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PeerTV PLC (PTV)

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Wednesday 23 December, 2015

PeerTV PLC

Offer to Loan Noteholders of Digitek SMT

RNS Number : 1009K
PeerTV PLC
23 December 2015
 

23 December 2015

PeerTV plc

("PeerTV" or "the Company")

Offer to Loan Noteholders of Digitek SMT Assemblies Limited  ("Digitek")

 

 

On 15 December 2015, 73% of the votes cast at a meeting of the secured loan noteholders of the Company's 64.1% owned subsidiary, Digitek, (the "Noteholders) supported a resolution to effect a debt to equity restructuring of Digitek. Therefore, the restructuring was not approved as this fell marginally short of the 75% majority required to pass the resolution.

 

Following subsequent dialogue with certain, larger Noteholders, the board of Digitek believe that a debt to equity restructuring would now be approved and in the absence of any other offers or alternatives have called a further and final meeting of the Noteholders to be held on Tuesday, 12 January 2015.

 

Accordingly a circular dated 22 December 2015, has been sent to the Noteholders to approve the following actions:

 

·     To convert the secured loan notes in issue into 70 per cent. of the issued share capital of Digitek

·     That the security agent (being Charles Street Securities Europe LLP) release the debenture and all charges created in favour of the secured loan noteholders at the time of the issue of securities in the exchange offer and release Digitek from all liabilities and any further obligations to the Noteholders.

 

Terms of the Proposed Restructuring

 

The terms of the proposed restructuring are summarized below:

 

1.     TZ Technologies Limited ("TZT"), which is an manual assembly outsource supplier, based in the north of Israel, will invest £100,000 in Digitek in order to finance the company's operational costs with effect from 1st January 2016. In addition, TZT will provide further amounts of up to £100,000 during the first year following the agreement in order to meet the cash flow requirements of Digitek.  As consideration TZT will be allocated 20% of the shares of Digitek.

 

2.    PeerTV has agreed to write off the net inter-company balances between Digitek and other companies in the PeerTV Group. PeerTV will hold 10% of the shares of Digitek.

 

3.    A number of individual Noteholders will provide a loan of £50,000 to Digitek. Interest on these loans will be charged at the annual rate of 6% and repayments of capital and accrued interest will be made in ten equal monthly instalments commencing 12 months from the date on which such loans are advanced, or such other terms as may be agreed by the board and the lenders. Such funds to be received by 22 January 2016.

 

4.    Subject to the acceptance of all other conditions, Amir Levit, the proposed General Manager will invest £25,000 into the business for a share of the equity, pro rata to TZT.

 

5.    The management team of Digitek will, conditional upon the achievement of specific milestones including Digitek achieving annual operating profits of over 1 million NIS, be issued options over 15% of the enlarged share capital of Digitek over a three year period.

 

It is expected that the release of pledges on the assets of Digitek would permit new lenders to advance secured funds.

Effect on PeerTV

Following the transaction PeerTV will hold 10% of the Ordinary Share Capital of Digitek.  PeerTV's holding would result from the conversion of the PeerTV loans to equity in Digitek and it writing off of the remainder of the loans. The actual amount of the write off is dependent on the valuation of Digitek agreed between the parties at the time of the transaction.

The new equipment acquired by PeerTV for Digitek in 2015 at a cost of about $500,000 will continue to be owned by PeerTV Marketing Limited which is a 100% subsidiary of PeerTV. The equipment will be leased to Digitek under the terms of a monthly agreement, on an arm's length basis which fairly reflects the value, age and condition of that equipment. At end of the term ownership of the equipment will be transferred to Digitek.

Alternative to the exchange offer

The board of Digitek believe that Digitek will be unlikely to continue trading without an injection of capital. If the exchange offer is not approved the board of Digitek will have to either appoint administrators or carry out a fire sale of the business.

Given that the board of Digitek are not in receipt of any firm offers for the business at the moment, liquidation would appear the most likely outcome if the Exchange Offer is not accepted by the required majority.

In the event of Digitek defaulting on its obligations under the terms of rental agreements for premises occupied, PeerTV as  guarantor will have to meet all or part of that obligation which is currently estimated at least £100,000.

If concluded, under the AIM Rules the Exchange Offer will be a substantial transaction requiring the disclosures set out in Schedule 4 of the AIM Rules. The profits attributable to the assets being disposed of and the effect on the PeerTV of the transaction can be seen from the attached pro-forma based on the interim unaudited financial statements for the six months ended 30 June 2015. For the foreseeable future PeerTV intends to hold its shareholding in Digitek.

Following the transaction PeerTV will hold 100% of both PeerTV Limited (operating the OTT business) and PeerTV Marketing Limited (owning the equipment). It will also hold 10% of Digitek and 64.1% of DHL, which shall be no longer active.

 

 

Further enquiries:

 

PeerTV Plc

Eitan Yanuv, Chairman                                                                                            

Tel: +972 974 07315

 

ZAI Corporate Finance Limited

Tim Cofman / Jamie Spotswood

Tel: +44 20 7060 2220

 

Daniel Stewart & Company plc

David Coffman

Tel: +44 207 776 6550

 

 

 

PEERTV PLC















CONSOLIDATED PROFORMA PROFIT & LOSS - SIX MONTHS ENDED 30 JUNE 2015












Combined

Digitek


Adjusted





$

$


$










Sales



970

670


300










Direct Costs


1,024

816


208










Gross Profit


-54

-146


92










Operating Expenses


1,299

385


914










Operating Loss


-1,353

-531


-822










Finance



655

357


298













-2,008

-888


-1,120










Minority Interest


408

408


0










Net Loss



-1,600

-480


-1,120


















CONSOLIDATED PROFORMA BALANCE SHEET OF PEER TV AT 30 JUNE 2015

















Adjusted








$


Fixed Assets





414










Intangible Assets - Digitek Holdings




0


Intangible Assets - Assemblies




186










Preference Shares - Assemblies




0










Current Assets





966










Total Assets





1,566










Current Liabilities





6,522










Non-Current Liabilities




80










Total Liabilities





6,602










Shareholders Equity





-5,036










Total Liabilities &






1,566


Shareholders Funds











This information is provided by RNS
The company news service from the London Stock Exchange
 
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