Kellan () : Further re. Redemption of Loan Notes & Refinancing

RNS Number : 3743T

Kellan Group (The) PLC

05 January 2017

AIM: KLN

5January 2017

The Kellan Group PLC

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

Further re. Redemption of Convertible Loan Notes and Refinancing

Further to the announcement dated 26 October 2016, the Company is pleased to announce that it has agreed terms to refinance the remainder of its loan obligations that were due on 14 February 2017. The completion of the debt restructuring plan will improve the Company's balance sheet whilst reducing ongoing financing costs. The Company will redeem £150,000 nominal of the 12% secured convertible loan notes 2010 ("2010 Loan Notes") and £150,000 nominal of the 12% unsecured convertible loan notes 2011 ("2011 Loan Notes") at par ("the Redemption") on or before 15 March 2017 ("the Due Date"). As part of the repayment terms, the holder has agreed, conditional upon the Redemption being completed on or before the Due Date, to waive the interest due in relation to the period from 1 February 2016 and extend the redemption date to the Due Date.

The £300,000 cost of the Redemption will be funded as to £150,000 by drawdown on the existing confidential invoice discounting facility provided to the Company by Barclays. The remaining £150,000 will be funded by BMN Commercial Limited ("BMN Commercial") This will be effected by increasing the existing £1,260,000 secured term loan (carrying an interest rate of 5 per cent. per annum and repayable on 20 September 2022) by an additional £150,000 ("the Additional Loan") to £1,410,000.

Additionally, the Company has increased the £366,100 Revolving Facility from BMN Commercial by an additional £150,000 to £516,100 ("the Additional Revolving Facility"). The Additional Revolving Facility is effectively a replacement for the Barclays drawdown to ensure the overall Company headroom is unaffected. The Barclays drawdown is at a substantially lower rate of 1.6% over base (1.85%), than the Revolving Facility and ensures the Company uses its cheapest means of funding first.

Under the AIM Rules, BMN Commercial is deemed to be a related party. Accordingly, the independent directors of the Company consider, having consulted with the Company's nominated adviser, Allenby Capital Limited, that the terms of the Additional Loan with BMN Commercial and the Additional Revolving Facility provided by BMN Commercial are fair and reasonable so far as the shareholders of Kellan are concerned.

The terms used in this announcement are the same as those used in the announcement dated 26 October 2016.

Richard Ward, Executive Chairman, commented, "We are delighted to have secured agreement on the refinancing and redemption of the remainder of the 2010 Loan Notes and 2011 Loan Notes. As a result, on completion of the refinancing in March 2017, the Company will be in a stronger financial position, improving its balance sheet and reducing its ongoing financing costs. This will enable the Company to pursue its organic and acquisitive growth strategy without any further distractions."

ENQUIRIES:

The Kellan Group PLC	Tel: [phone]
Rakesh Kirpalani, Group Finance Director
Allenby Capital Limited	Tel: [phone]
David Worlidge / James Thomas