29 Nov 2013 11:00
City of London Group plc ("COLG" or the "Company" or the "Group")
29 November 2013
Update to 1 November 2013 announcement, revised £17.4 million equity placing proposal, interim financing secured and proposed Board changes
Further to the announcement of 1 November 2013 outlining COLG's requirement to secure up to £17 million of additional capital to meet the further investment requirements of the Group's platform businesses to develop their commercial potential, the Board announces that:
· Discussions with Paul Iliescu and Bruce Mee (together, the "New Investors") are well advanced with respect to a revised proposal (the "Revised Proposal"). The Revised Proposal comprises a £17.4 million placing of new ordinary shares at 57.5p per new COLG ordinary share. If completed, the New Investors would then control approximately 58.9% of the fully diluted enlarged share capital of the Company. The Revised Proposal, if made, would require the approval of the Company's shareholders at a General Meeting and a white-wash waiver from the Takeover Code requirements under Rule 9. The Revised Proposal, which is still subject to the completion of due diligence and formal agreements, has the support of the Board and the Group's principal creditor. At this stage there can be no certainty that the Revised Proposal will be completed, or the terms on which it may be pursued.
· The Group's principal creditor has agreed to fund the repayment of £1.289 million of loans made to the Group and also provide further facilities to the Company secured through the grant of a debenture by the Company, amounting, in aggregate, to £3.5 million. £2.5 million of these new facilities will be made immediately available to the Group and the balance of £1.0 million by 5 January 2014. These facilities will provide the Company with its operational capital needs whilst the Company seeks to finalise the Revised Proposal which will address the additional investment required for the Group's platform businesses.
· Tony Brierley, acting Chairman, has, as planned, resigned as a Director with effect from 28 November. He is succeeded by John Williams, a non-executive Director. Eric Anstee has stepped down as a Director and Chief Executive Officer and John Kent, Deputy Chief Executive, has been appointed acting Chief Executive Officer.
· Paul Milner, chief executive of the Estate Office Shoreditch, will today become a non-executive Director of the Company, as a Board representative of the Group's principal creditor. Should agreement be reached with the New Investors, it is anticipated that Bruce Mee will also join the Board as a non-executive Director.
· Further financial and trading information is available within the Company's Interim Results which have been released today.
There are no other disclosures to be made under Listing Rule 9.6.13 in respect of Paul Milner.
Enquiries
City of London Group plc +44 (0)20 7628 5518
John Kent
N+1 Singer Capital Markets Limited +44 (0)20 7496 3000
Jonny Franklin-Adams
FTI Consulting +44 (0)20 7269 7103
Hazel Stevenson
Notes to Editors
A copy of this announcement will be available at www.cityoflondongroup.com. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
City of London Group plc is fully listed on the London Stock Exchange plc (LSE symbol CIN). COLG is a financial services group focused on providing merchant banking services to finance the SME and professional services sectors. It does this by financing trade and securing specialist funding throughout the supply chain to help fuel growth in these sectors, as major national and foreign banks limit new lending to these borrowers. COLG seeks to identify and exploit product niches and business models in these sectors where they are supported by strong day to day management teams, providing initial equity, working capital and seed funding for those teams.
Since 2009, COLG has focused on Specialist Financing and Alternative Fund Management. As part of its strategy to build a quality Financial Services Group, COLG has developed four specialist financing funds, pledging significant seed funds to Therium Capital Management Limited, a third party Litigation Funder, Credit Asset Management Limited and Professions Funding Limited, which respectively provide asset backed finance to SMEs and working capital loans to professional practice firms and finally Trade Finance Partners Limited, a trade finance provider to the SME market.
Note on forward looking statements
This statement may contain certain statements about the future outlook for COLG and its subsidiaries. Although the directors believe their expectations are based on reasonable assumptions, any statements about the future outlook may be influenced by factors that could cause actual outcomes to be materially different. This statement has been drawn up and presented with the purposes of complying with English law. Any liability arising out of or in connection with it will be determined in accordance with English law.