Less Ads, More Data, More Tools Register for FREE

Pin to quick picksGame Digital Plc Regulatory News (GMD)

  • There is currently no data for GMD

Watchlists are a member only feature

Login to your account

RNS Alerts are a premium feature

Login to your account

myTerminal is a premium feature

Login to your account

Don't have an account? Click here to register.

New Financing Facility

Thu, 21st Apr 2016 07:00

RNS Number : 8513V
GAME Digital PLC
21 April 2016

GAME Digital plc

New Financing Facility

GAME Digital plc (the "Company"), the specialist video games retailer, announces that on 20 April 2016 it and certain other members of its group (being Game Retail Limited ("GRL" - as borrower), Game Digital Holdings Limited, Game Digital Solutions Limited, Game eSports and Events Limited and Multiplay (UK) Limited) (collectively, with the Company, the "Group") have entered into an asset-backed revolving loan facility of up to £100,000,000 (the "Facility Agreement") with Lajedosa Investments S.à r.l. ("Lajedosa" - as lender). Lajedosa is an entity associated with Duodi Investments S.à r.l., the Company's major shareholder, which in turn is an investment vehicle ultimately wholly-owned by Elliott International, L.P. and Elliott Associates, L.P. (the latter via a participation interest with Elliott International, L.P.). A summary of the main terms of the Facility Agreement is set out below.

Background to the Facility Agreement

Since January 2016, the Group has been exploring more flexible forms of funding so as to better manage its financing requirements. Specifically, the Group has been investigating asset-backed lending arrangements to replace the Group's existing revolving credit facilities, as these better suit the needs of the business.

The quantity of stock that the business seeks to purchase varies seasonally and can rise significantly around the dates of new hardware and software releases. Consequently, the Group has a preference for an asset-backed loan facility as it affords greater flexibility than the existing revolving credit facilities, allowing the Group to increase or decrease its stock purchasing capacity through higher or lower funding, as required. An asset-backed lending arrangement also provides a less restrictive financial covenant structure compared with the Group's existing revolving credit facilities, which is also more suited to the Group's seasonal fluctuations in trading activity.

Further to the above, discussions have taken place with Lajedosa and a number of other third party specialist asset-backed lenders. The discussions with Lajedosa have resulted in the conditional offer of an asset-backed loan facility to the Group, as set out in the Facility Agreement. The Facility Agreement would ensure that the Group could comfortably satisfy its forecast funding requirements in a flexible and cost effective manner. The Company's directors believe that the approval of the Facility Agreement should support the continuation of existing credit insurance arrangements and should help insurers provide additional cover to the Group's suppliers ahead of its peak trading season. Furthermore, the Group continues to explore complementary or alternative similar financing arrangements from other third party providers which may be appropriate for the Group to improve its options and flexibility.

In connection with the Facility Agreement, Lajedosa, the Company and the other members of the Group named above will also enter into a debenture as security for the amounts due under the Facility Agreement (the "Debenture" and, together with the Facility Agreement, the "Financing Documents"). A summary of the main terms of the Debenture is set out below.

Related Party Transaction

For the purposes of Chapter 11 of the Listing Rules, Lajedosa is an associate of Duodi Investments S.à r.l., which is a related party of the Company by virtue of holding approximately 43.44 per cent. of the Company's ordinary shares of £0.01 each. As a result, Lajedosa itself is also a related party of the Company and the entry into the Financing Documents by the Company and the other members of the Group is, therefore, treated as a related party transaction for the purposes of Chapter 11 of the Listing Rules. Duodi Investments S.à r.l. is an investment vehicle ultimately wholly-owned by Elliott International, L.P. and Elliott Associates, L.P. (the latter via a participation interest with Elliott International, L.P.).

The Facility Agreement will not become fully effective until, amongst other things, the approval of the Company's shareholders ("Shareholders") has been obtained at a general meeting. As regards the Debenture, this will be entered into only if Shareholder approval is obtained. Further details of the Financing Documents and a notice convening a general meeting to approve the entry into the Financing Documents (the "Circular") will be sent to Shareholders in due course. The Circular will also contain further details regarding the background to the Financing Documents, including an update on credit insurance cover available to the Group's suppliers.

If Shareholders approve the Financing Documents and they become fully effective, they would replace GRL's existing £30,000,000 revolving credit facility with HSBC Bank plc and Barclays Bank plc (the "Existing Facility Agreement") and would be used by GRL to finance the acquisition of products from GRL's suppliers. However, should the Group's on-going discussions with other third party providers of finance result in the offer of alternative financing to the Group before it needs to access the funding being made available under the Financing Documents, the Company may, if considered appropriate, enter into new financing arrangements with such third party providers of finance instead.

Once posted, the Circular will be made available on the Company's website at www.gamedigitalplc.com. The Circular will also be submitted to the National Storage Mechanism and will be made available for inspection at www.hemscott.com/nsm.do.

Main terms of the Financing Documents

Facility Agreement

The initial aggregate principal commitment of Lajedosa under the Facility Agreement (once it has become fully effective) will be £50,000,000, which sum may be increased, subject to the satisfaction of certain conditions, at GRL's request up to a maximum of £100,000,000. Upon all conditions to the effectiveness of the Facility Agreement being satisfied, GRL will be required to pay a commitment fee equal to 0.5 per cent. per annum on the undrawn committed amounts under the Facility Agreement.

Interest on borrowings under the Facility Agreement will accrue at a rate which is the aggregate of 5.5 per cent. per annum plus one-month LIBOR from time to time. If GRL fails to pay any amount payable by it under the Facility Agreement on its due date, interest will accrue on the unpaid sum at a rate which is 2 per cent. higher than that rate. The Facility Agreement will reach maturity on 31 October 2017, subject to GRL's ability to extend the term of the Facility Agreement (subject to the Lender's consent) for up to two additional periods of one year each (or such longer period as may be agreed by the Lender).

The Facility Agreement will be cross-guaranteed by the Company, GRL and the other members of the Group (each an "Obligor") and will be secured by the Debenture, which creates fixed and floating charges over all the assets of each Obligor (including, without limitation, GRL's freehold real estate at Basingstoke). The Facility Agreement does not include any financial covenants, but does include restrictions, amongst other things, in relation to mergers, acquisitions, investments, disposals, new business activities and entry into certain forms of financing arrangement, in each case subject to certain exceptions. The Facility Agreement also includes customary events of default, including a cross-default clause whereby non-payment of any member of the Group's (as defined in the Facility Agreement) indebtedness of £2,500,000 or more when due constitutes an event of default under the Facility Agreement (subject to applicable grace periods). For the purposes of the Facility Agreement, the "Group" includes each of the Company's subsidiaries other than Game Stores Iberia S.L.U..

Debenture

The Debenture is standard in form and creates fixed and floating security over each Obligor's assets, including property owned by them. The Debenture also contains standard provisions requiring the Obligors to notify counterparties to any insurance policies which are charged or assigned to the Lender pursuant to the Debenture, and any banks which hold accounts which are charged pursuant to the Debenture, as well as provisions relating to investments (including shares) held by the Obligors, including that, once the security created pursuant to the Debenture has become enforceable, the Lender may exercise any voting rights in respect of the relevant investments in the name of the Obligor which holds those investments.

The security created pursuant to the Debenture becomes enforceable upon the occurrence of an event of default under, and as defined in, the Facility Agreement. If the Debenture becomes enforceable, it would allow the Lender to appoint an administrator to any Obligor or a receiver to any assets which are secured by the security created pursuant to the Debenture.

Enquiries:

GAME Digital plc

+44 (0) 1256 784 000

Martyn Gibbs

Chief Executive Officer

Mark Gifford

Chief Financial Officer

James Staveley

Investor Relations & Corporate Development Director

Citigate Dewe Rogerson

Grant Ringshaw

Jos Bieneman

+44 (0) 207 282 2851

This information is provided by RNS
The company news service from the London Stock Exchange
END
STRPGUUACUPQGRU

Login to your account

Don't have an account? Click here to register.