13 August 2010
PipeHawk Plc
("Pipehawk" or the "Company")
Issue of £1 million Convertible Unsecured Loan Stock to Director
The Company announces that it has issued £1 million of Convertible Unsecured
Loan Stock 2014 ("CULS") to Gordon Watt, the Chairman of the Company. The CULS
have been issued to replace loans made by Gordon Watt to the Company amounting
to £1 million.
In March 2010, the Company's bankers gave the Company notice that it intended to
withdraw all the facilities that it had made available to the Company. The
Directors sought to obtain replacement facilities from other banks but were
unsuccessful. Gordon Watt agreed to advance further funds to the Company on
similar terms to the loans he has previously advanced to the Company on the
understanding that negotiations would commence on converting £1 million of loans
into convertible unsecured loan stock.
The principal terms of the CULS are as follows:
-Â Â Â Â Â The CULS may be converted at the option of Gordon Watt at a price of 7p
per share at any time prior to 13 August 2014;
-Â Â Â Â Â Interest is payable at a rate of 10 per cent. per annum on the principal
amount outstanding until converted, prepaid or repaid, calculated and compounded
on each anniversary of the issue of the CULS. On conversion of any CULS, any
unpaid interest shall be paid within 20 days of such conversion;
-Â Â Â Â Â The CULS are repayable, together with accrued interest on 13 August 2014
("the Repayment Date");
-Â Â Â Â Â Â Â Â Â Â Â The Company has the option, after one year, to repay the CULS
before the Repayment Date, subject to the Company providing 10 days' notice and
paying a premium of 10 per cent. of the principal amount repaid;
-Â Â Â Â Â Â Â Â Â Â Â Except as may be agreed with the Panel on Takeovers and Mergers, no
conversion shall be permitted which would result in Gordon Watt and persons
deemed to be acting in concert with him holding in excess of 29.99 per cent. of
the voting rights of the Company.
The directors, other than Gordon Watt who took no deliberation in the
discussions, consider, having consulted with Merchant Securities Limited, that
the terms of the CULS are fair and reasonable insofar as the shareholders of the
Company are concerned. Merchant Securities Limited has relied on the commercial
assessments of the independent directors.
Following the issue of the CULS, the following summarises the amount of
indebtedness owing to Gordon Watt at 12 August 2010:
                                             £
CULSÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1,000,000
Loans                                   1,607,597
Unpaid salary                               492,590
Accrued interest                             213,899
                                        -------------
                                       3,314,086
                                       =======
Other than the CULS, these loans have been made in accordance with a letter of
support dated 12 November 2009. The loans are unsecured and accrue interest at
an annual rate of base rate plus 2.15 per cent.
Enquiries:
PipeHawk Plc
Gordon Watt (Chairman) 01252 343018
Merchant Securities Limited
David Worlidge 020 7628 2200
Simon Clements
[HUG#1437948]
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Source: Pipehawk PLC via Thomson Reuters ONE