REG - Electric Guitar PLC - Provision of Loan Facility and Financial Position

Electric GuitarAnnouncement

30/10/2023 07:15

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RNS Number : 6218R  Electric Guitar PLC  30 October 2023

 

30 October 2023

 

Electric Guitar PLC

 

("Electric Guitar" or the "Company")

 

Provision of Loan Facility and Update on Financial Position

 

Electric Guitar PLC (LSE: ELEG) announces that on 27 October 2023, the Company
entered into an agreement with Sanderson Capital Partners Limited
("Sanderson"), an 18.92% shareholder in Electric Guitar, for the provision of
a loan facility to the Company (the "Agreement"). A summary of the key terms
of the Agreement are set out below:

 

·    Amount - £250,000, of which at least £150,000 will be satisfied by
the issue of shares on the Repayment Date at a price equal to the price per
share at which new ordinary shares are issued to investors on Admission

·    Repayment Date - The earlier of six months or the successful
admission of the Company's issued share capital to trading on AIM
("Admission")

·    Facility Fee - £25,000 to be paid in cash on the Repayment Date

·    Drawdown Fee - 10% on each tranche to be paid in cash on the
Repayment Date

·    Interest - Nil

·    Security - Unsecured

·    Drawdown - In three tranches on defined milestones prior to Admission

 

Further to the Company's recent annual report, the £1.2 million raised at IPO
in January 2022 has allowed the Company to research suitable acquisition
targets in line with its stated corporate strategy and funded ongoing running
costs of the Company.

 

On 7 July 2023, the Company announced that it had identified 3radical Limited
("3radical") as an acquisition target in line with its corporate strategy and
that it had agreed non-binding heads of terms on a reverse takeover of
3radical (the "Proposed Transaction"). The Company has been working on the
Proposed Transaction since then, including the necessary due diligence and
preparation to apply for the Company's ordinary shares to be admitted to
trading on AIM, with a view to agreeing a definitive acquisition agreement and
seeking shareholder approval by the end of the year. In so doing, the Company
has incurred significant costs and the Company's cash position as at 30
September 2023 was £95,605. The loan facility has therefore been put in place
by Sanderson to allow Electric Guitar to be able to fund the further
transaction costs associated with the Proposed Transaction and provide working
capital.

 

If the Proposed Transaction were not to complete, the Board would need to
assess all options available to the Company.

 

The Agreement with Sanderson constitutes a material related party transaction
for the purposes of DTR 7.3, due to Sanderson being a large shareholder of the
Company at 18.92%, and was accordingly voted upon by the Directors (excluding
Sarfraz Munshi, who is a partner of Sanderson and therefore not independent),
and such independent Directors consider the material related party transaction
in respect of the Agreement to be fair and reasonable from the perspective of
the Company and its Shareholders who are not a related party.

 

For further information:

 

 Electric Guitar PLC                          01189 570 444

 John Hutchinson

 Chairman

 Axis Capital Markets  020 3026 0320

 (Corporate Broker)    rh@axcap247.com

 Richard Hutchison

 Yellow Jersey PR

 Sarah Hollins         020 3004 9512

 Annabelle Wills       electric@yellowjerseypr.com

                     (https://appriver3651008983.sharepoint.com/sites/CompanyData/Shared%20Documents/Corporate%20Finance/Mandated%20Transactions/Electric%20Guitar/Announcements/electric@yellowjerseypr.com)
 Bessie Elliot

 

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