Re Investment

20 Jun 2008 18:11



For immediate release

20 June 2008 

Brainspark plc 

("Brainspark" or the "Company")

Background

On 8 November 2006, the Company announced that it had sold an investment in return for US$1 million (£512,100) of commercial debt in Geosim Limited (in which the Company, holds fully diluted 42.11. per cent. of the issued equity). This debt is repayable by no later than Geosim Board approval of 31 December 2009 results

As part of the original security arrangements for the loan (which included a personal guarantee for Prof. Gardin, the Chairman of the Company), Prof. Gardin provided the Company with the benefit of a second charge on a property controlled by him (the "Property").

The loan secured by a first charge on the Property has now been substantially repaid and Prof. Gardin has informed the Company that he wishes to create a replacement first charge in an amount of Euro 600,000 (£475,000). The Company has, as set out below, agreed to this in return for an extension of the due date of loan notes due to Prof. Gardin and additional security arrangements. The Property was valued by Geom. Fabio Moretto a registered real estate assessment expert on 15 January, 2008 at Euro 1.25 million £985,000 on the basis of a formal assessment report signed by the expert.

Transaction

The Company has today entered into a deed of priorities (the "Deed") with bank BCC del Polesine and S.I.C.I. sas ("SICI"), a company controlled by Professor Francesco Gardin, a director of the Company, in respect of charges over the Property. The Property is a 18th century palazzetto located in via Miani 20, Rovigo Italy and has been valued by Geom. Fabio Moretto a registered real estate assement expert  at Euros 1,250,000. It is owned by S.I.C.I. sas, a family estates company controlled by Prof. Gardin.

A current first charge over Property is held by bank BNL, who are presently owed approximately £24,000.

The Company holds a second charge over Property (the "Second Charge"). The Second Charge secures a guarantee to the Company from Professor Gardin of a debt owed to the Company by Geosim, in which the Company holds 42.11 per cent. of the issued equity. Geosim presently owes the Company $975,000 of the original US$1,000,000 debt.

Professor Gardin has undertaken to ensure that (a) bank BNL is repaid in full and (b) not more than Euros 600,000 is borrowed from bank BCC del Polesine.

Under the Deed,  the Second Bank's charge over the Property will rank ahead of the Company's charge.

In return, Professor Gardin has agreed (i) to extend the date for repayment of £218,000 interest free convertible loan notes due 31 December 2009 (the "Loan Notes") by  18 months  to 30 June 2011, (ii) to allow the principal amount of Loan Notes to be reduced if his obligations under the Guarantee are unfulfilled and (iii) make an interest free loan to the Company repayable on 30th June 2011 equal to principal amount of any Loan Notes converted by Professor Gardin before that date. The personal guarantee from Prof. Gardin for the full amount owing from Geosim remains in place. The reason the Directors of Brainspark are agreeing to re-mortgage the Property is that they now hold the additional £218,000 interest free Loan Notes represting 42.7% of the potential maximum debit.

AIM Rule 13

This transaction is a Related Party Transaction under the AIM Rules on account of Prof. Gardin being a Director and a 20.53 per cent. shareholder in the Company. Accordingly, the Directors of the Company with the exception of Prof. Gardin consider, having consulted with the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

For further information please contact:

Brainspark plc 01 628 4777 85 Dennis Bailey, Independent Director

Beaumont Cornish Limited 0207 628 3396 Roland Cornish