Update on Redstone's loan rep

RNS Number : 5208R

Eckoh PLC

24 August 2010

 



24 August 2010

Eckoh plc

("Eckoh" or "the Company")

Update on Redstone's loan repayment

Eckoh plc, the UK's leading developer of speech recognition solutions for customer contact centres, provides an update on the outstanding debt owed by Redstone plc ("Redstone") to the Company under an agreement dated 17 September 2009 (the "Loan Agreement").

The original loan agreement, entered into in June 2006, was renegotiated between the parties in September 2009, and in the preliminary results of 21 June 2010 Eckoh commented: "A loan of £2.9m is due to be repaid by Redstone plc in two instalments in October 2011 and October 2012, which will further increase the strength of the Group's balance sheet. The renegotiation of the terms of this loan resulted in arrangement fee income of £0.2m to be recognised in the year (year ended 31 March 2010) with a further £0.3m being spread over the remaining term of the loan."

On 6 August 2010, Redstone announced the appointment of two new independent directors, Ian Smith and Tony Weaver. Mr Smith and Mr Weaver subsequently approached the Company to discuss a possible settlement of the Eckoh loan as part of an overall process of restructuring and refinancing Redstone. The Board of Redstone today published the details of their fund raising programme arranged in conjunction with a restructuring of their debt obligations as well as the details of the full and final settlement agreement with Eckoh.

The key terms of the settlement with Eckoh (which are subject to Redstone shareholder approval) are as follows:

·    A settlement fee of GBP 0.5 million payable in cash ("Eckoh Settlement Fee")  

·    Eckoh will be issued with 200,000,000 Ordinary shares ("Eckoh Settlement Shares") with an aggregate value of GBP 1 million at the placing price of 0.5p per share

·    Redstone have undertaken to procure purchasers for 100,000,000 of the Eckoh Settlement Shares within five business days of the completed fund raising at a minimum of 0.5p per share realising a sum of GBP 0.5 million (before commission and stamp duty). MXC Capital, representing the interests of Ian Smith and Tony Weaver, have indicated their willingness to purchase 100,000,000 of the Eckoh Settlement Shares

·    The remaining 100,000,000 Eckoh Settlement Shares will be held by Eckoh subject to a lock-in for 12 months

·    Redstone will make an application for the Eckoh Settlement Shares to be admitted to trading on AIM. It is expected that such Admission will occur on 9 September 2010. The Eckoh Settlement Shares, when issued, will be identical to and rank pari passu in all respects with the existing Redstone shares

·    In consideration of receiving the Eckoh Settlement Fee and the Eckoh Settlement Shares, Eckoh will release Redstone from its obligations under the Loan Agreement and the related security granted by Redstone

Chris Batterham, Chairman of Eckoh, said: "Since the recent appointment of the new Redstone non-executive directors, the Board of Eckoh has been working closely with Redstone to assist them in their refinancing project. Through these discussions, the Board recognised that it would be necessary to agree a settlement of the debt outstanding to Eckoh to help secure Redstone's financial future and to give Eckoh the best prospect of receiving any of the outstanding debt.

The Directors of Redstone have said today that without further equity funding, the level of gearing in the company is unsustainable and if the resolutions approving the placing are not approved then it is unlikely that Redstone will continue to trade. Hence, the Board of Eckoh believes that the terms of the settlement, which delivers Eckoh £1 million of cash immediately and the prospect of further cash in 12 months time, is in the best interest of all shareholders."

Enquiries:

Eckoh plc
Nik Philpot, Chief Executive Officer
Adam Moloney, Group Finance Director
www.eckoh.com	Tel: [phone]
Corfin Public Relations
Harry Chathli, Claire Norbury	Tel: [phone]
Seymour Pierce
Jonathan Wright	Tel: [phone]

 

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