Loan Note Issue and Refinancing

Roadside Real Estate PLC

23 April 2024

 

Roadside Real Estate PLC

("Roadside", "Roadside Real Estate" or the "Company")

Loan Note Issue and Refinancing

Roadside Real Estate, (AIM: ROAD) the roadside real estate business, is pleased to confirm that, further to its announcement on 28 March 2024, it has completed the issue of £9.0 million principal amount of secured loan notes, ("Loan Notes").

As at 31 December 2022, being the date of its latest audited accounts, the Company had £14.3 million of outstanding borrowings. Of this amount, £6.8 million was drawn under the £12.5 million facility with Tarncourt Properties Ltd., ("Tarncourt") £0.75 million was outstanding under its HSBC overdraft facility, £6.2 million was outstanding on property loans, along with a Coronavirus Business Interruption Loan, ("CBIL") totalling £0.55 million.

The £9.0 million of proceeds from the issue of the Loan Notes will be used as follows:

	£m
To repay the HSBC overdraft facility	1.2
To repay the outstanding CBIL	0.1
Set off existing debts from Tarncourt	6.9
Working capital (including funds to cover the Company's share of JV investment)	0.8
	9.0

Once the refinancing has completed as set out above, (the "Refinancing") the Company will have £25.0 million of outstanding borrowings. This will comprise of £5.5 million drawn under the Tarncourt facility, (which will be subordinated to the Loan Notes pursuant to a deed of subordination) £8.5 million of property loans, £2.0 million of other financing and £9.0 million principal amount of Loan Notes. The expiry of the Tarncourt facility, (the available limit of which has been reduced to £7.5 million) has been extended to 1 April 2026. Further details of this facility are provided below. 

The increase in debt from the amount outstanding as at 31 December 2022 is due to the construction and completion of Wellingborough and Maldon, continued investment in Cambridge Sleep Sciences Limited, ("CSS") and funding of the Company whilst it transitions to its roadside real estate strategy.

Benefit to Roadside Real Estate shareholders

The Refinancing and the provision of new debt capital enables the Company to develop its real estate business and the portfolio it is building with its joint venture partner, Meadow Partners LLP.

Cash headroom

Following completion of the Refinancing, but prior to the receipt of the consideration for the sale of shares in CSS to CGV Ventures 1 Ltd., (the "CSS Stake Sale") which has yet to formally complete and which will be subject to Noteholder approval before it can complete, the Company will have cash of £0.5 million and funding lines of more than £2.0 million available to it for the next two years.

Following completion of the Refinancing and the expected completion of the CSS Stake Sale for a total consideration of £6.0 million, the Company will have cash of £1.5 million and funding lines of more than £7.5 million available to it for the next two years.

Terms of the Loan Notes

The principal terms of the Loan Notes and their initial issuance are:

·      A 14% coupon rolled-up semi-annually in arrears with a minimum make-whole return of 25%.

·      A principal amount of £9.0 million of Loan Notes have been issued and the Company intends to issue further Loan Notes in the short term with a principal amount of £1.0 million. Beyond that, a further £5.0 million of Loan Notes may be issued with the consent of Kroll Agency Services Limited, (the "Agent") and following extension of the security package. The Company does not currently expect to issue the final £5.0 million principal amount of Loan Notes, however it will extend the security package on completion of the CSS Stake Sale. 

·      The Loan Notes shall be redeemed, unless previously redeemed or purchased, on 31 March 2026 together with any accrued interest and all other amounts outstanding up to, (and including) that date.

·      The Loan Notes are initially secured against the Company's assets and undertaking, including its entire remaining stake in CSS, as well as the assets and undertaking of CSS.

·      The Company has agreed, independent of the terms of the Loan Notes themselves, to pay initial subscribers for Loan Notes a bonus in cash equal to 25% of the principal amount of the Loan Notes subscribed by them, on the occurrence of any of the following events within 10 years: (i) the disposal by the Company of its shares in CSS for an aggregate consideration of £15.0 million or more, (excluding the CSS Stake Sale); (ii) the distribution of the Company's CSS shares to the Company's shareholders paid up out of the distributable profits or capital reserves of the Company; (iii) the disposal by CSS of all or substantially all of its undertakings and assets or the winding-up of the Company, which in either case results in the distribution of capital and/or distributable profits by CSS to the Company of at least £15.0 million; or (iv) the flotation of CSS on a recognised stock exchange.

·      Roadside may redeem the Loan Notes, together with any accrued interest, default interest and all other amounts outstanding up to, (and including) that date of redemption, upon giving 10 business days' written notice to the Agent and subject to the payment of an early redemption fee of 25% of the principal amount of the Loan Notes to be redeemed.

·      Kroll Agency Services Limited is acting as security trustee and agent on behalf of the noteholders.

·      The instrument contains standard events of default, including a failure to pay amounts on the relevant due date, cross-default with the Company's other indebtedness and insolvency events affecting the Company and any other obligor. Following an event of default, the Agent may give notice to the Company demanding the immediate redemption of all principal and interest of the Loan Notes.

·      The Loan Notes are freely transferable.

Terms of the Revised Tarncourt Facility Agreement

The headline terms of the revised Tarncourt facility agreement are:

·      Facility limit decreased from £12.0 million to £7.5 million;

·      Maturity date extended to 1 April 2026;

·      Interest rate of 3% plus the Bank of England base rate remains the same;

·      1% arrangement fee on the total commitment remains the same;

·      2% exit fee on the amount drawn down remains; and

·      Subordinated to the Loan Notes.

Related Party Transactions

Roadside is issuing £7.55 million principal amount of Loan Notes to Tarncourt, a company ultimately controlled by Charles Dickson and the Dickson Family. In addition, Charles Dickson is also subscribing for £1.25 million principal amount of Loan Notes. Charles Dickson is Executive Chairman of Roadside and a Director of the Company. Accordingly, the issue of Loan Notes to Tarncourt constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent Directors, having consulted with the Company's nominated adviser, Cavendish Capital Markets Limited, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

In addition, Roadside is entering into the Revised Facility Agreement with Tarncourt, a company ultimately controlled by Charles Dickson and the Dickson Family. Accordingly, entering into the Revised Facility Agreement also constitutes a related party transaction under Rule 13 of the AIM Rules for Companies. The independent Directors, having consulted with the Company's nominated adviser, Cavendish Capital Markets Limited, consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.

- Ends -

Enquiries:

Roadside Real Estate PLC Charles Dickson, Executive Chairman c/o Montfort
Montfort Olly Scott Georgia Colkin	[phone] [phone]
Cavendish Capital Markets Limited (Nomad and Joint Corporate Broker) Carl Holmes / Simon Hicks / Fergus Sullivan (Corporate Finance) Tim Redfern (ECM)	[phone]
Stifel Nicolaus Europe Limited (Financial Adviser and Joint Corporate Broker) Mark Young Jonathan Wilkes-Green Catriona Neville	[phone]

About Roadside

Roadside Real Estate is focused on building and scaling a high-quality portfolio of modern assets.

 

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