STP.L Regulatory News (STP)

25 Feb 2008 07:00

Spiritel PLC25 February 2008 For release 07.00, 25 February 2008 SPIRITEL PLC ("Spiritel" or "the Company") PROPOSED BALANCE SHEET RESTRUCTURING •Penta Capital to convert up to a total of £11m of Loan Facilities and Preference Shares into new Ordinary Shares at substantial premium to current share price •Penta Capital also to waive £800,000 annual interest charges Spiritel plc, (AIM:STP), the business communications service provider, ispleased to announce that it has agreed terms with Penta Capital Partners("Penta"), its funding partner, granting conversion rights over Penta's holdingof 4,100,000 redeemable preference shares of £1 each in the Company (the"Preference Shares") and up to £7 million of the loan facilities that have beenmade by Penta to the Company (the "Loan Facilities") into new ordinary shares of1p each (the "Ordinary Shares"), subject to shareholder approval at anExtraordinary General Meeting ("EGM") and the receipt of a waiver from the Panelon Takeovers and Mergers of the Rule 9 obligation on Penta to make a generaloffer for the Company. As part of the agreement, Penta will waive interestcharges on the Loan Facilities saving the company approximately £800,000 in afull year. Under the proposed terms, Penta shall, immediately after the EGM, convert suchof the Company's indebtedness in respect of the Loan Facilities and PreferenceShares into Ordinary Shares at a price of 1.1p per Ordinary Share so thatfollowing the said conversion, Penta shall have 49.99% of the Company's issuedshare capital. The conversion price of 1.1p per Ordinary Share represents apremium to the share price of 69% based on the closing price of 0.65 pence on 22February 2008, Following the conversion immediately after the EGM, Penta shall thereafter havethe right to convert up to a further £8.4 million of Spiritel's remainingindebtedness in respect of the Loan Facilities and Preference Shares intoOrdinary Shares at a price per Ordinary Share which is the higher of (i) 1.5pper Ordinary Share or (ii) the most recent placing price for Ordinary Shares.The minimum conversion price of 1.5p per Ordinary Share represents a premium tothe share price of 131% based on the closing price of 0.65 pence on 22 February2008. However, all conversions thereafter will also be limited such that Penta'smaximum equity holding does not exceed 49.99% of Spiritel's issued ordinaryshare capital. Based on the current issued share capital, immediately after the EGM Penta willconvert £2.61 million of Loan Facilities and Preference Shares at 1.1p, takingits total shareholding in Spiritel to 276,819,845 Ordinary Shares, whichrepresents approximately 49.99% of the Company's issued share capital postconversion and leaves £8.41 million of Loan Facilities and Preference Sharesoutstanding. Following this conversion, the remaining Loan Facilities andPreference Shares will be convertible at the higher of 1.5p or the price of themost recent equity placing. Penta has waived the interest on the Loan Facilities with effect from 1 November2007 and this will save the Company approximately £0.8 million in interestcharges annually and £67,000 per month in the current half of this financialyear, which began on 1 November 2007. If the debt to Penta has not been redeemedor converted by 1 May 2010, interest will be charged at 8% per annum from thatdate, but only if the share price is below 1.5 pence per share. Commenting on the announcement Alastair Mills, CEO of Spiritel said: "We aredelighted to have reached this significant agreement with Penta. It represents aclear endorsement from Penta of their confidence in the restructured Company andour growth strategy. In our recent Interim Results announcement we demonstratedhow far the Company had progressed since the adoption of our new strategy togrow the business and restore value to shareholders. A combination ofacquisitions, new customer wins and product developments are deliveringunderlying profitability and enhanced visibility of future earnings. Penta'sconversion will significantly strengthen our balance sheet, reduce interestcharges and increase scope for further strong, profitable growth." Steven Scott, a director of Penta and Spiritel added: "Spiritel has undergone afundamental turnaround in the past 18 months and we have been supporting theCompany throughout this successful period of transition. We are already seeingthe benefits of the new strategy and our debt conversion is a transformationalstep in Spiritel's development. We continue to follow Spiritel's progress withinterest and offer our full support to the management team as they positionSpiritel as a leading provider of business communications services." A circular detailing the particulars of Penta's proposed conversion andconvening an Extraordinary General Meeting to seek shareholder approval for theproposals and the waiver granted by the Panel on Takeovers and Mergers will besent to shareholders in due course. For further information please visit www.spiritelplc.com or contact: Spiritel plc Tavistock Communications Daniel Stewart & Co. Alastair Mills Simon Hudson Simon LeathersChief Executive Clemmie Carr Stewart DickTel : 020 7160 0100 Tel: 020 7920 3150 Tel. 020 7776 6550 Notes to Editors Spiritel is a business communications group which seeks to take advantage of theopportunities created by rapidly changing telecoms markets in the UK as themigration to Internet Protocol (IP) based services accelerates. The Group is aconsolidator of the highly fragmented UK telecoms reseller market and aims tobuild a substantial customer base and scale through selective acquisitions. Weare organised into two divisions, Spiritel Technologies - focused on ourinfrastructure and IP products and services - and Spiritel Business, whichprovides our customer services. Today, the Group offers a broad range of telecommunications services andproducts to a customer base of small and medium sized enterprises and anincreasing number of larger national organisations. We are a leader in theprovision of new, but proven, Voice over IP (VoIP) solutions that are firmlybased on the traditional service values which run throughout the Group. This information is provided by RNS The company news service from the London Stock Exchange