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LONDON (Alliance News) - Character Group PLC on Monday said it entered into an agreement with other shareholders of OVG-Proxy AS to provide credit facilities.
Proxy is the Danish incorporated toy distributor in which Character, through its subsidiary Character Nordic Ltd, acquired a 55% interest in October 2018. Other Proxy shareholders include Kidz AS and Wamami Holding APS, which are owned by Proxy Chief Executive Morten Geschwendtner and Proxy Chief Financial Officer Mikkel Kjaersgaard, respectively.
As part of the agreement, Kidz has sold and transferred to Character Nordic further shares in Proxy, constituting 20% of the share capital of Proxy for a nominal consideration of 12 pence.
The toys, games and giftware distributor said it holds 75% of Proxy following the transaction.
In turn, Character Nordic has agreed to provide a revolving, 60-day credit facility of up to USD1.5 million to finance inventory purchases of Proxy. In addition, the company will provide a short-term loan of USD920,000 to be repaid by the end of July.
Character Nordic will also provide a cash security deposit to Proxy's bankers of GBP1.4 million and Proxy's bankers will have an option to acquire the toy inventories of Proxy at cost up to a value not exceeding GBP2.6 million in the event of a default by Proxy of its banking facility agreement terms.
"This is a pragmatic solution to address the change in the operating environment that Proxy has faced in the Nordic region since the collapse of Top Toy. Both the board of Character and the management at Proxy believe the market conditions in our Nordic territories will favour Proxy in the medium term and that together we will grow our presence profitably going forward," said Character Joint-Managing Director Jon Diver.
"I am delighted that the management team at Proxy are not only confident of Proxy's future but are backing that judgement in reaching this deal with us," added Diver.
Character shares closed flat on Monday at 555 pence each.
