Toople Plc (LON: TOOP), a provider of bespoke telecom services to UK SMEs, has today announced that it has raised gross proceeds of £662,231 from the placing of 189,208,896 new ordinary shares of 0.0667 pence each in the Company at a price of 0.35 pence per share. Application is being made for the new shares to be admitted to trading, which is expected to be on or around 3 June 2019.
The Company proposes to use the funds to redeem the outstanding loan to the Company from David Breith at a substantial discount to its book value, as well investing further in the business to accelerate the sign up of new customers, who over the life of their fixed term contracts will contribute to increased revenues for the Company.
The Loan originated when Mr Breith lent funds to the Company when he was a director of Toople. At the time of the Company’s admission to the Official List of the London Stock Exchange in May 2016, Mr Breith had made loans totalling £750,000 to the Company and prior to Admission he entered into an agreement to formalise the Loan such that, inter alia, it was interest free and not repayable for three years from Admission and then only in the event that the Company is in profit and has sufficient funds to make the repayment. In May 2017, the Company and Mr Breith entered into a deed of variation to restate the balance owed under the Loan to £606,756 with all other terms remaining in place.
The conditions for repayment of the Loan have not yet been met and so the amount outstanding remains at the restated balance of £606,756 and was disclosed at a present value of £601,327 in the 2019 interim results based on current International Financial Reporting Standards. Mr Breith has now agreed to accept a payment of £150,000 in full and final settlement of the Loan, subject to this payment being made by 31 May 2019.
The new Ordinary Shares will rank pari passu with the existing Ordinary Shares of the Company. Following completion of the Placing, the Company’s issued share capital will comprise of 1,143,589,455 Ordinary Shares (including the 189,208,896 new Ordinary Shares). This figure of 1,143,589,455 Ordinary Shares may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.
Commenting, Andy Hollingworth, CEO at Toople plc commented:
“We were approached by our brokers, who had received demand from their clients to invest further in our business as they are pleased with the substantial financial and operational progress we have made in the last twelve months. Given the demand and the opportunity to repay the Company’s debt at a significant discount to book value, the Board believes that the Placing is very much in the interest of all shareholders. We were delighted that investor interest was such that the Placing utilised all of the share authorities that were granted at the recent AGM.”
“Once the Loan has been repaid, the Company will use the remaining funds raised to invest further in its digital marketing strategy to increase the rate of customer enquiries and correspondingly to improve conversion rates. Given that these customers are typically signing two year fixed contracts, we believe that the Company can use this opportunity to accelerate its timeframe to cash generation and profitability.”