Craven House Capital Regulatory News (CRV)

28 May 2013

Craven House Capital Plc

("Craven House" or the "Company")

Loan Acquisition

Issue of Equity

The Company today announces that it has signed an agreement to acquire, at a small fraction of its nominal value, a distressed loan (the "Loan") in the 3 Star Green Isle Conference and Leisure Hotel in Dublin (the "Hotel").

The Hotel has 270 bedrooms, as well as conference and leisure facilities, and recently was independently valued at between €3.5m and €5m. Following the acquisition of the Loan, which is being acquired for a cash consideration of €0.7 million, Craven House will be the sole secured lender for the Hotel and will then lead a restructuring of the remaining unsecured creditors.

Under the original terms of the Loan, the Hotel was due to pay an annual interest charge of approximately €250,000 per annum. The directors of Craven House believe that the Hotel can be a profitable going concern and, post the restructuring, can generate more than sufficient cash-flow to service a significant annual interest payment to Craven House, resulting in a substantial increase in the Company's annual revenues.

Desmond Holdings Ltd ("Desmond"), the Company's Investment Manager, will lend the Company the €700,000 required to complete the transaction at a rate of 6% per annum (the "Desmond Loan"). The Desmond Loan is repayable after a period of two years and can also be converted into equity in Craven House (at a price of 1.25p per share) at Craven House's discretion.

Desmond is a substantial shareholder in the Company and Mark Pajak is a director and shareholder in Desmond. Accordingly, the Desmond Loan constitutes a related party transaction under AIM Rule 13. The independent directors of the Company, having consulted with Daniel Stewart & Company plc, the Company's nominated adviser, consider that the terms of the transaction are fair and reasonable as far as shareholders are concerned.

Mark Pajak, Acting Chairman, commented, "It is core theme of the Company's investing policy to acquire interests in cash generative assets. The directors believe that the Hotel is such an asset and has the ability, post-restructuring, to significantly increase the Company's revenues and cash flows; with the additional potential of capital appreciation through having acquired the Loan at a significant discount to the underlying asset value."

The Company also announces the issue of 730,000 new ordinary shares of 0.1p each in the share capital of the Company, at a price of 1.25p per ordinary share, in lieu of fees of £9,125 ("New Ordinary Shares"). Application has been made to the London Stock Exchange for the New Ordinary Shares and admission is expected to take place on 3 June 2013. The New Ordinary Shares will rank parri passu with the existing issued ordinary shares. 

Following the issue of the New Ordinary Shares, the Company's total issued share capital will consist of 592,695,959 Ordinary Shares with each share carrying the right to one vote. The Company has no Ordinary Shares held in treasury. The total of 592,695,959 Ordinary Shares may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FSA's Disclosure and Transparency Rules.

 For further information please contact: