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Frontier Smart Technologies Amends Loan Facility With Science Group

Tue, 03rd Sep 2019 13:38

(Alliance News) - Frontier Smart Technologies Group Ltd said Tuesday it has amended the loan agreed with shareholder Science Group PLC in August.

The original loan allowed for interest to be charged on drawn amounts at a rate of 12 percentage points above 3-month Libor. Now, however, the interest rate to be charged on drawn amounts has been reduced to 5 points above 3-month Libor.

All other terms of the facility agreed on August 21 remain the same.

The pair agreed a standby loan agreement after Frontier confirmed it would struggle to meet covenant tests in December for its existing Clydesdale Bank loan.

While Frontier is in talks with Clydesdale over future covenant testing, failure to meet covenants could trigger an exit event, whereby Frontier would have to repay the loan plus an exit fee.

Science Group has agreed to supply a standby credit facility to Frontier Smart if the Clydesdale loan is called or if the board decides to repay the loan. The standby loan expires April 2022 and is on broadly the same terms as the Clydesdale facility.

Shares in Frontier Smart Technologies were 6.0% lower in London on Tuesday at 23.50 pence each. Science Group was up 1.8% at 189.90p.

Science Group hiked its holding in Frontier to 72% on Monday, as it pursues a takeover of the firm.

Science Group intends to pursue a merger in accordance with Cayman Islands law, where home technologies firm Frontier is incorporated.

Frontier said it is highly likely the takeover would be approved by shareholders at a general meeting, likely to occur in October or November, given the size of Science Group's stake in the company.

The approval of the takeover will likely bring an end to a bruising boardroom battle which has seen two Frontier directors and former chair Hossein Yassaie leave the company.

For several months, Science Group has been steadily building its stake in Frontier. It initially pursued a takeover at 30.00p per Frontier share, though this was rebuffed in May. Its current offer, which was accepted last week by the board of Frontier, is 25.00p.