-RNS10 May 2021 08:46
Whilst ECP retained an option to acquire 60 per cent. of InnFin (the "Option Agreement"), details of which were announced on 27 July 2020, the Board decided it would better further ECP's strategy by acquiring the entire business. As a result, ECP has agreed to acquire 100% of InnFin for an initial consideration of €2.45m reflecting its ability to contribute directly to delivering the Company's growth Themes, current business levels, and pre-identified pipeline of upcoming transactions. A potential earn-out payment of a further €2.45m could become payable, subject to InnFin achieving agreed EBITDA levels over the next three years. The projected total EBITDA across the three year period is greater than the total potential consideration.
If these performance targets are not met, the potential earn-out does not become payable. If the targets are achieved, the earn-out can be paid in cash or shares at the Company's election. The initial purchase consideration will be settled by the payment of €1m in cash, €328,700 of vendor loan at a 5 per cent. interest rate accruing for 24 months ("IF Vendor Loan"), £62,000 (€71,300 at an exchange rate of £1:€1.15) in shares of Eight Capital ("Consideration Shares") issued at 0.039p (being the 360 day Volume Weighted Average Price) which equates to 155,388,471 shares, the offset of €350,000 that is owed to Eight Capital by the vendor as part of the Option Agreement, and €700,000 of the Company's listed bonds. Standard representation and warranty clauses for a corporate acquisition of this kind have been included in the contract.
The Consideration Shares will be issued to Concreta Srl, which, on admission of the shares to trading on AQSE, will be interested in 9.9 per cent. of the Company's enlarged issued share capital. As a result of a further issue of the Company's listed bond as partial consideration for InnFin the Company will have a total of €3,990,000 bonds outstanding.
The Term Loan
ECP's Chairman, Dominic White, has agreed to lend €1.1m to the Company by way of a 24 month, unsecured loan, at an accruing interest rate of 5% p.a. ("Term Loan"), to enable the acquisition to proceed and to provide working capital to the Company.
Loan Conversion
Following the issue of the Consideration Shares, IWEP Ltd ("IWEP"), the Company's largest shareholder, has agreed to convert £27,000 (equivalent to €31,050 at an agreed rate of £1:€1.15) of its outstanding vendor loan ("IWEP Vendor Loan") into 67,669,173 new ordinary shares ("Conversion Shares") at a price of 0.039p per share ("Conversion").
On Admission, IWEP's holding will be 29.9%. As a consequence of the InnFin acquisition and in consideration of the Term Loan, the maturity date for the IWEP Vendor Loan has been extended to 6 August 2022 ("Extension"). All other terms of the IWEP Vendor Loan remain unchanged and the balance outstanding following Conversion is €455,950. IWEP is controlled by Dominic White, Eight Capital's Chairman.
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