Oxford Cannabinoid Technologies Holdings PLC (LSE:OCTP) said 198.5mln of its shares have been pledged as security against a loan.
The shares pledged represent around 20.66% of the company’s issued share capital and are held by Kingsley Capital Partners, a limited liability partnership in which Neil Mahapatra, executive chairman of Oxford Cannabinoid, has a majority stake.
Oxford Cannabinoid has a written undertaking from KCP that £400,000 has been drawn down under the £1mln overdraft facility, which has been provided by Brown Shipley.
KCP is not in default under the terms of the facility and further, KCP has undertaken that it will not draw down any further funds under the facility until such time as the pledged shares have been removed from the charge.
The company understands that KCP retains beneficial ownership of the pledged shares, with full voting rights; as such, KCP has confirmed that its beneficial interest in the company remains unchanged at 198.5mln shares.
As the granting of the shares as security technically counts as a disposal under the lock-in agreement, KCP entering into the facility without consent from the company equates to a breach of the lock-in agreement. The directors (other than Neil Mahapatra) are considering their positions given they were each unaware of the facility and are consulting with their advisers as to the course of action they should take.
Oxford Cannabinoid understands that Brown Shipley is unable to exercise its security over the pledged shares until 1 July 2022, by which time KCP hopes to have removed the pledged shares from the legal charge granted in favour of Brown Shipley.