LONDON (Alliance News) - eServGlobal Ltd on Tuesday said it plans to raise up to GBP15.0 million through a share placing and an open offer, with the funds to be used to repay and refinance debt, accelerate sales and marketing and reduce costs in its core business.
The mobile financial services company said it plans to place 300.0 million shares at a price of 4.00 pence per share to raise GBP12.0 million, and will make an open offer of up to 74.4 million shares at 4.00 pence per share to raise up to GBP3.0 million.
Shares in eServGlobal were up 2.4% at 5.25 pence on Tuesday.
The proceeds of the placings will be used to repay and refinance debt, accelerate sales and marketing and reduce costs in the core business and for general working capital purposes.
eServGlobal said the placings have been structured in such a way "as to allow the company to receive part of the proceeds as quickly as possible in order to begin implementing these strategies".
The placings and open offer are not underwritten, the company said, adding that it has entered into a placing agreement under which FinnCap has agreed to use "reasonable endeavours to place the placing shares with institutional investors, including certain existing shareholders".
eServGlobal added that it has agreed a restructuring of its loan facilities with its lenders, Alphagen Volantis Fund Ltd and Alphagen Volantis Catalyst Ltd, conditional upon the issue of the placing shares and the completion of a debt restructure.
Under the debt restructure, the company's existing debt will be discharged and the loan facilities will be replaced with a new loan, pursuant to which the lenders shall make available a term loan of GBP7.0 million.
The lenders have also agreed to subscribe for 111.1 million placing shares for a total consideration of GBP4.4 million, and such amount will be satisfied by the waiver of GBP4.4 million of indebtedness. The lenders will then own 28.05% of the voting power of the company, assuming no shares are issued pursuant to the open offer.
"We have transformed the core business following a restructuring in late 2015, significantly reducing costs and focusing on profitable contracts. As announced in the trading update on May 18, there are clear signs of improvement in the financial performance of the company. The funds raised will enable us to continue the transformation, including adding further sales capacity to capture increased volume of opportunities," said Executive Chairman John Conoley.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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