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Chamberlin PLC - castings and engineering firm - Receives GBP200,000 of new funding from real estate investor and IQ-AI Ltd Chief Executive Trevor Brown. Brown, who is also CEO of Braveheart Investment Group PLC has been issued with GBP200,000 notes as the funding was advanced through an unsecured convertible loan note instrument. Subject to shareholder approval, these notes will convert automatically into 3.3 million new shares at 6 pence each, a 14% discount to the January 3 closing middle market price before suspension. The shares will represent an approximately 29.5% stake in Chamberlin's enlarged share capital.
Upon conversion, conditional on the passing of resolutions at its March 8 general meeting, Chamberlin has agreed to appoint Brown as a non-executive director, where he "has agreed to explore with the board all potential options of further funding to help stabilise the short-to-medium term working capital requirements of the company."
Following this transaction, and further fundraising, possibly including additional equity fundraising, Chamberlin will be in a position to publish its annual accounts for its financial year ended March 2020 on a going concern basis as well as its interim results for the six months ended September 30. This should, in turn, result in its share suspension being lifted.
The note conversion is conditional on shareholder approval for re-organising Chamberlin's share capital and the granting of necessary share allotment authorities to directors. This is because authorities granted July 2019 has expired, meaning not only the conversion but also any future equity fundraising are dependent on shareholder approval.
Chamberlin notes that if it cannot obtain additional funds it "will be unable to continue trading as a going concern" and that if shareholders do not pass the needed resolution then it "is expected to be unable to comply with one or more financial covenants that are in place under the terms of its existing facilities with its lending banks."
"If the company is unable to reach agreement on alternative arrangements with its lending banks and other creditors (including HM Revenue & Customs), then this could lead to enforcement action over all or part of the group's assets including executing a disposal of such assets. In the event that the resolutions are not passed, the directors would likely seek to place the company into some form of insolvency proceeding, or a creditor may take action to enforce or initiate an insolvency proceeding. Any such proceeding would be likely to result in little or no value for shareholders. Accordingly it is important that Shareholders vote in favour of all of the resolutions so that the conversion may proceed and all funding options are available to the board," says Chamberlin.
Current stock price: 7.00 pence
By Anna Farley; annafarley@alliancenews.com
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