SEC has agreed to subscribe for 85.7mln Porta shares at 3.5p each. Once the dust has settled on a couple of other debt-for-equity agreements, detailed below, SEC will have a 19.3% stake in Porta.
Forenzo Tagliabue, founder and chief executive of SEC, will join the Porta board as non-executive deputy chairman. Raymond McKeeve, a non-executive director of five years’ standing, has notified the board of his intention to step down.
As well as taking a strategic equity stake in Porta, SEC has signed a commercial collaboration agreement with its UK sector peer that will see the pair share business opportunities and platforms.
SEC and Porta intend for this collaboration to be a global partnership, allowing for a broader set of skilled offerings to be offered across a greater geographical reach than either company is currently able to provide on its own.
The fee sharing arrangements on joint projects will be determined on a case-by-case basis.
Meanwhile, Porta announced the settlement of a couple of outstanding debts through the issue of shares.
Its £311,375 debt with Hawk has been settled through the issue of 8.90mln shares and its £417,779 debt with Retro Grand has been paid off through the issue of 11.94mln shares.
Hawk will end up with around 15.6% of the enlarged issue share capital of Porta and Grand Retro 6.8%.
Porta has also agreed the terms of a discounted bond with Hawk to replace Porta's existing £4.11mln deep discounted bond with Hawk, which was due to mature on 14 April 2019 and which has an equivalent annual interest rate of 12.8%. The Hawk discounted bond replacement has a redemption date of 14 April 2021 and the amount to be redeemed on that date will be £4,460,243.
The equivalent annual interest rate on the new bond will be 8%, so the company has got a lower interest and pushed back the redemption date by two years.
An option exists for Porta to redeem the bond early, should it wish.
Similarly, Porta has agreed with Retro Grand to replace its existing convertible loan facility with a new convertible loan, which will have a face value of £5,183,415, a term of 364 days from the effective re-financing date of 30 June 2017 and on which interest will accrue at a rate of 8% per annum, payable quarterly in arrears.
"I previously identified the need for an equity injection and I am delighted to announce the subscription agreement with SEC, which will provide Porta with the necessary additional funds to support the growth of the company for the foreseeable future,” said John Foley, non-executive chairman of Porta.
"The board is also pleased to report the negotiation of much improved terms with Hawk and Retro Grand, which significantly reduce the company's finance costs. These important developments form part of the board's ongoing strategy to build a strong, growing business supported by an equally strong balance sheet,” he added.
Shares in Porta were up 3% to 3.22p in the first half hour of trading.