CTNO Cantono

 

TIDMCTNO 
 
RNS Number : 5562R 
Cantono PLC 
01 May 2009 
 

Cantono PLC ("Cantono" or the "Company") 
1 May 2009 
Fundraising and Update 
In the Chairman's Statement in the interim announcement made in February, 
Shareholders were informed that the Company was looking at the best options in 
order to maximize shareholder value. The Board has subsequently concluded that 
the best means of achieving this is to seek to dispose of the Company's data 
centre business which the Company and its advisers believe has significant 
value. Advisers have been appointed to manage this process, and significant 
preliminary interest has already been received from a number of parties. Any 
such disposal would be subject to shareholders' approval in a general meeting. 
 
 
The Company is pleased to announce that it has today set out the terms of a 
further facility of up to GBP1.25m to underpin its working capital requirements 
as set out below. An agreement has been reached for up to GBP890,000 under this 
facility to be issued to institutional investors and Cantono's management. 
Following the failure on 15th March of Xploite plc to pay to the Company the 
deferred consideration due following the sale of Blue River Systems Limited, 
your Board recognised the need to find an alternative source of working capital 
and has raised the above facility primarily from the Company's institutional 
shareholders, including the same institutions that supported the GBP2m 
fundraising in December 2008. The Board is pleased by this further demonstration 
of continuing support from the Company's institutional investors. 
 
 
The facility will be drawn in tranches on specified dates in the form of secured 
loan notes, on terms similar to those of the December 2008 fundraising, other 
than that the notes carry no rights to convert into shares in the Company. In 
summary the key terms are: 
 
 
  *  redeemable in December 2011 or earlier in the event of (i) a change of control; 
  (ii) a sale of a material part of the business of the Company; or (iii) an event 
  of default 
  *  secured pari-passu to the existing A and B loan notes issued in December 2008 
  but ranking behind facilities provided by Barclays, the Company's bankers 
  *  no rights to convert into shares 
  *  interest free but with a redemption premium of 200% (plus repayment of 
  principal) if repaid within 12 months and a premium of 300% (plus repayment of 
  principal) thereafter 
  *  each further tranche drawdown requires the consent of the majority of investors 
  in this investment 
 
 
 
 
 
 
 
The first tranche, of GBP340,000, which includes all the loan notes ("Loan 
Notes") issued to Cantono management, GBP28,106 to Troon Management Services 
Limited ("Troon") and GBP56,211 to Noble AIM VCT plc managed by Noble Fund 
Managers ("Noble"), will be drawn down immediately. Subsequent drawdowns will be 
made to the extent that Cantono's Board request drawdown under the facility, and 
the majority of investors accept the request. 
 
 
Rationale for the Fundraising and use of Proceeds 
 
 
For some time the Company has been attempting to raise new finance to allow the 
Company's Data Centre division to be developed. The Company and its advisers 
have approached a number of potential debt providers and existing and potential 
institutional investors. It became clear that, given the Company's funding 
requirements, the issue of loan notes under the facility was the only 
deliverable source of funds in the timeframe. 
 
 
Related Party Transactions 
 
 
The subscription for Loan Notes by Michael Northall (GBP50,000) and Ian Williams 
(GBP25,000), both directors of the Company, will constitute a "related party 
transaction" under the AIM Rules. 
 
 
Further, the subscribers for Loan Notes comprise a number of institutions, one 
of which, Troon, is a "substantial shareholder" in the Company as defined in the 
AIM Rules. As such, the subscription by Troon for up to GBP105,396 of Loan 
Notes, also represents a "related party transaction". Noble AIM VCT plc, another 
of the subscribing institutions, is managed by Noble. Dr. Paul Jourdan, an 
employee of Noble, is a non-executive director of Cantono plc. Noble AIM VCT plc 
is subscribing for up to GBP210,793 of Loan Notes. 
 
 
Eamus Halpin, the only Independent Director, having consulted with the Company's 
nominated adviser, Brewin Dolphin Limited, considers that the terms of these 
subscriptions by related parties are fair and reasonable insofar as the 
Company's shareholders are concerned. 
 
 
Litigation update 
 
 
With regard to the dispute and potential litigation with certain subsidiaries of 
Xploite plc, the Board has considered its position, and following consultation 
with its legal advisers, remains firmly of the view that the Company has a 
strong case to pursue for breach of contract. Assisted by the proceeds available 
from this fundraising the Board is resolved to fully enforce the Company's legal 
rights in this matter. 
 
 
Further announcements will be made as appropriate. 
 
 
For further information please contact: 
 
 
Cantono PLC 
Eamus Halpin, Chief Executive                  01895 444 420 
 
 
Brewin Dolphin Investment Banking 
Neil Baldwin, Director                          0845 270 8612 
 
 
ENDS 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCSDMFUSSUSEFL 
 

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