K3 Business Technology Group Regulatory News (KBT)

AIM: KBT

30 March 2021

K3 Business Technology Group plc

("K3", "the Company" or "Group")

Shareholder Loan Conversion,

Notification of PDMR Dealings

and

Total Voting Rights

Further to the announcement earlier today of the Company's results for the year to 30 November 2020, the Company reports that it has reached agreement with two of its major shareholders, Kestrel Partners LLP (through its discretionary clients) ("Kestrel") (represented by Non-executive Director Oliver Scott) and Johan Claesson (also Non‐executive Director) via his associated company, CA Fastigheter AB (together "the Lenders") to convert the full principal amount of the £3.0m shareholder loans ("Shareholder Loans") into ordinary shares of 25p each in the Company ("Ordinary Shares") (the "Loan Conversion") at a conversion price of £1.68 per Ordinary Share (being the prevailing bid-price on 26 March 2021).

Taking in to account this Loan Conversion and the receipt of the Starcom disposal proceeds, the Group's consolidated pro forma net cash position as at 28 February 2021 was £5.8m.

The Shareholder Loans were made on an unsecured basis on 1 April 2020 to strengthen the Group's liquidity position during the initial period of the Coronavirus pandemic (at which point the closing price of K3 Ordinary Shares was 80p per Ordinary Share) and repayment was due in full on 30 June 2021 together with accrued interest.

As part of the process of extending the Group's bank facilities, the independent directors of K3 (being all directors excluding Johan Claesson and Oliver Scott) ("Independent Directors") have agreed with the Lenders to fully convert the Shareholder Loans into Ordinary Shares. Taking into account the Company's future plans, the Independent Directors believe that the Loan Conversion is an advantageous way of further strengthening the Group's balance sheet.

The main terms of the conversion of the Shareholder Loans are as follows:

- conversion is at a price of £1.68 per Ordinary Share (being the prevailing bid-price on 26 March 2021);

- upon conversion of the Shareholder Loans CA Fastigheter AB and discretionary clients of Kestrel will receive 892,857 Ordinary Shares each (1,785,714 Ordinary Shares in aggregate) (together the "Conversion Shares");

- payment of accrued interest and conversion costs amounting to an aggregate amount of £552,064 will be paid by the Company to the Lenders in cash on or around the date of conversion; and

- the warrants over 1.2m Ordinary Shares granted to the Lenders at the date of the Shareholder Loans have not been exercised and will remain in place.

The Loan Conversion will increase the Company's issued share capital by 1,785,714 new Ordinary Shares, representing 4.16% of the Company's current issued share capital. The Conversion Shares will be allotted pursuant to existing general authorities granted to the Directors at last year's AGM. Application will be made to the London Stock Exchange for the Conversion Shares to be admitted to trading on AIM which is expected to occur on 7 April 2021.

The revised shareholdings of Kestrel and Mr Claesson following the issue of the Conversion Shares will be:

Kestrel

Mr Scott is a partner of and holds a beneficial interest in Kestrel. Mr Scott is also a shareholder in one of Kestrel's clients ("Kestrel Opportunities").

Mr Claesson

Further disclosures regarding the above PDMR dealings are set out at the foot of this announcement.

Related party transactions

The agreements reached by K3 with each of Kestrel (and its underlying clients) and Mr Claesson in order to give effect to the Loan Conversion and the payment of the associated interest and conversion costs constitute related party transactions under the AIM Rules, by virtue of Kestrel and Mr Claesson each being substantial shareholders in the Company (as defined in the AIM Rules) and Mr Claesson and Mr Scott each being a Non-executive Director of the Company.

Having consulted with finnCap (as the Company's nominated adviser), the Independent Directors consider that the terms of the related party transaction are fair and reasonable insofar as the Company's Shareholders are concerned.

Total Voting Rights

Following the Loan Conversion, the issued share capital of the Company is 44,732,379 Ordinary Shares. There are no shares held in treasury and thus the total number of voting rights in the Company is 44,732,379, which may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure Guidance and Transparency Rules.

Enquiries:

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED IN ARTICLE 7 OF THE MARKET ABUSE REGULATION EU NO. 596/2014, AS RETAINED AND APPLICABLE IN THE UK PURSUANT TO S3 OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").