Trafalgar Prop Regulatory News (TRAF)

21 December 2018

Trafalgar Property Group plc

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

Proposed fundraising to raise up to £1 million via a bond issue

The Board of Trafalgar Property Group Plc (AIM:TRAF), the AIM quoted residential and assisted living property developer, announces its intention to raise up to £1 million (but not less than £0.5 million), before expenses, ( "Proposed Fundraising") by way of the issue of new 8.5% Convertible Secured Bonds due 2025 ("Bonds"), of £1.00 per unit nominal value, to be issued at £1 per Bond ("Subscription Price"). The Company intends to create and issue up to £5 million of Bonds which will be available for subscription. The Proposed Fundraising constitutes the initial tranche of a proposed overall fundraising of up to £5 million.

The proposed Bond issue

As highlighted in the Notice of General Meeting Circular issued on 27 February 2018, the Company has been exploring the issue of a bond which will be traded on NEX Exchange Growth Market ("NEX Exchange"). The Board has been reviewing the Company's options to address the ongoing working capital requirements of the Group and for the implementation of its strategy for Trafalgar Retirement + Limited and as such, the Directors have explored a number of options and believe that the Proposed Fundraising is the best option available to the Group.

Terms of the Bonds

The principle terms of the Bonds include:

· Income: 8.5% per annum, initially payable for the period to 30 September 2019 and thereafter quarterly in arrears on 31 March, 30 June, 30 September and 31 December in each year.

· Security: the Bonds will be secured by a floating charge given by the Company over its assets. The benefit of the charge will be held by Woodside Corporate Services Limited as trustee. The Company's subsidiaries will be able to repay existing secured and unsecured loans and take new secured and unsecured loans; and the Company will be able to grant security on such terms as it may determine, whether ranking in priority to, pari passu with or behind the security for the Bonds.

· Redemption: the Bonds will mature on 31 December 2025. Bondholders are able to request early redemption on 31 December 2021 and on 31 December 2023; the Company reserves the right to refuse any early redemption request.

· Conversion: bondholders can elect, instead of redemption on the final redemption date in 2025, to convert all or part of their bonds into ordinary shares of 0.1p in the Company ("Ordinary Shares") at a 5% discount to the then closing mid-market share price on the business day prior to the final redemption date.

· Transferability: the Bonds will be freely transferable and eligible to be held in CREST.

The minimum investment for the Bonds is £5,000 and in £5,000 increments thereafter.

Availability

Under the Proposed Fundraising, the Bonds will only be made available to:

(i) persons falling within the definition of "qualified investors" for the purposes of section 86(7) of the Financial Services and Markets Act 2000 (as amended), and (ii) a "professional client" or an "eligible counterparty" ("Eligible Counterparty") within the meaning given in COBS 3.5.1 and COBS 3.6.1, respectively, of the FCA Conduct of Business Sourcebook as at 1st November 2007; and (iii) who have professional experience in matters relating to investments falling within Article 19(5) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the "Order") or are high net worth companies, unincorporated associations etc. falling within Article 49(2) of the Order; or

(ii) elsewhere, persons to whom the Bonds information document may be lawfully distributed, (together, "Relevant Persons").

Proposed fundraising

The Company is proposing to raise in total up to £5 million through the issue of the Bonds, with an initial Proposed Fundraising of up to £1 million. The Proposed Fundraising is conditional upon a minimum subscription of £500,000 being reached. The Proposed Fundraising will be marketed to potential investors that are Relevant Persons through the Company's agent, Holmes Property Ventures Limited, and a further announcement of the results of that fundraising will be made in due course, although closing of the Proposed Fundraising is not expected to take place before 31 March 2019. The Proposed Fundraising is not underwritten.

Admissions to trading onto NEX Exchange

Upon the minimum subscription for the Bonds being achieved, applications will be made to NEX Exchange for the admissions to trading on the NEX Exchange Growth Market of the Bonds and also of the Company's ordinary shares of 0.1 pence each (the "Ordinary Shares").

Subject to the conditions to the Proposed Fundraising being satisfied, further announcements as to the admissions of the Ordinary Shares and of the Bonds to trading on the NEX Exchange Growth Market will be made in due course.

The admission of the Ordinary Shares to trading on the AIM market will be maintained.

Use of Proceeds

It is anticipated that net proceeds received from the initial Proposed Fundraising will be used by the Group (i) to fund suitable residential property development opportunities through its established sourcing network of contacts; (ii) to fund planning permission costs for assisted living sites it currently has under option; (iii) to expand the land department team to facilitate the identification and acquisition of options over a larger number of sites; and (iv) for working capital purposes. The extent of achieving these objectives will be affected by the level of initial funding raised through the Proposed Fundraising.

Grant of warrants

As part of the consideration payable to Alexander David Securities Limited ("Alexander David") for their services as financial adviser to the Bond issue and NEX Corporate Adviser, the Company has agreed to grant to Alexander David warrants to subscribe for up to 4,251,904 new Ordinary Shares (representing 1% of the current issued ordinary share capital), exercisable at the closing mid-market price for Ordinary Shares on AIM at the date of admission of the Bonds to the NEX Exchange, for a period of three years from such admission.

Arrangements with Holmes Property Ventures Limited ("HPV")

As disclosed in the Notice of General Meeting Circular issued on 27 February 2018, the Company appointed HPV to advise on funding structures and to use its reasonable endeavours to procure funding for the Group. In consideration for those services, and conditional upon the raising of both a pre-funding amount of £200,000 - £300,000 and an initial funding amount of £5 million in full (or agreed amount at withdrawal of the offer), the Company has agreed to issue to HPV 100 million new Ordinary Shares (representing 19.04% of the then enlarged ordinary share capital) at the closing mid-market price for Ordinary Shares on AIM at the date of issue.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

FOR FURTHER INFORMATION PLEASE CONTACT:

Trafalgar Property Group plc

Christopher Johnson

Telephone: +44 (0) 1732 700 000

NEX Exchange Corporate Adviser and Financial Adviser for the Proposed Fundraising and Bond issue

Alexander David Securities Limited

David Scott -Corporate Finance

James Dewhurst - Corporate Broking

Telephone: +44 (0) 20 7448 9820

AIM Nominated Adviser and Broker:

Allenby Capital Limited

Jeremy Porter / James Reeve / Liz Kirchner

Telephone: +44 (0) 20 3328 5656

Yellow Jersey Limited

Charles Goodwin

Telephone: +44 (0) 7747 788 221