Trafalgar Prop Regulatory News (TRAF)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

TRAFALGAR PROPERTY GROUP PLC

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

Consolidation and variation of terms of convertible loan notes and debt

Trafalgar (AIM:TRAF), the AIM quoted residential and assisted living property developer, announces that Christopher Johnson a substantial shareholder in the Company and a director of one of its subsidiaries, Trafalgar New Homes Limited) has agreed to a consolidation and variation of the terms of his two unsecured convertible loan notes and director loan held by him. The conversion of the total amount owed to him by the Company (£905,000) will result in the issue to Christopher Johnson of a new unsecured convertible loan note (the "New CLN") for an aggregate amount of £905,000. This replaces:

· the £600,000 unsecured convertible loan note issued on 13 July 2020, which would have been redeemable on 31 July 2022, and which was convertible at 0.2p per share (now 2p following the share consolidation on 29 December 2020). It carried the right, upon a conversion of the loan note, to the grant of warrants to subscribe for ordinary shares on a one for one basis, exercisable at the conversion price of 2p for a period of two years from the date of grant;

· the £200,000 unsecured convertible loan note comprising a loan facility entered into on 22 November 2021, which is redeemable on 30 November 2022, and which is convertible at 0.7p per share; and

· £105,000 owed to him by the Company on directors loan account.

The New CLN will be convertible in full into 226,250,000 Ordinary Shares at 0.4p per ordinary share (a 29 per cent. premium to the mid-market closing price of 0.31p on 8 July 2022) and can be converted at any time by Mr Johnson, subject inter alia to his entire holding being less than 29.99 per cent of the voting rights in issue in the Company. 

The New CLN carries the right, upon a conversion, to the grant of warrants to subscribe for ordinary shares on a one for one basis, exercisable at the conversion price for a period of two years from the date of grant.

The Company does not currently have sufficient authority to allot securities to satisfy a conversion of the New CLN, and has agreed to convene a general meeting to seek such authorities before 31 October 2022. Mr Johnson has agreed not to exercise conversion rights under the New CLN until the Company has obtained sufficient authorities.

The New CLN represents a material extension of the redemption dates under the previous convertible loan notes, improving the Company's cash flow position, which the Company has agreed with Mr Johnson in consideration for the other variations in the terms of the New CLN, namely the reduction in conversion price.

Following the issue of the New CLN, the Company will have no indebtedness to Mr Johnson other than under the New CLN. Trafalgar New Homes Limited ("TNH"), the principal operating subsidiary of the Company, remains indebted to Mr Johnson under its loan agreement with him ("TNH Loan") in the current approximate amount of £2,204,650. TNH makes repayments or drawings under the TNH Loan periodically, depending upon its working capital requirements.

Related Party Transaction

As Christopher Johnson is a substantial shareholder in the Company and a director of one of its subsidiaries (Trafalgar New Homes Limited), the issue of the New CLN therefore constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The Directors of Trafalgar, all of whom are independent in respect of the related party transaction, consider, having consulted with SPARK, the Company's Nominated Adviser, that the issuance and terms of the New CLN are fair and reasonable insofar as the Company's Shareholders are concerned.

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