Healthcare Enterprise Group PLC (“HCEG”, “the Company” or “the Group”, AIM: HCEG), the international healthcare products group, announces that it has made arrangements to raise £0.5 million (before expenses) by way of an issue of secured loan notes (the “Issue”) to provide additional working capital for the Group.

 

 

Ludgate Investments Limited (“Ludgate”), which has acted as placing agent for the Company, has received irrevocable commitments from investors in respect of the £500,000 Fixed Rate Secured Loan Notes (the “Loan Notes”). The Loan Notes, which are to be secured by the grant of a floating charge over the assets of HCEG, pay interest at the rate of 8 per cent. per annum payable semi-annually on 30 June and 31 December in each year, with the first payment covering the period to 30 June 2008. The Loan Notes can be repaid at any time if the Company and the holders of the Loan Notes (“Noteholders”) so agree but are in any event redeemable at par together with accrued interest by the Company on 31st December 2008. The Issue is conditional upon the execution of the agreed security documentation.

 

In addition, subject to the shareholders of the Company passing the resolutions to be proposed at a general meeting of the Company by the requisite majority which are required to effect, inter alia, a capital reorganisation of the Company (the “Resolutions”), Noteholders will receive warrants to subscribe for 100 ordinary shares in the Company (“Shares”) at 1 penny per Share on the basis of 100 warrants for every £1 of Loan Notes (“Warrants”). Subject to the passing of the proposed Resolutions, Warrants over 50,000,000 shares will be issued.

 

The Warrants, if granted, will be capable of being exercised at any time up to 31 December 2008.

 

Investors
 

Investors in the Issue include Nigel Wray, who was a director of the Company in the last 12 months. Mr Wray has subscribed for £150,000 of Loan Notes in the Issue and will receive 15,000,000 Warrants assuming the grant of the Warrants is approved by the shareholders of the Company. Assuming full conversion of the Convertible 8% Unsecured Loan Stock announced by the Company as part of the refinancing package on 26th October 2007 (the “Loan Stock”) and assuming the exercise of all of the Warrants, his total equity holding in the Company will be 80,199,836 ordinary shares representing 16.48% of the enlarged share capital (assuming no further issues by that time).   

 

Further, John Gunn and associated parties have subscribed for £60,000 of Loan Notes in the Issue and will receive 6,000,000 Warrants assuming the grant of the Warrants is approved by the shareholders of the Company.  The Directors intend to appoint Mr Gunn to the Board at the next general meeting of the Company. Assuming full conversion of the Loan Stock and the exercise of all of the Warrants, John Gunn’s and his associated parties’ total equity holding in the Company will be 50,000,000 ordinary shares representing 10.27% of the enlarged share capital (assuming no further issues by that time).  An announcement in accordance with the AIM Rules will be made once this appointment is approved and implemented.

 

Ludgate, a company of which John Gunn is a director, has subscribed for £150,000 of Loan Notes in the Issue and will receive 15 million Warrants. Assuming full conversion of the Loan Stock and the exercise of all of the Warrants, Ludgate’s total equity holding in the Company will be 15,000,000 ordinary shares representing 3.08% of the enlarged share capital (assuming no further issues by that time).

 

The fees and expenses of the Issue are expected to be approximately £40,000 (excluding any value added tax) and will be borne out of the proceeds of the refinancing.

 

The independent Directors, Mark Tompkins and Lyndon Gaborit, consider having consulted with Numis, that the terms of the Issue and the grant of Warrants (if so approved by the shareholders of the Company) are fair and reasonable insofar as the shareholders of the Company are concerned.

 
 

 

 

Healthcare Enterprise Group PLC                                          
Mark Tompkins, Chairman
Lyndon Gaborit, Executive Deputy Chairman
+44 (0)1925 898 200

 

Numis Securities                                                                     
David Poutney
+44 (0) 20 7260 1000   
 
College Hill
Adrian Duffield
Jon Davies
+44(0)2074572020