Westminster Group PLC (LON:WSG) has commenced a staged redemption programme of its existing £2.245mln convertible secured loan notes.
The redemption programme is scheduled to be completed well before the 15% loan notes are due to mature at the end of June this year.
Since the beginning of this year holders of the loan notes have had the option to convert the notes into Westminster shares at 10p per share instead of redeeming the notes for cash.
Westminster said the redemption programme would save the company money on both interest and management fees.
£3mln mezzanine loan facility
The supplier of managed security services and technology-based security solutions has been able to kick off the redemption of the loan notes thanks to a £3.0mln mezzanine loan facility it has entered into.
As well as enabling the company to start redeeming its loan notes, the financing facility will provide the company with the funds to maintain its growth and deliver on its project opportunities.
The mezzanine loan facility, which has been provided by corporate finance specialists RiverFort Global Opportunities PCC and YA II PN, is subject to a 0.75% commitment fee.
The facility can be drawn down in tranches that may be repaid over 18 months; the tranches will carry a 6.5% rate of interest and a 5% drawdown fee.
Westminster can elect to convert any of its monthly payments or amounts due by issuing the facility providers with a convertible note giving conversion rights equal to the amount concerned. The convertible notes can be converted into shares within 12 months of the date of issue, either at 14.54p a pop or at 90% of the volume-weighted average price in the five (trading) days before the conversion date.
Westminster may also elect to make early repayment of any outstanding amount subject to a 5% early redemption premium.
£1.75mln share subscription
Separately, the loan facility providers have agreed to pump £1.75mln into the company in return for shares priced at 12.5p each.
Westminster has also agreed to issue RiverFort and YA 3.5mln warrants at 14.54p that can be exercised between six and 48 months from issue. The exercise price of the warrants is at a 34% premium to Tuesday’s closing share price.
Westminster shares currently trade at 10.5p, down 0.25p on the day.
"With the option to draw down further funds at our discretion, the option to elect to pay any monthly payments as convertible notes and the option to make early repayment, should we so wish, makes this a very flexible financing facility for our current needs,” said Peter Fowler, the chief executive officer of Westminster Group.
"Given the group's growth prospects we believe this structure and facility provides us with the necessary flexibility needed to support the continued growth of the business with the added benefit of the upside potential from future share price growth," he added.