Revised Arrangements with MDC Nominees Ltd
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF REGULATION 11 OF THE MARKET ABUSE (AMENDMENT) (EU EXIT) REGULATIONS 2019/310.
26 October 2021
("Tintra", the "Group" or the "Company")
Revised Arrangements with MDC Nominees Ltd
On 12 July 2018 the Company (then called Boxhill Technologies plc) announced a restructuring (the "Restructuring") that involved the disposal of certain subsidiaries, one of which was Emex Technologies Ltd. ("Emex"), to MDC Nominees Ltd. ("MDC").
Under that Restructuring, MDC issued the Company a £2m, 10-year, zero-coupon, secured loan note (the "Loan Note"). At the same time, it entered into a commercial arrangement with the Company in relation to various "non-conforming" payment services customers that were transferred at that time (the "Commercial Agreement").
The Loan Note was intended to be repaid via a sinking fund made up of a combination of amounts generated by the Commercial Agreement and the proceeds from any successful legal actions that were expected to be pursued by Emex (the "Legal Claims").
As part of a change management process previously announced by the Company, this arrangement was reviewed. It was assessed that during the period since the Restructuring nothing has been achieved in relation to the Commercial Agreement.
However, it was assessed that one of the Legal Claims was material and as such a considerable amount of work was undertaken to progress that Legal Claim. As result of that progress Emex is now in possession of a Legal Opinion (the "Opinion") from a leading QC stating the potential success of the action as being greater than 50% (fifty percent).
As a result of the Opinion, Emex has entered into a contingent fee arrangement with solicitors to progress this matter further. The amount referred to in the Opinion under this Legal Claim is considerably in excess of the £2,000,000 due under the Loan Note.
Due to the work undertaken by the Company it has favourably renegotiated the terms of the Loan Note and the Commercial Agreement (together, the "Transaction") as follows:
1) As per the original Restructuring the first £2m received by Emex (after the deductions set out below) under the Legal Claim to repay the Loan Note.
2) Emex's contingent fee arrangement with its solicitors provides that they will receive 30% of the gross amount received (made up of the Legal Claim plus any recovered costs).
3) Under Emex's company voluntary arrangement, 20% of the balance after legal costs will be due to historical creditors.
4) The Company will on top of the amount due under the Loan Note now receive 60% of any amounts recovered after the payments made in 1-3) above.
5) The Loan Note is to be additionally secured by way of a debenture over Emex directly, including a fixed charge over the proceeds of this Legal Claim, as well as the existing debenture over MDC which will remain.
6) All other terms of the Restructuring, the Loan Note and the Commercial Agreement are to remain unchanged.
The Company expects Emex to initiate the action before the end of the year and the Company is providing assistance by way of human resources to this endeavour as part of the Transaction.
Richard Shearer, Chief Executive of Tintra, said: "A lot of work has gone into arriving at this revised solution, working with solicitors and Queen's Counsel, to build out a strategy that I now feel provides a tangible chance of the debenture being settled, which is not something I thought three months ago. Further still, the Company taking direct security over the Legal Claims and Emex gives an enhanced security of the Company's liability and removes layers of exposure that made me uncomfortable.
Whilst a lot of my focus is on forward looking scaling of our business, I am very pleased with the progress we have been able to make in this historical matter. I must confess to being a convert, having been somewhat dismissive of the realities of recovering any funds from this liability at the outset, I am now optimistic about the fact that whilst it will take some time, the Company will eventually see the return from the original Restructuring and perhaps even further benefits."
MDC is owned by John Botros, a director of certain Group subsidiaries. The Transaction therefore constitutes a related party transaction under the AIM Rules. The Board consider, having consulted with Allenby Capital Limited, the Company's nominated adviser, that the terms of the Transaction are fair and reasonable insofar as its shareholders are concerned.
For further information, contact:
Richard Shearer, CEO
020 3795 0421
Allenby Capital Limited
(Nomad, Financial Adviser & Broker)
John Depasquale / Nick Harriss / Vivek Bhardwaj
020 3328 5656