GLIF.L Regulatory News (GLIF)

Proposed Placing and Open Offer

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN THE UNITED KINGDOM) OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION OR TO US PERSONS (AS DEFINED BELOW). PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

This Announcement is an advertisement and not a prospectus. Investors should not subscribe for or purchase or make an election for any securities referred to herein except on the basis of the information contained in the prospectus (the "Prospectus") published by GLI Finance Limited (the "Company" or "GLI") relating to such securities.

3 December 2015

GLI Finance Limited

(a non-cellular company limited by shares incorporated in Guernsey with registered number 43260)

Proposed Placing and Open Offer and dividend policy

The Company is pleased to announce that:

- it has today published a Prospectus, which has been approved by the UK Listing Authority, in connection with the issue of a new class of 2020 zero dividend preference shares ("2020 ZDP Shares") at an issue price of 100p per share, to be issued by means of a placing and open offer and a placing programme, and

- the issue is conditional upon, among other things, the passing of a resolution at an EGM being convened for 21 December 2015; a circular to Shareholders containing information on the proposed placing and open offer and convening an EGM at which the approval of Ordinary Shareholders will be sought for the adoption of new articles of incorporation to permit the issue of the 2020 ZDP Shares as well as dis-applying certain pre-emption rights in relation to a possible issue of convertible unsecured bonds (the "Circular"), is being posted to Shareholders today.

The Company also announces that the Directors have resolved to adopt the following dividend policy for the Company going forward. It is intended that aggregate dividends declared in respect of each annual accounting period are paid out of the net income of the Company in respect of that annual accounting period, such policy to be measured at the end of each accounting period. The Board may, however, exceptionally pay dividends and special dividends out of capital.

A copy of the Prospectus will be submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.morningstar.co.uk/uk/NSM. The Prospectus and the Circular will be available on the Company's website: http://investor-relations.glifinance.com/investorrelations

Capitalised terms used but not defined in this announcement have the meanings set out in the Prospectus.

EXPECTED TIMETABLE OF KEY EVENTS

The following is a reproduction without material adjustment of the Chairman's letter to Shareholders which is contained within the Circular:

"Dear Shareholder

1. Background

Your Board announced on 17 November 2015 that the Company was considering the issue of further securities to refinance certain existing borrowings as well as to provide additional working and growth capital.

The Circular provides details of: (i) a proposed issue of new 2020 zero dividend redeemable preference shares ("2020 ZDP Shares"), which requires the approval of Ordinary Shareholders, in order to repay all or part of the Loan Facility and, to the extent that the net proceeds of that issue are sufficient, to provide additional growth capital; and (ii) a potential issue of convertible unsecured bonds ("CULS") to replace the Loan Facility, which requires the approval by Ordinary Shareholders of a resolution to waive pre-emption rights, (together the "Proposals").

During the last year your Board has positioned itself to benefit from the rapid expansion, innovation and development of the alternative (i.e. non-bank) commercial funding sector, avoiding consumer loans. As the sector matures it is becoming increasingly regulated in several jurisdictions (which creates barriers to entry for potential new competitors who need to bear the cost of compliance before they are able to generate business). GLI is actively promoting the adoption of best practices across its family of Platforms, seeking a competitive edge over direct local competitors.

The establishment of GLI Asset Management Limited, a wholly-owned subsidiary of the Company, as an asset manager and its appointment as manager of GLI Alternative Finance PLC ("GLI Alt Fi"), an investment trust, enables GLI to generate fund management income, while investors in GLI Alt Fi benefit from the flow of loan proposals generated by GLI's family of Platforms. Conversely, GLI's family of Platforms benefit from the availability of capital to invest in the loans they generate, making these Platforms more attractive to business borrowers helping them to achieve growth while being selective about the credit quality of borrowers.

As the alternative finance sector grows in size and geographical spread your Board believes that it will become less 'alternative' and increasingly a 'first call' source of funding. If GLI is to maintain its position in the alternative finance space, it requires additional capital to expand its loan portfolio, which is mostly sourced through its family of Platforms, as well as to continue to invest in those Platforms and, if suitable opportunities arise, to make further Platform investments.

GLI Alt Fi is expected to expand, issuing new equity to fund a growing loan portfolio, which it is anticipated should benefit GLI's family of Platforms. However, there will be times when GLI Alt Fi is fully invested and there are other loan opportunities which do not meet GLI Alt Fi's criteria. With additional capital, GLI could grow its own loan portfolio, thereby helping its family of Platforms to maintain or increase their growth momentum and accumulating loans which could be retained by GLI for its own account or used to establish other new managed funds.

GLI is therefore currently seeking to increase the capital available for these growth plans by the issue of CULS described below, which would be used to replace the Loan Facility. In addition, to the extent that the net proceeds of the issue of 2020 ZDP Shares were in excess of the amount required to repay the Loan Facility, the excess would also be used to fund GLI's growth plans.

GLI's ability to raise debt is limited, save with ZDP Shareholder consent, to £30 million (plus certain other, mainly short term, borrowings). GLI's current Loan Facility bears interest at 11 per cent. per annum. Your Board is exploring the possibility of replacing this with convertible unsecured bonds, at a lower running interest cost. The conversion price of such CULS would be above the market price of Ordinary Shares as at the date of issue. If converted, such funding would become permanent capital, but on a less dilutive basis than would be the case if new Ordinary Shares were issued at today's Ordinary Share price.

The Proposals

Your Board today announced proposals to issue, by way of a Placing and Open Offer (together the "Issue"), up to 40 million 2020 ZDP Shares for the purposes described above. The Company has today published a prospectus in connection with the proposed Issue (the "Prospectus"). The 2020 ZDP Shares are, subject to the satisfaction of certain conditions, being made available at the issue price of 100 pence per share to existing Ordinary Shareholders and ZDP Shareholders on the register as at the record date of 6.00 p.m. on 1 December 2015. The 2020 ZDP Shares are also being made available pursuant to the Placing.

In addition to the Placing and Open Offer of 2020 ZDP Shares, the Prospectus provides for a Placing Programme of new 2020 ZDP Shares in order to provide finance to help to maintain your Company's position in a rapidly growing market. The maximum number of 2020 ZDP Shares which may be issued pursuant to the Placing Programme is 40 million less the number of 2020 ZDP Shares issued pursuant to the Issue.

The Issue and the Placing Programme require the approval of Ordinary Shareholders for the adoption of the New Articles to reflect the creation of a new class of 2020 ZDP Shares and to provide for the rights attached to the 2020 ZDP Shares. As the 2019 ZDP Shares will rank in priority to the new 2020 ZDP Shares, the consent of ZDP Shareholders is not required in connection with the Issue and the adoption of the New Articles.

The protections afforded to ZDP Shareholders permit (without ZDP Shareholder consent) borrowings of up to £30 million (which limit does not apply to certain borrowings, such as borrowings arranged to redeem ZDP Shares or to refinance existing borrowings). As the proceeds of the CULS issue would be used to replace the Loan Facility and borrowings will be kept below the £30 million limit, the consent of ZDP Shareholders is not required for the issue of any CULS.

The arrangements for replacing the Loan Facility with convertible debt can only proceed if Ordinary Shareholders vote at the forthcoming Extraordinary General Meeting to waive pre-emption rights to enable the new Ordinary Shares to be issued on conversion to be allotted to holders of CULS without first being offered to all Ordinary Shareholders.

2. 2020 ZDP Shares

The 2020 ZDP Shares will be a new class of shares. The rights attaching to the 2020 ZDP Shares will, conditional on the passing of Resolution 1 to be proposed at the EGM, be set out in the New Articles and are also set out in Part 2 of this document. The 2020 ZDP Shares have a redemption value of 143.563 pence on their Maturity Date of 22 December 2020 compared to an initial right to capital of 100 pence per share at issue. The return over the period is expected to be equivalent to a gross annual return of 7.5 per cent. over their five year life.

Applications will be made to the UK Listing Authority and to the London Stock Exchange respectively for admission of the 2020 ZDP Shares to be issued pursuant to the Issue to: (i) the Official List (by way of a Standard Listing under Chapter 14 of the Listing Rules); and (ii) trading on the London Stock Exchange's main market for listed securities.

3. The Issue and the Placing Programme

Overview of the Issue

The Company is seeking to raise up to £40 million pursuant to the Placing and the Open Offer. To the extent that fewer than 40 million 2020 ZDP Shares are issued pursuant to the Issue, the Company may issue such number of shares via the Placing Programme.

The issue price for the 2020 ZDP Shares to be issued pursuant to the Issue is 100 pence per share (the "Issue Price").

The Open Offer

Up to 20 million 2020 ZDP Shares will be offered to existing Ordinary Shareholders and ZDP Shareholders by way of the Open Offer. The Open Offer is structured to allow Ordinary Shareholders and ZDP Shareholders to subscribe for Open Offer Shares at the Issue Price pro rata to their holdings of Ordinary Shares and/or 2019 ZDP Shares on the basis of 0.08498 2020 ZDP Shares for each Ordinary Share and/or 2019 ZDP Share held on the register as at the record date of 6.00 p.m. on 1 December 2015 (the "Basic Entitlement").

Ordinary Shareholders and ZDP Shareholders may also make applications in excess of their Basic Entitlements. To the extent that Basic Entitlements are not subscribed by Shareholders, such Open Offer Shares will be available to satisfy such excess applications. In addition, to the extent that applications are received in respect of an aggregate of more than 20 million Open Offer Shares, any 2020 ZDP Shares not taken up under the Placing would be made available, but if excess applications exceed the aggregate of the number of 2020 ZDP Shares being made available pursuant to the Open Offer, being 20 million, plus any 2020 ZDP Shares not taken up under the Placing, they would be scaled back accordingly. Any 2020 ZDP Shares not taken up under the Open Offer will be made available under the Placing.

Further details as to how Ordinary Shareholders and ZDP Shareholders can apply for 2020 ZDP Shares are set out in the Prospectus.

The Placing

2020 ZDP Shares will also be made available to investors under the Placing. The Company and Panmure Gordon have entered into the Placing Agreement pursuant to which Panmure Gordon has agreed, subject to certain conditions, to use its reasonable endeavours to procure subscribers for the 2020 ZDP Shares made available under the Placing. The maximum number of 2020 ZDP Shares available under the Placing is 20 million plus any 2020 ZDP Shares not taken up under the Open Offer.

Conditions to the Issue

The Issue is conditional on, inter alia: (i) the approval of Ordinary Shareholders of Resolution 1 to be proposed at the EGM; (ii) Admission having become effective at or before 8.00 a.m. on 22 December 2015 or such later time and/or date as the Company and Panmure Gordon may agree (being not later than 8.00 a.m. on 29 January 2016); and (iii) the Placing Agreement becoming unconditional in all respects (save for any conditions as to Admission) and not having been terminated in accordance with its terms prior to Admission.

The Placing Programme

Pursuant to the Placing Programme, conditional on the passing of Resolution 1 to be proposed at the EGM, the Company may issue up to such number of 2020 ZDP Shares as is equal to 40 million less the number of 2020 ZDP Shares issued pursuant to the Issue. The Placing Programme is flexible and may have a number of closing dates in order to provide the Company with the ability to issue 2020 ZDP Shares over a period of time. The Placing Programme is intended to satisfy continued market demand for the 2020 ZDP Shares and to raise further money to provide GLI with additional capital primarily to expand its loan portfolio which is mostly sourced through its family of Platforms, as well as to continue to invest in those Platforms and, if suitable opportunities arise, to make further Platform investments.

2020 ZDP Shares will, subject to the Company's decision to proceed with an allotment at any given time, be made available at the Placing Programme Price to investors, being not less than the aggregate of the Accrued Capital Entitlement per 2020 ZDP Share at the time of the relevant allotment plus an amount sufficient to cover the costs and expenses of such issue, including any placing commission.

4. Adoption of the New Articles

New articles of incorporation need to be adopted in order to reflect the creation of the new class of 2020 ZDP Shares and to provide for the rights attached to such shares. Please see Part 2 of this document containing the provisions proposed to be adopted in the New Articles.

A copy of the New Articles and a copy of the Articles will be available at the EGM and will also be available for inspection at the registered office of the Company at any time from the date of the Circular until the date of the EGM.

5. CULS

As explained above, your Company is permitted (without ZDP shareholder consent) to raise up to £30 million of debt (in addition to certain, mainly short term, borrowings) and is considering a possible issue of CULS to replace the Loan Facility. The Directors believe that an issue of CULS will have a number of advantages, in particular:

§ CULS will provide long-term structural gearing at a lower fixed cost than the Company's existing borrowings (the Loan Facility);

§ following any conversion of CULS, the Company would have an increased number of Ordinary Shares in issue, enlarging the Company's capital base and enabling the Group to hold a larger and more widely diversified loan portfolio and better funded Platforms; and

§ by granting the right to convert the CULS into Ordinary Shares at a premium to the current share price, if the holders of CULS exercised their conversion rights, such funding would become permanent capital, but diluting net assets per Ordinary Share by less than would be the case if new Ordinary Shares were issued at today's Ordinary Share price.

Ordinary Shareholders' approval is required for the waiver of pre-emption rights to permit new Ordinary Shares to be issued on conversion of the CULS. As the conversion price is not known at the date of this document and is likely to be adjusted in certain circumstances (such as on the payment of dividends or in the event of a bonus issue or rights issue) the Company is seeking authority to dis-apply the pre-emption rights in the New Articles in respect of a larger number of new Ordinary Shares than is currently expected to arise on conversion of the CULS. This would give your Board the ability and flexibility to make arrangements for the issue without incurring the delays and complexities which could arise if a further extraordinary general meeting had to be convened. Accordingly, the Company is seeking authority, pursuant to Resolution 2 to be proposed at the EGM, to dis-apply pre-emption rights in respect of up to 60 million new Ordinary Shares arising on conversion of the CULs.

6. The Resolutions

Resolution 1 - to adopt the New Articles

The adoption of the New Articles requires Ordinary Shareholder approval in accordance with the Articles. Under The Companies (Guernsey) Law, 2008 a resolution to adopt new articles of incorporation can only be passed by way of a special resolution. Accordingly, Resolution 1 to be proposed at the EGM will be proposed as a special resolution.

Resolution 2 - to dis-apply pre-emption rights

Under the New Articles, a special resolution is required to dis-apply the pre-emption rights that would otherwise arise by virtue of the New Articles on the issue of CULS which have attached thereto the right to convert into new Ordinary Shares. Resolution 2 to be proposed at the EGM will therefore also be proposed as a special resolution.

A special resolution requires not less than seventy five per cent. (75%) of those Ordinary Shareholders present (whether in person or by proxy) and voting to vote in favour of it in order for it to be passed.

7. Action to be taken

Form of Proxy required in connection with the EGM

A notice convening an Extraordinary General Meeting of the Company, which is to be held at 10.00 a.m. on 21 December 2015, is set out at the end of the Circular. Whether or not they intend to be present at the Extraordinary General Meeting, Ordinary Shareholders are requested to complete and return the accompanying Form of Proxy in accordance with the instructions printed thereon, so as to be received as soon as possible and, in any event, no later than 10.00 a.m. on 19 December 2015. The completion and return of the Form of Proxy will not preclude you from attending the meeting and voting in person should you so wish.

The consent of ZDP Shareholders is not required for the Proposals and holders of 2019 ZDP Shares will not (unless they also hold Ordinary Shares) receive a Form of Proxy or be entitled to attend or vote at the Extraordinary General Meeting.

Open Offer

Ordinary Shareholders and ZDP Shareholders (save for those with an address in a Restricted Jurisdiction) will find enclosed with the Circular a copy of the Prospectus. Those Shareholders who hold their Shares in certificated form will also find enclosed an Application Form for use in connection with the Open Offer.

The action to be taken by you in respect of the Open Offer depends on whether you hold your Ordinary Shares and/or 2019 ZDP Shares in certificated or uncertificated form. Full details of how to apply for 2020 ZDP Shares under the Open Offer are set out in Part VI of the Prospectus.

Shareholders who do not wish to apply for 2020 ZDP Shares under the Open Offer should take no action in relation to the Open Offer.

8. Costs of the Proposals

The net proceeds of the Issue are dependent on the level of take up under the Issue. On the assumption that 40 million 2020 ZDP Shares are issued pursuant to the Issue, the expenses of the Issue and Admission are expected to be approximately £1.2 million and will be met out of the gross proceeds of the Issue, reducing the net proceeds to an estimated £38.8 million.

Any 2020 ZDP Shares issued pursuant to the Placing Programme will be issued at a price which is not less than the aggregate of the Accrued Capital Entitlement of a 2020 ZDP Share at the time of the relevant allotment plus an amount sufficient to cover the costs and expenses of such issue, including any placing commission.

The costs of a successful issue of CULS will be deducted from the gross proceeds of such an issue.

9. Recommendation

The Board believes that the Proposals are in the best interests of the Company and Shareholders as a whole and unanimously recommends that you vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting to be held at 10.00 a.m. on 21 December 2015.

The Directors intend to vote in favour, or procure the vote in favour, of the Resolutions at the Extraordinary General Meeting in respect of their own beneficial holdings of Ordinary Shares which, in aggregate, amount to 6,995,257 Ordinary Shares, representing approximately 3.26 per cent of the Company's issued Ordinary Shares.

Yours faithfully

Patrick Firth

Chairman"

For further information, please contact:

GLI Finance Limited

Geoffrey Miller

+1 203 916 0003

+44 7408 830719

Panmure Gordon (Nominated Adviser and Corporate Broker)

Dominic Morley / Tom Salvesen

+44 (0)20 7886 2500

Peter Steel

+44 (0)113 357 1150

Camarco (PR Advisor)

Ed Gascoigne-Pees

+44 (0)203 757 4984

+44 (0)788 400 1949

Hazel Stevenson

+44 (0)203 757 4989

+44 (0)798 600 9720

About GLI Finance Limited

GLI Finance (www.glifinance.com) is a specialist provider of finance to small and medium sized enterprises. Its ordinary shares are quoted on AIM and its issued zero dividend preference shares are listed and traded on the main market of the London Stock Exchange (ticker GLIF (Ord) and GLIZ (2019 ZDP)). GLI Finance both invests in loans to SMEs and originates finance for SMEs through a variety of finance platforms.

The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include Global Trade Finance, UK and US SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crowd funding and UK property-backed lending.