REG-JZ Capital Ptnrs Ltd: Extension of Maturity of Subordinated Loan Notes

JZ Capital PartnersAnnouncement

26/08/2022 07:15

JZ CAPITAL PARTNERS LIMITED (the "Company" or "JZCP")

(a closed-ended investment company incorporated with limited liability under
the laws of Guernsey with registered number 48761)

LEI 549300TZCK08Q16HHU44

Extension of Maturity of Subordinated Loan Notes
as a Smaller Related Party Transaction

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) NO. 596/2014, WHICH FORMS PART OF UK LAW BY VIRTUE OF
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("MAR").

26 August 2022

JZ Capital Partners Limited, the London listed fund that has investments in US
and European microcap companies and US real estate, is pleased to provide an
update in relation to its subordinated 6 per cent. loan notes maturing on 11
September 2022 (the "Subordinated Loan Notes") issued to David W. Zalaznick
and John (Jay) Jordan II (who as Shareholders know are the founders and
principals of the Company's investment adviser, Jordan/Zalaznick Advisers,
Inc. ("JZAI")) and their affiliates (together, being the "Subordinated
Noteholders").

As announced on 23 June 2022, the Company intended to seek to negotiate an
extension of the maturity of the Subordinated Loan Notes, with the Company now
being pleased to announce that, subject to the satisfaction of certain
conditions, such an extension of just over 12 months' duration has been
secured. The Subordinated Loan Notes will now, subject to the satisfaction of
those conditions, be extended on an interim basis to 30 September 2022 before
being further extended to 30 September 2023. In return and consistent with the
existing Investment Policy of the Company, it has also been agreed that,
subject to the satisfaction of certain of those same conditions and following
the Company's senior facility agreement provided by WhiteHorse Capital
Management, LLC (the "Senior Facility") being paid off in full in due course,
the Company will make mandatory redemptions from time to time of the
Subordinated Loan Notes from the net cash proceeds generated from certain
realisations achieved by the Company. The Company will continue to be able,
subject to compliance with certain financial tests of the Senior Facility, to
make voluntary redemptions of the Subordinated Loan Notes. All other terms of
the Subordinated Loan Notes (including their interest rate at 6 per cent. per
annum payable semi-annually) will remain unchanged and the Subordinated Loan
Notes will continue to be fully subordinated to the Senior Facility.

The amendments to the Subordinated Loan Notes as described in this
announcement is considered to be a smaller related party transaction of the
Company pursuant to chapter 11 of the listing rules made by the Financial
Conduct Authority pursuant to section 73A of the Financial Services and
Markets Act 2000, as amended (the "Listing Rules") (insofar as they apply to
the Company by virtue of its voluntary compliance with the same). As such,
whilst shareholder approval for such amendments is not required, this
announcement made in accordance with Listing Rule 11.1.10 R(2)(c) is required
to be made by the Company. Further details of the amendments, along with the
application of the Listing Rules to the same are set out below.

The extension of the Subordinated Loan Notes is, as previously explained and
subject to the Company's compliance with the financial covenants of the Senior
Facility, expected to facilitate the repayment of the Company's zero dividend
preference shares ("ZDPs") due on 1 October 2022. The extension has also been
negotiated and secured for the reason that, whilst following the
transformational realisation of the Company’s interest in Testing Services
Holdings and the anticipated redemption of the ZDPs its cash reserves will be
at a healthy level, the Company needs to maintain cash liquidity to invest in
accordance with its existing Investment Policy to maximise the value of its
existing portfolio investments where appropriate as well as in the current
uncertain economic climate to support them and so as to meet existing
obligations as they fall due. The Company remains focused upon its existing
Investment Policy as approved by Shareholders (which includes not making
further investments outside, as mentioned above, of existing obligations or to
support existing portfolio companies, and with the intention of realising the
maximum value of the Company's investments and, after repayment of all its
indebtedness, to return capital to Shareholders).

Extension of Maturity of Subordinated Loan Notes

Shareholders are reminded that the Company's issuance of the Subordinated Loan
Notes to the Subordinated Noteholders was the subject of a circular issued to
Shareholders by the Company dated 28 May 2021 and approved by Shareholders in
an extraordinary general meeting of the Company held on 18 June 2021.

The principal terms of the Subordinated Loan Notes (save for the amendments
thereto as described in this announcement), along with the associated
documentation (including the Note Purchase Agreement ("NPA"), the Security
Documents and the Subordination and Intercreditor Agreement) are as set out in
the aforementioned circular. The only changes made to these arrangements are
to allow for the extension of the maturity of the Subordinated Loan Notes and
to provide for mandatory redemptions of the same in certain circumstances once
the Company's Senior Facility has been paid off in full in due course. All
other terms of the Subordinated Loan Notes (including their interest rate at 6
per cent. per annum payable semi-annually) will remain unchanged and the
Subordinated Loan Notes will continue to be fully subordinated to the Senior
Facility.

Specifically, the maturity of the Subordinated Loan Notes will, with effect
from 9 September 2022 and subject to the satisfaction of certain conditions
(including (i) the senior lender to the Senior Facility consenting to the
amendments to the Subordinated Loan Notes (which has already been obtained),
and (ii) no event of default under the NPA or the Senior Facility), first be
extended on an interim basis to 30 September 2022, being the time immediately
prior to the repayment of the ZDPs due on 1 October 2022.

Such maturity date will then, with effect from 30 September 2022 and subject
to the satisfaction of certain other conditions (including (i) no event of
default under the NPA or the Senior Facility, (ii) the payment in full of all
interest accrued and then due on the Subordinated Loan Notes, and (iii)
compliance with the covenants in the Senior Facility which demonstrate that
the Company is permitted to effect the repayment of the ZDPs), subsequently be
extended by a further 12 months to 30 September 2023. Shareholders are
reminded that the repayment of ZDPs remains subject to compliance with the
financial covenants of the Senior Facility including the aforementioned
covenants demonstrating that the Company is permitted to effect the repayment
of the ZDPs.

In return and consistent with the Company's existing Investment Policy, it has
also been agreed that, with effect from 30 September 2022 and conditional upon
the satisfaction of the same conditions as those applying to the further
extension and following the Senior Facility being paid off in full in due
course, the Company will make mandatory redemptions from time to time of the
Subordinated Loan Notes from the net cash proceeds generated from certain
realisations (being asset sales in excess of $500,000) achieved by the
Company. Any such mandatory redemptions will also be subject to the Company
being permitted, if no event of default under the NPA has occurred and is
continuing, to retain an amount of those net cash proceeds as are necessary
for it to be in compliance with the NPA's minimum liquidity covenants. As
mentioned above, the Company will continue to be able, subject to compliance
with certain financial tests of the Senior Facility, to make voluntary
redemptions of the Subordinated Loan Notes.

In order to effect the above changes, the Company has entered into an
amendment to the existing NPA with the Subordinated Noteholders, with the
senior lender to the Senior Facility also having consented to those
amendments. For the avoidance of doubt, the interim extension is to become
effective on 9 September 2022 but remains conditional upon the satisfaction of
the conditions applying to that extension as described above, and the further
extension and the additional mandatory redemption provisions are to become
effective on 30 September 2022 but remain conditional upon the satisfaction of
the conditions applying to the further extension as also described above. The
Company will make further announcements in relation to the fulfilment of the
conditions and the effectiveness of the amendments as and when required.

Unless otherwise defined herein, capitalised terms used in this section of
this announcement have the meanings given to them in the aforementioned
circular of the Company dated 28 May 2021.

As mentioned above, the amendments to the Subordinated Loan Notes as described
in this announcement is considered to be a related party transaction under
chapter 11 of the Listing Rules (with which the Company voluntarily complies
and insofar as the Listing Rules are applicable to the Company by virtue of
such voluntary compliance).

JZAI is as also earlier mentioned the Company's investment adviser pursuant to
an investment advisory and management agreement dated 23 December 2010 between
the Company and JZAI, as amended from time to time, and, under the Listing
Rules, would therefore be considered a related party of the Company (as
defined in the Listing Rules). As founders and principals of JZAI, Messrs
Zalaznick and Jordan are associates of JZAI and would also be considered
related parties of the Company. In addition, each of them are substantial
Shareholders of the Company as they are each entitled to exercise or to
control the exercise of 10 per cent. or more of the votes able to be casted at
a general meeting of the Company. As such, each of them would be considered to
be related parties of the Company on this basis as well. The amendments to the
Subordinated Loan Notes as described in this announcement, which involve
Messrs Zalaznick and Jordan as related parties of the Company, would be
considered to involve a transaction or arrangement between the Company and its
related parties. Accordingly, Messrs Zalaznick and Jordan as related parties
and such amendments as described herein as a transaction or arrangement
between them would be considered to be a related party transaction under
Chapter 11 of the Listing Rules.

Such amendments to the Subordinated Loan Notes as described in this
announcement do however fall within Listing Rule 11.1.10 R and constitute a
smaller related party transaction under the Listing Rules. This announcement
is therefore being made in accordance with Listing Rule 11.1.10 R(2)(c).

Market Abuse Regulation

The information contained within this announcement is considered by the
Company to constitute inside information as stipulated under MAR. Upon the
publication of this announcement, this inside information is now considered to
be in the public domain.

The person responsible for arranging the release of this announcement on
behalf of the Company is David Macfarlane, Chairman of JZCP.

______________________________________________________________________________________

For further information:

 Kit Dunford / Ed Berry FTI Consulting                                                                     +44 (0)7717 417 038 / +44 (0)7703 330 199  
 David Zalaznick Jordan/Zalaznick Advisers, Inc.                                                           +1 (212) 485 9410                          
 Sam Walden / Martin Chapman Northern Trust International Fund Administration Services (Guernsey) Limited  +44 (0) 1481 745385 / +44 (0)1481 745183   

Important Notice

This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or comparable
terminology. These forward-looking statements relate to matters that are not
historical facts. By their nature, forward-looking statements involve risks
and uncertainties because they relate to events and depend on circumstances
that may or may not occur in the future. Forward-looking statements are not
guarantees of future performance. The Company's actual investment performance,
results of operations, financial condition, liquidity, policies and the
development of its strategies may differ materially from the impression
created by the forward-looking statements contained in this announcement. In
addition, even if the investment performance, result of operations, financial
condition, liquidity and policies of the Company and development of its
strategies, are consistent with the forward-looking statements contained in
this announcement, those results or developments may not be indicative of
results or developments in subsequent periods. These forward-looking
statements speak only as at the date of this announcement. Subject to their
legal and regulatory obligations, each of the Company, Jordan/Zalaznick
Advisers, Inc. and their respective affiliates expressly disclaims any
obligations to update, review or revise any forward-looking statement
contained herein whether to reflect any change in expectations with regard
thereto or any change in events, conditions or circumstances on which any
statement is based or as a result of new information, future developments or
otherwise.



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