Daniel Stewart Securities Plc Regulatory News (DAN)

29 January 2015

Daniel Stewart Securities plc ("Daniel Stewart" or "the Company")

Regulatory Capital Resolution

Daniel Stewart, the investment bank offering corporate advisory, institutional stockbroking and wealth management services, is pleased to announce that it has raised £1.52m to strengthen the Company's balance sheet for regulatory capital purposes. The refinancing will provide the Company with additional tier 1 regulatory capital which will, in the Directors opinion, be more than be sufficient to resolve the Company's current regulatory capital shortfall. 

Summary

- Cash subscriptions for 111,000,000 new shares to raise £0.44m ("Cash Subscription")

- Cash subscription for Non-redeemable callable bonds for further £0.78m ("The Bond Subscription")

- Acquisition and conversion of loan notes held by Peter Shea to provide a further £0.30m ("Loan Note Conversion") (together with Cash Subscription and Bond Subscription, the "Refinancing")

- New shares to be issued under existing authorities granted at General Meeting on 6 November 2014

Cash and Bond Subscriptions

The Company has raised £444,000 through the subscription by institutional and other investors for 111,000,000 new ordinary shares of 0.25p each in the Company ("Shares") at 0.4p per new Share, representing a 12.5% premium to the Company's closing price on 30 September 2014, being the last day prior to suspension of the Company's Shares.

Epsilon Investments PTE Limited ("EIL"), a Company registered in Singapore and controlled by Zainab Binte Mohamed Omar has subscribed for 70,500,000 of the new Shares, following which EIL will hold an interest in approximately 9.99% of the Company's Shares as enlarged by the Cash Subscription and Loan Note Conversion.

In addition, EIL have bought from the Company a non-redeemable callable bond ("Bond") for £775,000, which funds have been received by the Company and are non-refundable. The Bond confers on the bondholder the right to subscribe for 194,000,000 new Shares upon payment of a further £1,000, equating to a cost of 0.4p per new Share. Conversion of the Bond by EIL is subject to EIL receiving Financial Conduct Authority ("FCA") controller status, following which EIL shall promptly exercise the Bond. Upon conversion of the Bond EIL shall hold an interest in approximately 29.39% of the Company's Shares as enlarged by the full Refinancing.

Loan Note Conversion and Director Dealings

On 28 January 2014 Peter Shea, Chairman and Chief Executive applied to the Company for the conversion of £300,000 unsecured non-interest bearing convertible loan notes ("Loan Note"), at a conversion rate of 0.4p per Share, being the same price as the Cash and Bond Subscriptions. As a result, 75,000,000 new Shares are being issued to Mr Shea, following which he will be interested in 154,338,874 Shares, representing approximately 21.9% of the Company's Shares as enlarged by this conversion and the Cash Subscription. This will reduce to 17.15% following conversion of the Bond.

The Loan Note originates from the final unpaid portion of the £1m unsecured credit facility originally entered into on 29 December 2009 between the Company and certain providers of finance. This unpaid portion, which carried a coupon of 8%, comprised £225,000 principal together with rolled up unpaid interest ("Debt"), and was acquired by Mr Shea on 28 January 2015 from Rockridge Investments SA ("Rockridge"), a Panama registered company and existing shareholder, for a consideration of £300,000 and with the intention by Mr Shea of undertaking the conversion of the Loan Note. Whilst the Debt was convertible, the conversion terms were not specified, and therefore on 28 January 2015 the Company issued the Loan Note, containing defined conversion terms, to Mr Shea in substitution for the Debt.

Update on Suspension

The Company expects to be in a position to publish its Report & Accounts for the year ended 31 March 2014 in early February. Until such time the Company's Shares will remain suspended.

Admission

Application has been made for the admission to trading on AIM of 186,000,000 new Shares ("Admission"), expected to be effective on 3 February 2015.

Following Admission, the Company's issued share capital will comprise 705,902,579 ordinary shares, which figure may 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 FCA's Disclosure and Transparency Rules. The Company does not hold any shares in treasury.

A further application will be made in relation to the 194,000,000 new Shares arising from the Bond conversion in due course.

Related Party Transaction

Under the AIM Rules for Companies ("AIM Rules"), Peter Shea is deemed to be a related party and therefore the Loan Note Conversion is a related party transaction pursuant to Rule 13 of the AIM Rules. The independent directors of Daniel Stewart, Peter Dicks and Stuart Lucas, each a non-executive director, consider that, having consulted with Westhouse Securities Limited, the Company's Nominated Adviser, the terms of the Loan Note Conversion are fair and reasonable insofar as the shareholders of the Company are concerned.

Further details on the Bond

- the Bond is unsecured and freely transferable, qualifying as tier 1 regulatory capital

- the Bond subscription rights shall lapse after 18 months ("Period")

- the Company is restricted from issuing new Shares (save in connection with the Refinancing) or cancelling Shares during the Period or until the Bond is converted to new Shares (whichever is the earlier)

Enquiries:

DANIEL STEWART SECURITIES PLC Tel: 020 7776 6550

Peter Shea

WESTHOUSE SECURITIES Tel: 020 7601 6100

Richard Johnson / Martin Davison

END