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STM Expects Profitability Boost From Loan Note Equity Conversion (ALLISS)

Thu, 16th Apr 2015 08:00

LONDON (Alliance News) - STM Group PLC Thursday said it expects its profitability to benefit from a move by convertible note holders to convert their holdings into equity.

In a statement, the financial services company said it has so far repaid 70 of the convertible loan notes, which has a value of GBP700,000. The remaining 30 unconverted loan notes will be repaid in March 2016.

STM said it had received conversion notices over 155 convertible loan notes, each of which has a face value of GBP10,000. It will issue 6.0 million new shares priced at 26 pence each to satisfy conversion notices.

Chief Executive Colin Porter said that the move reduces STM's structured borrowing to GBP300,000, which will "further enhance profitability for 2015".

Over the course of 2014, STM's external borrowing decreased by GBP1.0 million, largely a result of the repayment of convertible loan notes issued in 2010 to the value of GBP3.5 million and issuing the new ones to the value of GBP2.6 million.

Alan Kentish, the company's director of business and product development is one of the loan note holders to have handed in a conversion notice.

The director is a beneficial owner of Clifton Participations Inc, which is converting 32.5 convertible loan notes with a value of GBP325,000. That means that STM will issue Clifton with 1.3 million shares, which will give Kentish a holding of 7.2 million shares. Kentish will therefore have a 12.15% stake in STM.

Louise Kentish, the director's wife, holds 1.1 million shares in STM as trustee of the Focus Trust, equivalent to a 1.85% stake in the company, although neither of the two have a beneficial interest in the shares the trust holds.

"The extent of the convertible loan note holders wishing to convert into equity in STM demonstrates considerable confidence in the business; particularly given that one of those converting is our Director of Business & Product Development, Alan Kentish," Colin Porter, chief executive, said.

STM shares were up 1.0% at 31.30 pence on Thursday morning.

By Samuel Agini; samagini@alliancenews.com; @samuelagini