PCF.L Regulatory News (PCF)

Private & Commercial Finance Group plc

Placing, Subscription and Open Offer of up to £10 million Convertible Loan Notes

Posting of Circular to Shareholders and the publication of Prospectus

Further to the announcement on 26 June 2012, Private & Commercial Finance Group plc ("PCFG", "the Group" or "the Company") is pleased to announce that it has conditionally raised £4,610,467 through a placing and subscription of new convertible loan notes (the "Convertible Loan Notes") to, among others, Bermuda Commercial Bank plc ("BCB"), the wholly owned subsidiary of Bermuda National Limited. PCFG is also making an open offer to all shareholders and holders of its existing convertible loan notes ("Existing Loan Noteholders" and "Existing Loan Notes") to raise £4,149,533, which amount is being underwritten by BCB. The placing is for a maximum of £2,000,000 and, pursuant to a placing agreement between the Company and Westhouse Securities Limited ("Westhouse"), Westhouse has to date received commitments for £760,000.

Defined terms used in the Circular shall apply in this announcement unless otherwise defined herein.

Scott Maybury, Chief Executive of PCFG, said;

"This is a very positive development for the Group and positions us to take advantage of future opportunities in our sector. It affirms Bermuda National's support for our business and confidence in our plans. This, together with the committed headroom we now have on our debt facilities, means the Group can embark on the growth strategy and initiatives outlined in our most recent Annual Report.

"There are significant benefits to the transaction including the commitment of all revolving debt facilities for more than three years and the provision of a facility to repay the Existing Loan Notes which mature in September 2013. It also strengthens the balance sheet making the Group more attractive to new funders. With this platform in place we look to the future with the confidence to grow the portfolio and improve the Group's return on assets towards our target of 2%."

The fundraising is conditional on admission of the Convertible Loan Notes to the standard listing segment of the Official List and to trading on the London Stock Exchange's Main Market. Applications have been made to the UK Listing Authority and to the London Stock Exchange and it is expected that admission of up to £7,000,000 of the Convertible Loan Notes ("First Admission") will occur and that dealings in the Convertible Loan Notes will commence at 8.00 a.m. on 5 November 2012 (the "Closing Date"). The remaining £3 million of Convertible Loan Notes are expected to be admitted within 12 months ("Final Admission"). The TIDM ticker symbol on the London Stock Exchange will be PCFC.

A prospectus in respect of the placing and open offer (the "Prospectus") has been published and will be available on the Company's website www.pcfg.co.uk and an application form has been sent to Shareholders and Existing Loan Noteholders. The Prospectus will not be posted to Shareholders.

BCB's subscription and underwriting of the Convertible Loan Notes under the open offer requires shareholder approval of a resolution to waive the obligation of BCB with its concert parties to make a general offer for the entire issued share capital of the Company in accordance with the Takeover Code (the "Whitewash Waiver"). A Circular containing details of the concert party and the Whitewash Waiver and notice of a general meeting (the "Circular") has today been posted to shareholders and the general meeting has been convened for 10.30 a.m. on 2 November 2012 at the citizenM hotel, 20 Lavington Street, London SE1 0NZ. The Circular is also available on the Company's website www.pcfg.co.uk.

Use of Proceeds

The proceeds of the Issue will be used as follows:-

·; to repay senior debt and enable PCF Group Limited, one of the Company's subsidiaries, to comply with a new loan to value ("LTV") covenant contained in its facility from Barclays Bank plc which will, subject inter alia to First Admission, be effective for a term of three years to 1 October 2015;

·; to repay the Existing Loan Notes (following the exercise of the Put Option), which mature on 30 September 2013; and

·; to fund the future growth of the Company, including, where identified, its ability to make further corporate and/or portfolio acquisitions.

The Convertible Loan Notes

The key terms of the Convertible Loan Notes are as follows:

·; issue price of 100p per £1 nominal value of Convertible Loan Notes;

·; interest rate of 6 per cent. per annum payable by equal half-yearly instalments;

·; rank pari passu with Existing Loan Notes and in priority to the ordinary shares on a winding-up of the Company;

·; amounts in excess of £1 million may be converted into new ordinary shares in the Company at any time, otherwise conversion is twice annually (in March and September), at a rate of one ordinary share per 8.5p nominal of Convertible Loan Notes (representing a premium of 3.87p to the price of an ordinary share on 11 October 2012, being the last practicable date prior to the publication of the Circular); and

·; all outstanding Convertible Loan Notes shall be redeemed at nominal value on 30 September 2016. 

The Subscription and Underwriting

Under the terms of the subscription and underwriting, BCB has agreed to subscribe for up to £8 million nominal of Convertible Loan Notes at the Issue Price on the following basis:

·; £850,467 of Convertible Loan Notes on the Closing Date;

·; up to £3 million of Convertible Loan Notes subject to a put option arrangement (the "Put Option"); and

·; up to £4,149,533 of Convertible Loan Notes but only to the extent that qualifying shareholders and qualifying loan noteholders do not subscribe for their maximum entitlements under the open offer.

Under the terms of a subscription and underwriting agreement, the Company and BCB have agreed the terms of the Put Option, pursuant to which the Company has the option to require BCB to subscribe for up to £3 million of Convertible Loan Notes. BCB will only be required to subscribe for such Convertible Loan Notes if the option is exercised by the Company before the business day falling 12 months after the date of the Prospectus. The admission to trading on the Main Market of any Convertible Loan Notes issued following the exercise of the Put Option by the Company will be subject to compliance with the Prospectus Rules and, in particular, the requirement (if any) for the Company to publish a supplementary prospectus.

The Placing

Westhouse has conditionally placed £760,000 of Convertible Loan Notes with new investors under the terms of a placing agreement between the Company and Westhouse.

The Open Offer

Under the open offer, £4,149,533 of Convertible Loan Notes is being offered in aggregate to qualifying shareholders and qualifying loan noteholders, each qualifying shareholder and qualifying loan noteholder having an entitlement to subscribe for Convertible Loan Notes pro rata as nearly as practicable to their current holdings of ordinary shares and/or Existing Loan Notes (qualifying loan noteholders being entitled to subscribe for an amount of Convertible Loan Notes pro rata as nearly as practicable to the number of ordinary shares which such holder would have held if all the Existing Loan Notes had been converted into ordinary shares immediately prior to the record date). In addition to such pro rata entitlement, qualifying shareholders and qualifying loan noteholders may apply for an additional amount of Convertible Loan Notes under an excess application facility so that in aggregate they may apply to subscribe for up to a maximum amount equal to 200 per cent. of their individual open offer entitlements. Such applications will only be satisfied to the extent that other qualifying shareholders and qualifying loan noteholders do not take up their open offer entitlements.

Further details of the open offer are set out in the Prospectus and, in particular, the terms and conditions of the open offer are set out in Part IV of the Prospectus.

Conditions

The Proposals are conditional, inter alia, upon:-

a) the passing of a resolution to approve the Whitewash Waiver at the General Meeting;

b) the placing agreement having become unconditional in all respects (save for First Admission) and not having been terminated in accordance with its terms;

c) the subscription and underwriting agreement having become unconditional in all respects (save in relation to First Admission and, in the case of the Put Option, Final Admission) and not having been terminated in accordance with its terms; and

d) First Admission becoming effective by no later than 8.00 a.m. on 5 November 2012 (or such later date as the Company, BCB and Westhouse may agree, not being later than Friday 23 November 2012).

The issue of the Convertible Loan Notes subject to the exercise of the Put Option is conditional upon, inter alia, Final Admission becoming effective by no later than 8.00 a.m. on the date specified in the notice of exercise to be issued by the Company to BCB.

The ordinary shares, together with the new ordinary shares arising on the conversion of Convertible Loan Notes, will continue to be admitted to trading on the AIM Market.

Related party transaction

BCB is a related party under the AIM Rules by virtue of its parent company, Bermuda National Limited, being a"substantial shareholder"in the Company (as defined in the AIM Rules). Accordingly, the agreement to subscribe for Convertible Loan Notes by BCB under the subscription and underwriting agreement is a related party transaction as defined in the AIM Rules. The independent directors (being each of the directors with the exception of David Morgan, who is the representative of Bermuda National Limited on the Company's board), having consulted with the Company's nominated adviser, Westhouse Securities Limited, consider that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.

Notes