Mobilewave Group PLC Update on funding and winding up petition (9327W)

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RNS Number : 9327W

Mobilewave Group PLC

01 February 2013

1 February 2013

MobileWave Group PLC

("MobileWave" or the "Company")

Update on Funding, Winding up petition & Litigation

The Board advises shareholders that agreement has been reached with The Portman Estate ("Portman"), the landlords of 71 Gloucester Place, to enter into an agreement to surrender the Company's lease of the premises. This agreement calls for the Company to pay Portman's legal expenses incurred in this matter as well as acknowledging its debt to Portman. In addition, a lease surrender fee will be payable by the Company. In return, Portman will not seek to enforce the winding-up petition it has sought against the Company (details of which were announced on 7 January 2013), which will be heard in the High Court on 4 February, 2013. The agreement with Portman will also contain an undertaking not to proceed against the Company for payment of any outstanding debts before 31 August, 2013.

In order to fund the Portman legal costs and to settle debts outstanding to smaller creditors, the Company has secured a loan of US$25,000 each from two of the Company's Directors, Andy Polansky and Vivake Gupta (the "Loans"). Interest will accrue and be rolled up to the repayment date, being 29 January 2014. The Loans carry interest at a rate of 10 per cent. per annum and are convertible at the election of either of the lenders into ordinary shares in the capital of the Company at a price of 0.35 pence per share, being the price the ordinary share of the Company were trading at immediately prior to suspension.

The provision of Loans by the two Directors, Vivake Gupta and Andy Polansky, is deemed to be a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. The Chairman of the Company, Rory Stear, who is independent of this transaction, having consulted with Charles Stanley Securities (the Company's Nominated Adviser), considers the terms of the Loans to be fair and reasonable insofar as the Company's shareholders are concerned and in the best interest of MobileWave.

An additional loan of GBP20,000 has been promised by GDE Global Inc., a substantial shareholder of the Company which has a beneficial interest of 12.99 per cent. in the entire issued share capital of MobileWave. The loan provided by GDE Global Inc., will convert into new ordinary shares of MobileWave when the suspension of trading in the securities of the Company is lifted.

The agreement with Portman and the raising of the Loans from the Directors and the promised loan from GDE Global Inc., allows the Company to meet its commitments in the near term and the Company continues to both pursue its action against Devin Narang and to work with the Asian investor to receive the investment that the Company requires to discharge its commitments to its major creditors and stabilise itself for the future.

Shareholders are aware that the Company has pursued a three prong strategy in its pursuit of the debt owed by Devin Narang to the Comany. Firstly, having been granted judgement in the amount of GBP1,070,000 in the British Courts, the Company is seeking to utilise the treaty that exists between India and the UK and execute the judgement in India. The hearing in the Delhi Court took place on31 January 2013 following this hearing, final argument has been set for to be heard on 17 May 2013. Secondly, the Company is seeking a bankruptcy order against Narang and this matter is scheduled for a full hearing in the English Courts in May 2013. Thirdly, the Company continues, on a Without Prejudice basis, to seek to constructively engage with Mr. Narang to seek a settlement. As stated in the Interim Results on 30 November 2012 the Board continues to remain positive that a beneficial outcome will be realized.

The long term future of the Company will be determined by successfully sourcing sufficient new investment to pay its long term creditors and provide working capital for the Company to move forward. The Company's Chairman, Rory Stear has previously announced that he has for some months been assisting an Asian investor in concluding a substantial transaction that will, in turn, result in the required investment by the Asian investor to the Company. Negotiations for the successful conclusion of these transactions are far advanced and the Board expects these to conclude, and the Company to receive funding, during the first quarter of 2013. These are highly complex transactions but the decision of the individual Directors to provide Loans to the Company at this critical stage, should demonstrate the Board's optimism that this matter is close to conclusion and their commitment to MobileWave.

As set out in preliminary results statement on 31 August 2012, the Company's ability to meet its financial and working capital requirements depend on further funding and creditor cooperation. The Board remains confident that funding will become available during Q1 2013 and will update shareholders accordingly.

In light of the uncertainty as to the timing and final outcome of the discussions with the potential investor trading in the Company's shares will remain suspended pending confirmation of the financing.

A further announcement will be provided to shareholders as soon as information becomes available.

For further information, please contact:

MobileWave Group plc

Rory Stear, Chairman ([e-mail])

Charles Stanley Securities, nominated adviser and broker:

Dugald J Carlean / Carl Holmes 020 7149 6000

This information is provided by RNS

The company news service from the London Stock Exchange

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