DQ Entertainment PLC Further re senior secured convertible bonds (3719L)
11 January 2016 - 6:00PM
UK Regulatory
TIDMDQE
RNS Number : 3719L
DQ Entertainment PLC
11 January 2016
11 January 2016
DQ Entertainment plc ("DQE" or the "Company")
Further re senior secured convertible bonds and requisition of
general meeting and proposed issue of warrants
Further to the announcement on 8 January 2016, the Board of DQE
announces that with regard to the senior secured convertible bonds
issued by the Company's subsidiaries, DQ Entertainment (Mauritius)
Limited ("DQE Mauritius") and DQ Entertainment (Ireland) Limited
("DQE Ireland") (the "Bonds"), which are held by OL Master
(Singapore) Pte. Limited (the "Bondholder"), on 18 December 2015,
DQE Mauritius and DQE Ireland entered into an agreement with the
Bondholder in respect of events of default under the DQE Mauritius
Bond Instrument and the DQE Ireland Bond Instrument (the
"Standstill Agreement"). As of this date, a condition of the
Standstill Agreement regarding the issue of certain warrants by the
Company (as described below) (the "Warrant Issue Condition")
remains unfulfilled, but discussions regarding these matters are
ongoing with the Bondholder as explained below.
In the Standstill Agreement, the Bondholder stated that events
of default had occurred under the DQE Mauritius Bond Instrument and
the DQE Ireland Bond Instrument (the "Bond Instruments") as
follows:
1. Change of control
Under the terms of the Bond Instruments only, the Bondholder
deemed there to be a change of control event due to Corporate
Computer Services, Platinum Consulting Group and their
affiliates/associates having acquired, in aggregate, ordinary
shares of GBP0.001 par value each in the capital of the Company
("Ordinary Shares") representing more than 50 per cent. of the
issued ordinary share capital of DQE. The Bondholder therefore
advised that this constituted a continuing event of default under
the Bond Instruments (the "Advised Change of Control Event").
By way of background to the Advised Change of Control Event, on
3 June 2015 it was announced that Corporate Computer Services had
acquired approximately 29.7 per cent. of the voting rights in the
issued ordinary share capital of the Company (the "Acquisition").
Further, on 30 September 2015, Platinum Consulting Group, Anil
Chintapalli (a member of the Shareholder Group) and Corporate
Computer Services (together, the "Requisitioners") requisitioned an
extraordinary general meeting of the Company (the "General
Meeting") to propose resolutions to appoint two directors to the
board of the Company (the "Proposed Directors"). The UK Takeover
Panel therefore ruled that Corporate Computer Services, Platinum
Consulting Group, Global MSA and their affiliates/associates (the
"Shareholder Group") had come together as a concert party, but only
after the Acquisition and not before. The Company agreed with this
ruling.
The Acquisition and the determination of a concert party did not
and has not resulted in a breach of rule 9 of the UK Takeover Code
or the requirement for an offer for the Company under the UK
Takeover Code. The Advised Change of Control Event is therefore
determined only as a result of the contractual terms of the Bond
Instruments and not for the purposes of the UK Takeover Code.
On 27 October 2015 it was announced that in line with the
requirements of the AIM Rules for Companies regarding the
appointment of new directors, DQE has requested certain due
diligence information from the Proposed Directors. Whilst DQE has
received due diligence information, the due diligence process is
ongoing and DQE intends to proceed with convening the General
Meeting as soon as possible once that process is concluded
satisfactorily. Further announcements regarding the General Meeting
will be made in due course.
It was agreed in the Standstill Agreement that, subject to DQE
satisfying the Warrant Issue Condition, the Bondholder would not
take any enforcement action in relation to the Advised Change of
Control Event for a period of three months from the date of the
Standstill Agreement in order for DQE to have the opportunity to
remedy the Advised Change of Control Event.
The Company continues to discuss the Advised Change of Control
Event with the Bondholder in good faith to resolve any potential
breach of the Bond Instruments and come to a resolution amicably
and expeditiously.
2. Monthly interest payments
Monthly interest payments due under the terms of the DQE
Mauritius Bond Instrument and the DQE Ireland Bond Instrument on 9
December 2015 (the "Interest Payment") were not paid by DQE. In
anticipation of such, DQE requested that the Bondholder approve for
the Interest Payment to be paid from funds reserved in the
Company's blocked account, as put in place for security pursuant to
the terms of the Bonds (also pursuant to the terms of the Bonds,
the Company is required to maintain at least 6 months of cash
interest in this account at all times) (the "Blocked Account"). The
Bondholder stated that this amounted to an event of default which
is continuing under the DQE Mauritius Bond Instrument and the DQE
Ireland Bond Instrument (the "Non-Payment Event").
Under the Standstill Agreement, subject to DQE satisfying
certain conditions (details provided below) including the Warrant
Issue Condition, it was agreed that DQE Ireland could drawdown
funds from the Blocked Account in order to pay the Interest Payment
due. Such payment was made by the Company on 28 December 2015 (the
"Disbursement"). The Bondholder also agreed it would not take any
enforcement action in relation to the Non-Payment Event and failure
to maintain the required balance within the Blocked Account,
provided that after payment of the Disbursement, a sum equal to the
Interest Payment is paid into the Blocked Account by no later than
29 January 2016. The Company expects to be able to reimburse the
Blocked Account by 29 January 2016, but a failure to do so would
constitute an event of default.
As explained below, discussions regarding these matters are
ongoing with the Bondholder.
Proposed issue of warrants
In consideration of entering into the Standstill Agreement and
agreeing to the terms above, it was agreed that warrants to
subscribe for 16,878,914 Ordinary Shares exercisable at 5.375p per
share (the "Warrants") be issued to the Bondholder (the issue of
such Warrants, being the Warrant Issue Condition defined above) no
later than 31 December 2015. As of this date, the Warrants have not
been issued by the Company and therefore, the Company has not
fulfilled its obligations under the Standstill Agreement. The
Company is discussing with the Bondholders in good faith to resolve
this situation under the Standstill Agreement and the issue of the
Warrants as a potential remedy for the above deemed events of
default.
The Warrants would represent approximately 29.99 per cent. of
the current issued share capital of the Company and be issued under
the existing authority conferred upon the Board of Directors by the
shareholders of DQE in accordance with Resolution 8 and Resolution
9 (ii) at the Annual General Meeting of the Company held on 28
September 2015.
The Warrants are immediately exercisable from the issue date for
a period of three years at any time when an event of default under
the terms of the Bond has occurred and is continuing. The Warrants
may be exercised at the sole discretion of the warrant holder in
whole or in part and are freely transferable.
The two alleged events of default described above are those that
are referred to as having occurred in the announcement on 8 January
2016. As noted above, the Company continues to discuss these
matters with the Bondholder and expects to reach an expeditious
resolution with the Bondholder.
The Company will make further announcements in due course.
Enquiries:
DQ Entertainment plc Tel: +91 40 235
Tapaas Chakravarti - Chairman 53726
and CEO
Rashida Adenwala - Director Finance
& Investor Relations
Allenby Capital Limited Tel: +44 (0)20
Jeremy Porter / Alex Brearley 3328 5656
Buchanan Tel: +44 (0)20
Mark Edwards/Robbie Ceiriog-Hughes 7466 5000
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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