Redhall Group PLC Short Term Funding Agreement (0634O)

TIDMRHL

RNS Number : 0634O

Redhall Group PLC

25 January 2019

The information communicated in this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For immediate release 25 January 2019

Redhall Group plc

("Redhall" or the "Company")

New short term funding arrangements agreed

Redhall Group plc (AIM: RHL), the high integrity manufacturing and services group, announces that it has agreed terms with two of its major shareholders, Lombard Odier Investment Management ("LOIM") and client funds managed by Downing LLP ("Downing"), for new short term financing facilities of, in aggregate, GBP2.0 million (the "Shareholder Facilities").

The Shareholder Facilities will be utilised to fund unusually high, short term working capital balances, which are being driven principally by two of the Company's major contracts. The board of Redhall (the "Board") considers that the Shareholder Facilities are the most appropriate method of providing this temporary additional working capital.

The Company has entered into facility agreements, dated 24 January 2019, with each of LOIM and Downing regarding the Shareholder Facilities (respectfully the "LOIM Agreement" and the "Downing Agreement" and together the "Shareholder Facility Agreements"). In accordance with the terms of the Shareholder Facility Agreements, an additional GBP1.0 million working capital facility has been made available to the Company by each of LOIM and Downing for a period of eight months. Each of the Shareholder Facilities is repayable in full by 1 October 2019, along with an exit fee equal to 12.5 per cent of the Shareholder Facility. No additional interest will be payable on the Shareholder Facilities during their term.

The Shareholder Facilities are subordinated to the Company's existing facilities with HSBC UK Bank plc ("HSBC"). HSBC has given its permission for the Company to enter into the Shareholder Facilities and has entered into an inter-creditor agreement with each of LOIM, Downing and the Company. The Company expects to redeem the Shareholder Facilities from cash flow.

Each of LOIM and Downing is classified as a "substantial shareholder" and a "related party" under the AIM Rules and, therefore, entering into each of the LOIM Agreement and the Downing Agreement is deemed to constitute a related party transaction for the purposes of AIM Rule 13. The Board (excluding Jamie Brooke with regards the LOIM Agreement), having consulted with GCA Altium, the Company's nominated adviser, consider that the terms of each of the LOIM Agreement and the Downing Agreement are fair and reasonable insofar as the Company's shareholders are concerned.

Martyn Everett, Redhall's Chairman, commented:

"The Board is grateful for the continued support of LOIM, Downing and HSBC, believing it signifies their confidence in the Company's ongoing prospects.

"Market conditions remain encouraging in the majority of the Company's core sectors and we see a strong pipeline of opportunities. A further update on trading will be included in the Company's preliminary results for the year ended 30 September 2018, which, as previously announced, will be released on 31 January 2019."

Contact details:

 
 Redhall Group plc                               Tel: [phone] 
 Russ Haworth, Interim Chief Executive Officer 
  Simon Comer, Chief Financial Officer 
 
 Buchanan, PR Adviser                            Tel: [phone] 
 Mark Court, Sophie Wills, Hannah Ratcliff 
 
 GCA Altium, Financial and Nominated Adviser 
 Tim Richardson                                  Tel: [phone] 
 
 WH Ireland, Broker 
 Adrian Hadden, Jessica Cave                     Tel: [phone] 
 

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January 25, 2019 02:00 ET (07:00 GMT)