Audioboom enters $4m loan facility to fund growth

Podcast producer and distributor Audioboom has entered into a $4m (£3.09m) secured loan facility arrangement with SPV Investments, it announced on Friday.

The AIM-traded firm said SPV Investments is a special purpose vehicle owned equally by Tobin Ventures, which itself is owned by Audioboom’s chairman Michael Tobin, and its largest shareholder Candy Ventures.

It explained that historically, the company’s growth had been financed by the issue of equity, resulting in dilution to its shareholders.

The board said it believed that the expectation of potential equity issues had resulted in a negative impact on Audioboom’s share price.

It added that it was “increasingly confident” in the firm’s ability to forecast performance and growth prospects, as demonstrated by the recently-announced 2019 year-end trading update, in which market expectations were exceeded for the first time in the company's history.

“Whilst the facility may not need to be drawn down in full, the board is confident that it will provide sufficient headroom to fund the company and its growth strategy through to sustainable positive cash generation on a monthly basis,” the Audioboom board said in its statement.

It explained that the facility would be drawn down based on an agreed cash flow forecast schedule, and had a minimum draw down amount of $0.2m.

The facility would attract interest at a rate of 8% per annum on drawn down funds, together with an $80,000 arrangement fee payable on the first draw down, equivalent to 2% of the full $4m available.

Audioboom would also pay the SPV's legal and other costs incurred in conjunction with the facility, which were not expected to be material.

The accrued interest would be payable at the date of repayment of the principal amount outstanding, with the latest date for repayment being 24 months from the start of the facility, although it could be repaid earlier at the company's election.

Any amounts repaid would not be available for subsequent drawdown.

The special purpose vehicle could require early repayment of some or all of the amounts outstanding if Audioboom undertook a future equity fundraising, provided that a minimum of $3m of any such fundraise would remain available for other uses by the company, or if there was a change of control of the firm.

Audioboom said the facility would be secured against its assets, and would contain events of default as customary for the type of facility.

The interest rate payable would increase to 12% per annum in the case of default on repayment by Audioboom.

Audioboom’s board noted that the provision of the facility was independent of the guarantee facility provided by the special purpose vehicle in June, which remains in force and effect.

“I am delighted that our chairman and largest shareholder have continued to demonstrate their support and belief in the company's prospects and strategy,” said chief executive officer Stuart Last.

“This non-dilutive financing should fund Audioboom through to sustainable positive cash generation and allows the management team to remain focussed on delivering further growth in what is an increasingly exciting market.

“We have made a strong start to the year with bookings for 2020 ahead of management expectations.”

At 0932 GMT, shares in Audioboom were up 15.29% at 245p.