European Wealth Group Limited CLS Update and Proposed Re-Financing (1736G)

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RNS Number : 1736G

European Wealth Group Limited

25 May 2017

European Wealth Group Limited

("European Wealth", or the "Group")

Convertible Loan Stock Update and

Proposed Re-Financing

European Wealth (AIM: EWG, EWGL), the integrated wealth management group, announces that, further to the announcement on 10 February 2017, it is in advanced discussions regarding a re-financing package that, once entered into and completed, will re-structure the Group's balance sheet, enabling the repayment of the GBP4.2m of quoted convertible loan stock issued by the Company in 2014 ("CLS") and due for redemption on 9 June 2017 and all other debts, accrued interest and deferred consideration ("Proposed Fundraising"). Upon completion of the Proposed Fundraising, the Group would be in a net positive cash position, leaving it well capitalised to grow without the working capital constraints previously referred to. Given the right financial structure, the Board believes that the trading prospects of European Wealth remain encouraging and are underpinned by strong momentum in assets under management.

Proposed Fundraising

Under the terms of the Proposed Fundraising, two new external investors will each subscribe for shares worth GBP3.1 million (being GBP6.2 million in aggregate) in the Group. In addition to this, these two investors will jointly underwrite an open offer that will be made available to European Wealth shareholders and employees to raise a further GBP3.1 million. In total, the Proposed Fundraising would represent a re-financing of GBP9.3 million.

The price of the subscription and open offer will be at a significant discount to the current market price with the result that, on completion of the fundraising, the two new investors will each hold a significant stake in the Group. This, together with the anticipated appointment of their representatives on the Board of the Group, means that the entry into a subscription and underwriting agreement between the investors and the Group is subject to certain regulatory pre-conditions and only once these pre-conditions have been met, which could take a couple of months, will the Company be able to enter into the subscription and underwriting agreement. At which time, the Group will make a full announcement as to the terms of the fundraising. The Proposed Fundraising will also be subject to shareholder approval and a circular will be posted to shareholders following the announcement.

Bridge Financing

Due to the time required to obtain regulatory and shareholder approval, it is not possible to complete the Proposed Fundraising prior to the redemption of the CLS. However, one of the two new investors has offered to provide a bridge financing facility to the Group for GBP5.0m, which is sufficient to repay the CLS and all accrued interest thereon. The Group anticipates agreeing, and announcing, the full terms of the bridge financing, which will include payment of interest on a monthly basis, by early June.

Shareholders should be aware that there is no guarantee that either the bridge financing or the Proposed Fundraising will be completed and if either does not proceed then the Group will need to raise alternative finance in order to repay its debts.

Cancellation of CLS from admission

Unless an extension to the redemption date is approved by 90 per cent. of CLS holders by value, the CLSs will be due for redemption on 9 June 2017. As such, the Group has applied for a cancellation of the CLS from admission as of 12 June 2017, as the CLS may no longer be in existence at this date and therefore would be incapable of being traded. A further announcement in respect of the cancellation date will be made if appropriate.

Holders of the CLS should also note that today is the final date to serve a notice for conversion of their CLS into ordinary shares in European Wealth.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

For further details, please contact:

 
 European Wealth Group       Tel: +44 (0)20 
  Limited                     7293 0733 
 John Morton                 www.europeanwealth.com 
                             Tel: +44 (0)20 
   finnCap Ltd (Nomad         7220 0500 
   and Broker) 
 Adrian Hargrave 
 Scott Mathieson 
 
 FWD Consulting (Financial   Tel: [phone] 
  PR) 
 Elliot Lane 
 Gug Kyriacou 
 

About European Wealth Group Limited

European Wealth Group Limited (AIM: EWG, EWGL) is the holding company for the integrated wealth management business, European Wealth Management Group Limited. Having commenced trading in 2010, European Wealth has two operating divisions, European Investment Management Limited ("EIM") and European Financial Planning Limited ("EFP"). Both are regulated by the FCA. EIM has opted for Restricted Adviser status and EFP for Independent Adviser status. Today the Group's head office is in London with an expanding network of offices both in the UK and continental Europe. Core services offered by the Group are financial planning, corporate pension advisory and investment management in both equity and fixed interest instruments. For further information on European Wealth's wealth management and financial planning services, please go to www.europeanwealth.com

This information is provided by RNS

The company news service from the London Stock Exchange

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May 25, 2017 02:01 ET (06:01 GMT)