisition Limited ("Hanover"). Under the Facility £1.25 million (the "Initial Loan") has been made immediately available to Brady Trading and, should the recommended Hanover cash offer for the Company described in an offer document dated 17 October 2019 (the "Offer") be declared unconditional in all respects, Brady Trading has the right to request that the Facility is increased by a further £2.75 million to an aggregate amount of £4.0 million (the "Increased Loan").
As previously announced, the Company required access to approximately £1.5 million to meet the working capital requirements of the Group's existing operations prior to 30 November 2019, with a specific cash payment due on 15 November 2019.
The proceeds of the Initial Loan will be applied towards the Group's immediate working capital requirements for the period to 15 November 2019, the first closing date of the Offer, and to meet the previously announced specific cash payment due on 15 November 2019. In addition, the Initial Loan will be used to refinance the Company's existing £1.0 million bank overdraft facility (the "Overdraft Facility").
The refinancing of the Overdraft Facility does not form part of the previously announced £1.5 million working capital requirement prior to 30 November 2019. As a result, the Company continues to require access to additional funding in an amount of approximately £1.4 million prior to 30 November 2019 to support existing operations. Thereafter, the Board currently estimates that the Company will require access to an additional £0.4 million during December 2019, again to meet the Company's working capital requirements.
Whilst the Increased Loan, if available to the Company, would meet these funding requirements and provide additional funding to support to the Group through the anticipated low point of its Q1 2020 working capital cycle in February 2020, the Facility is uncommitted and, in addition, availability of the Increased Loan is conditional on the Offer being declared wholly unconditional.
Whilst the Company remains free to secure additional funding prior to the Offer being declared unconditional, there can be no guarantee that the Company will be able to secure additional unconditional funding. Should either the Offer not become effective or additional third-party funding not become available, in each case, before Brady requires additional working capital, there is a risk of the Offer lapsing and Brady shareholders receiving no or little value.
As security for the Facility, the Company, Brady Trading and Brady Credit Trading Limited will grant first ranking security over all of their assets (including, and not limited to, all shares held by it in any member of the group from time to time). Interest will be charged on the drawn amount under the Facility at a floating annual rate of 2.5 per cent over the prevailing Bank of England base rate.
The Facility is repayable immediately on demand by Hanover (the "Repayment Date") and is otherwise capable of repayment by Brady Trading in full without penalty on three business days' notice at any time. Unless repayment and/or cancellation is demanded by Hanover or made by the Company, the Facility will cease to be available on the date falling one month after the earlier of: (i) the date that ordinary shares in the Company subject to the Offer are acquired by Hanover; and (ii) the date on which the Offer is withdrawn, lapses or the board of directors of the Company withdraws or modifies its recommendation of the Offer (the "Termination Date").
The Facility is also repayable in the event of a change of control or the sale of all or substantially all of the assets of the Group or an illegality event.
An arrangement fee of 3% is payable on the principal of the Facility made available to Brady Trading (£1.25 million unless Brady Trading has exercised its right to increase the Facility), payable by Brady Trading on any date elected by Brady Trading not falling later than the Termination Date. In addition, a loan fee of £3,750 per quarter is payable quarterly in arrears and on the Termination Date.
Under the Facility, Brady Trading has agreed to meet the costs and expenses (including legal fees) reasonably incurred by Hanover in connection with entry of the Facility not exceeding £100,000 (excluding VAT and documented disbursements), such expenses to be paid by Brady Trading within 30 days of the date of the Facility.
In accordance with Rule 26.3 of the Code, a copy of the Facility will be available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, for inspection on Brady's website at https://www.bradyplc.com/recommended-cash-offer/ promptly and in any event by no later than 12 noon (London time) on the Business Day following the date of this announcement. For the avoidance of doubt the contents of that website is not incorporated into, and does not form part of this announcement.
The information contained within this announcement was deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 prior to release of this announcement. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
For further information please contact:
Carmen Carey, Chief Executive
Martin Thorneycroft, Chief Financial Officer
Telephone: +44 (0)20 3301 1200
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Ben Jeynes / Cameron MacRitchie
Telephone: +44 (0)20 7397 8900
Bob Huxford / Ian Silvera / Megan Kovach
Telephone: +44 (0)20 7382 4730
Brady plc (BRY.L) is the largest European-headquartered provider of trading and risk management software to the global commodity and energy markets. Brady combines fully integrated and complete solutions supporting the entire commodity trading operation, from capture of financial and physical trading, through risk management, handling of physical operations, back office financials and treasury settlement, for energy, refined and unrefined metals, soft commodities and agriculturals.
Brady has 30 years' expertise in the commodity markets and its clients include many of the world's largest financial institutions, trading companies, miners, refiners and producers, tier one banks and a large number of London Metal Exchange (LME) Category 1 and 2 clearing members and many leading European energy generators, traders and consumers.
For further information visit: www.bradyplc.com
Brady plc: Twitter/Facebook/LinkedIn
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