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LONDON - Fragrant Prosperity Holdings Limited (FPP), a UK-based company, has announced the issuance of new convertible loan notes amounting to £125,000 and the refinancing of existing notes. The new notes, part of an instrument allowing for a maximum of £200,000, carry a 5% annual interest rate, compounded and added to the principal quarterly. They are due for repayment on the second anniversary of their issue, with an option for the company to repay after December 31, 2025, or upon announcing a key commercial term of a reverse takeover under UK Listing Rules.
The conversion of these notes into company equity is set to occur unconditionally with the publication of a Prospectus for a fundraise exceeding the 19.99% limit within a 12-month period without a Prospectus. The conversion price offers a 10% discount to the price of a fundraise conducted alongside the Prospectus issue. Note holders will also receive warrants at the placing price for each share converted from the notes after a qualifying fundraise.
In a move to restructure its debt, FPP has negotiated a standstill agreement with holders of 78% of its existing convertible loan notes. This agreement includes waiving past accrued interest, halting future interest if conversion occurs before the standstill period ends, and automatic conversion into equity at the placing price after a qualifying fundraise of at least £250,000. The standstill is effective until September 3, 2025, and includes a lock-in period restricting share disposal post-conversion.
The proceeds from the new convertible loan notes will be used to repay one existing note holder and refinance the remainder, aiming to significantly improve the company’s balance sheet by eliminating other convertible loan notes. Notably, £25,000 of the new notes were subscribed by Stonedale Management & Investments Ltd, controlled by Simon Retter, a director of FPP.
This announcement, which contains inside information as per Article 7 of EU Regulation 596/2014, marks the information as public following its release.
The company’s actions reflect a strategic effort to manage its debt and prepare for potential future fundraising and corporate restructuring activities. This financial maneuvering is based on a press release statement by Fragrant Prosperity Holdings Limited.
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