Manx Financial Group plc (LON:MFX) has entered into two new unsecured loan agreements totaling £2.0 million for three years to help support the regulatory capital requirements of Conister Bank Limited under Isle of Man banking regulations.
The two loans of £1.0 million each from Jim Mellon and Burnbrae Limited respectively have been agreed on arms-length standard commercial terms with an annual interest rate of 8% that is comparable with the terms offered to unrelated parties. The loans are unsecured and repayable by the Company at any time during the period.
Both loans are considered to be Related Party Transactions under the AIM rules as Jim Mellon is a director of the Group and indirectly wholly owns and is Chairman of Burnbrae Limited and Denham Eke, also a director of the Group, is Managing Director. As a result, Jim Mellon, Denham Eke and Greg Bailey (who is deemed to be in concert with Jim Mellon) recused themselves from voting in the transaction.
The Group’s Independent Directors (being the Board with the exception of Jim Mellon, Denham Eke and Greg Bailey) consider, after consulting the Group’s Nominated Adviser, that the terms of the loans are fair and reasonable insofar as the Group’s shareholders are concerned. In reaching this conclusion the Independent Directors, having considered the most suitable method of preserving the regulatory capital funding required for the continued expansion of the Group’s subsidiary, Conister Bank Limited, reviewed the costs and practicality of alternative third-party finance, as well as the possibility of a rights issue, and concluded that the terms of the loans were both fair and reasonable for all shareholders.
