5 Jun 2013 11:37
Formation Group plc ('Formation' or the 'Company')
Related Party Transaction
The Company announces that as previously reported its wholly owned subsidiary Formation Design & Build Ltd took out a loan of £558,457.53 in May 2012 (the "Loan") which matured on the 31st May 2013. The Loan from the Kennedy Family Discretionary Settlement (the 'Lender') was for the purposes of additional working capital. The interest payable on this is 10 per cent. per annum and as security for the loan, Formation granted the Lender a registered charge over its share of the net profit due to Formation arising from the residential and commercial development at 52-58 Commercial Road, London E1 1LP ('Whitechapel').
The Loan, repayable on maturity, is £614,303.29 including interest and has been assigned to Formation Group plc by its subsidiary Formation Design & Build Ltd with a further request for £350,000.00 in additional working capital funds. A new loan has been therefore secured from the Lender for £964,303.29 on a monthly rollover basis using the same security and interest rate and is repayable on or before the end of January 2014. Furthermore, as a condition of this loan a register of charge is to be prepared and filed at companies house.
Under the AIM Rules, the Loan constitutes a related party transaction given the Lender's relationship with David Kennedy who, together with certain related parties, holds a majority shareholding in Formation. In accordance with the AIM Rules, the directors independent to the transaction are required to consider, having consulted with the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable.
The independent directors consider, having consulted with Zeus Capital, that the terms of the transaction are fair and reasonable insofar as shareholders of Formation are concerned.
Contact details:
Formation Group PLC - David Kennedy; Chief Executive Officer - 020 7920 7590
NOMAD to Formation Group PLC;
Zeus Capital Limited - Ross Andrews / Andrew Jones - 0161 831 1512