React Group Regulatory News (REAT)

Verdes Management PLC ("Verdes" or the "Company")

Convertible Loan Agreement and Update on Implementation of Investing Policy

15 January 2015



The Board of Verdes Management PLC (AIM: VMP) is pleased to confirm it has signed a new convertible loan agreement ("Agreement") to provide up to £250,000 of loan capital (the "Loan") to the Company. Details are set out below.

Investing Policy update

As the Company has no trading business, nor any investments which generate income, the Company is still regarded as an "investing company" under the AIM Rules for Companies ("Rules"). It has until 14 February 2015 to make an acquisition or acquisitions which constitute a reversetakeover under AIM Rule 14 or otherwise implement its investing policy ("Policy") to the satisfaction of the London Stock Exchange, or its shares will be suspended from trading. The Company would then have a further six months to implement this Policy, otherwise its shares would be de-listed from trading on AIM.

The Company has to date reviewed over 20 opportunities to fulfil its Policy. To the Board's frustration it has reached an advanced stage in progressing two successive potential investments during 2014, each of which fell down late in the process. The Company is currently about to commence due diligence on a further promising investment which would constitute a reverse takeover under the Rules and which, if terms are agreed, the Board believes will meet the criterion. The Company has not as yet signed heads of terms, so it is premature to be able to confirm details of this potential transaction.

Cash and working capital position

The costs relating to the aborted transactions referred to above, together with the on-going operating costs of the Company, means that at 31 December 2014 the Company's cash balances have reduced to approximately £121,000 (unaudited). The Board believes that the funds received by the Company from the Loan will provide working capital for the Company and defray costs involved with implementing its Policy

Terms of the Loan

The Loan has the following principal terms:

Lender: the Loan is being provided by Helium Rising Stars Fund ("Helium" or "the "Lender"), a substantial shareholder in the Company.

Principal: £250,000.

Draw down: the Loan will be drawn down by the Company immediately upon signing of the Agreement.

Premium: a premium of £25,000 will be paid or settled by the Company to or in favour of the Lender on the earlier of 30 June 2016 ("the Maturity Date") and the date of conversion or redemption of the Loan.  

Security: the Loan is unsecured.

Conversion: the whole of the Loan (but not part only) can be converted by the submission of a conversion notice ("Conversion Notice") by the Lender to the Company in the Conversion Period. In these circumstances the Company may elect (within 10 business days) to repay the Loan (and Premium) at par in cash.

Repayment: the Company may redeem the whole (but not part only) of the Loan (and the Premium) at any time at par by not less than 20 business days' prior written notice to the Lender, and otherwise the Company will redeem the full amount of the Loan and the Premium at par (to the extent not previously redeemed or converted) on the Maturity Date. If the Company elects to repay the Loan (and Premium), Lender has the right to convert the Loan (and Premium) as set out below.

The Loan (and Premium) may also fall due for redemption in certain circumstances including, inter alia, change of control of Verdes (i.e. an offer in respect of the Company having become or been declared unconditional in all respects in accordance with the City Code on Takeovers and Mergers ("City Code") or an offeror and any person or persons acting in concert (as defined in the City Code) with him acquiring shares equal to or voting rights in respect of 50 per cent or more of the issued ordinary share capital of the Company), or in the event of appointment of a Receiver.

Issue Price:the conversion price will be the price per Share at which Shares are offered for subscription by the Company pursuant to any placing which accompanies an Acquisition which fulfils the Company's Policy. In the event that the Company gives notice of redemption, the Lender shall be entitled at any time more than five business days prior to the expiry of such notice period, to deliver a Conversion Notice to the Company in respect of all (but not some of) the Loan (and Premium). In these circumstances the Issue Price of the new Shares shall be the average mid-market closing price of a Share for each of the five business days immediately prior to the date of the Conversion Notice.

In the event of service of a Conversion Notice, all of the Loan (plus Premium) must convert. However the total number of Shares to which the Lender is entitled upon such Conversion , when taken together with any other Shares held by the Lender and any concert party of the Lender exceeds 30% of the issued share capital of the Company at any time the amount of the Loan and/or Premium representing such excess shall be redeemed in cash by the Company. Therefore in the event that the Loan (and Premium) is converted to new Shares, this could result in Helium owning Shares representing up to 29.99% of the voting ordinary share capital (dependent upon the Issue Price.) At present Helium owns 100,000,000 Shares comprising 10.75% of the Company's issued share capital

Conversion Periodmeans the period commencing ten business days, and ending two business days, prior to readmission of the Company's share capital following any acquisition (which fulfils the Policy and constitutes a reverse takeover for the purposes of the AIM Rules for Companies) ("Acquisition") or (as appropriate) the period commencing ten business days prior to, and ending on, the Maturity Date.

Coupon: the interest rate on the Loan is 0%. In the event of default (ie Redemption being triggered and the Loan failing to be repaid), default interest at 2% over Barclays Bank base rate will be payable.

Since the Lender is a substantial shareholder, the transaction is classified under the AIM Rules as a related party transaction. As Gill Leates, the Company's Chairman, is not considered independent Stephen Foster, Adam Reynolds and Sarah Bertolotti ("the Independent Directors") have considered the terms of the Loan.

The Independent Directors, having consulted with SPARK Advisory Partners Limited, the Company's Nominated Adviser, consider the terms of the Loan to be fair and reasonable insofar as the Company's shareholders are concerned.

Use of Funds: The Loan will enable the introduction of further working capital to Verdes, and enable it to progress the implementation of its Policy.

Proposed Open Offer: in the event that the Company undertakes an Acquisition and raises funds in a placing of new Shares, it is the Board's current intention to undertake an Open Offer which would allow qualifying shareholders to subscribe for new shares at the same Issue Price as any Placing that (that accompanies any Acquisition) takes place.

Full details of the Agreement are available on the Company's website: www.verdes-group.co.uk

For further information, please contact:

Verdes Management PLC

Gill Leates - Chairman 07799 662642

Adam Reynolds - Independent Director 07785 908158

Stephen Foster - Independent Director 07876 830691

SPARK Advisory Partners Limited

Neil Baldwin 0113 370 8974

Mark Brady 0113 379 8971

ENDS