(Alliance News) - Brady PLC on Monday said, through its subsidiary Brady Trading Ltd, it has entered into an uncommitted secured loan agreement with Hanover Acquisition Ltd.
The stock was trading 16% lower on Monday in afternoon trade at 10.06 pence a share.
Under the deal, GBP1.3 million has been made immediately available to Brady Trading, the company said, and Brady Trading has the right to request that the facility is increased to an aggregate amount of GBP4.0 million, subject to Hanover cash offer becoming unconditional.
In mid-October, Brady agreed to a 10 pence per share cash takeover offer made by a vehicle of Hanover Active Equity Fund II Sca SICAV-RAIF, valuing the firm at GBP8.3 million.
Brady provides trading, risk management and settlement solutions to the energy and commodities sectors.
Brady had previously said it requires GBP1.5 million to meet the working capital requirements of its existing operations prior the end of November, with a specific cash payment due on Friday.
On Monday, the AIM-listed company said the GBP1.3 million initial loan will be used for immediate working capital requirements until Friday and to refinance its existing GBP1.0 million bank overdraft facility.
The refinancing of the overdraft facility, however, does not form part of the previously announced GBP1.5 million working capital requirement, Brady noted. Thus, the company said it continues to require access to additional funding of GBP1.4 million prior to the end of November to support existing operations.
Thereafter, Brady estimates that it will require access to an additional GBP400,000 during December, again to meet its working capital requirements.
The facility is repayable immediately on demand by Hanover, Brady said, and is otherwise capable of repayment by Brady Trading in full without penalty on three business days' notice at any time.
An arrangement fee of 3% is payable on the principal of the facility made available to Brady Trading, it said. In addition, a loan fee of GBP3,750 per quarter is payable in arrears or on the date on which the offer is withdrawn.
Finally, Brady Trading said it has agreed to meet the costs and expenses "reasonably incurred" by Hanover in connection with entry of the facility, not exceeding GBP100,000. Such expenses to be paid by Brady Trading within 30 days of the date of the facility, it said.
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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