TPG.L Regulatory News (TPG)

This announcement contains inside information

TP Group plc

("TPG", "TP Group" or "the Company")

Business Update and Standby Credit Facility from Science Group

The future strategy for TP Group was set out in the announcement on 1 November 2021. For the financial year to 31 December 2021, the Group's underlying trading continues to be satisfactory and the underlying forecast from the operating businesses remains broadly in line with management expectations. This performance during a period of uncertainty and change is a credit to the Group's operating managers.

As outlined in the update on 1 November 2021, TP Group has incurred exceptional costs totaling £2.1 million. Additional exceptional costs are anticipated to be incurred in the current financial year. These exceptional items are anticipated to include further provisions against potential liabilities related to certain historic contracts in TPG Maritime. In addition, an impairment of goodwill and intangibles is anticipated.

The Group's core UK business operations are now being refocused and 2022 planning is underway. The review of the non-core operations is progressing and an advisor has been appointed to assist with this on, in contrast to the model adopted earlier in the year, a fee structure based primarily on a successful result for the Company.

Standby Credit Facility from Science Group

The filing of the TP Group subsidiary statutory accounts has been delayed due to discussions with the Group's auditors in relation to the going concern commentary contained within the TP Group Annual Report being replicated in the subsidiary account filings.

In parallel, as previously reported, certain payments, including deferred consideration related to the Osprey acquisition, advisor fees and the termination payment to the former CEO, were deferred (or paid in equity warrants) in Q2/Q3 to assist cash flow, some of which extend into 2022. While these cash deferrals have enhanced cash headroom, discussions with the Group's bank in regard to (i) a relaxation of covenant tests; (ii) an increase in the facility and (iii) an extension of the facility beyond March 2023 have been undertaken. Unfortunately, while the bank has remained constructive, without additional external funding, the Company's bank was unwilling to provide additional support or flexibility.

Since its first approach, Science Group has been consistent that its investment in TP Group was made as a long-term, financially strong, strategic partner. Accordingly, following the recent Board changes, Science Group offered TP Group a standby loan facility to provide additional cash headroom to allow the TP Group Board to execute the new strategy and to provide reassurance in relation to auditor's reports. The independent directors of TP Group have welcomed this supportive arrangement and an agreement has now been negotiated between the parties on arms-length commercial terms appropriate to such a facility.

While it is hoped that this facility will not be required to be used, this is a prudent and appropriate measure to provide additional headroom. In summary, the Revolving Credit Facility provided by Science Group is for up to £5 million for a period to 30 September 2023. The terms of the facility, which reflect the unsecured standby revolving nature of the arrangement, include a set-up fee of 3%, interest rate on drawn amounts of 1% per month and a rate of 0.4% per month of any undrawn amount, both subject to the Sterling Overnight Index Average remaining below 1%. The facility can be cancelled or refinanced by TP Group at any time and without penalty or early termination charges.

As a result of Science Group providing the additional finance facility, the Company's bank has now agreed to amend and ease covenants and also to extend the term of the existing £7m Revolving Credit Facility to 30 September 2023.

The Science Group facility is a related party transaction. As such, the TP Group independent directors, having consulted with the Company's nominated adviser, consider that the terms of the facility are fair and reasonable insofar as TP Group shareholders are concerned. As directors of both companies, Martyn Ratcliffe and Peter Bertram, have not participated in the decisions of the Boards of either TP Group or Science Group in relation to the facility.

In the view of the TP Group independent directors, entering into the £5m Revolving Credit Facility provided by Science Group has the following important benefits.

Remuneration Committee Disclosure Omission

In recent weeks, it has come to light that in October 2019, the Remuneration Committee of the TP Group Board introduced change of control provisions in the contracts of the Executive Directors that were engaged at that time. The effect of these provisions was to increase the notice period from 1 year to 2 years in such event. This change was omitted from the Remuneration Committee report within the Company's Annual Reports for 2019 and 2020 but will be properly disclosed in future Remuneration Committee reports to shareholders.

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