MND Resolves Financial Difficulties By Bolstering Equity And Restructuring Debt With A View To Boosting Growth
As stated in the 31 July 2019 press release, over the last few months Montagne et Neige Développement (“MND” or the “Company”) (Euronext Growth - FR0011584549 - ALMND) and its advisers have been working to restructure and extend MND Group debt and to increase its equity so that its financial resources meet its needs, thereby resolving the financial difficulties announced on 31 July 20191 .
The Company hereby announces the key features of its planned financial restructuring, which involves (i) a new financial partner alongside the MND’s reference shareholder, (ii) restructuring of the Company’s bank debt and (iii) two capital increases subject to shareholder approval voted in an extraordinary general meeting, with a view to bolstering the Company’s equity. New financial partner alongside the reference shareholder MND has signed an agreement with Cheyne SVC LLP and Cheyne Capital Management (UK) LLP, an alternative investment fund manager regulated by the Financial Conduct Authority (“Cheyne SVC”), whereby Cheyne SVC undertakes to back the Company’s planned bank debt restructuring and equity strengthening. For this purpose, Cheydemont was formed as holding company, in which Montagne & Vallée (“M&V”), MND’s reference shareholder2 , holds a 60% equity stake and Cheyne SVC holds the remaining 40%.
Cheyne SVC will grant loans repayable at maturity (December 2023) amounting to €19.5 million for M&V and €21.0 million for Cheydemont to fund their subscription of newly issued shares as laid out below. In return, the loans granted by Cheyne SVC will be secured in line with standard bank loan terms and conditions. Cheyne SVC will also be granted one M&V preference share and one Cheydemont preference share
The Company has signed an agreement with its bank partners, under which a Cheyne SVC-managed fund will purchase €34.8 million of short and medium-term bank liabilities, thereby avoiding the risk of payment default in the event these partners accelerate their debts. After the capital increases described above, bank liabilities bought by Cheyne SVC will be reorganised into a single senior loan granted to MND Group and repayable at maturity (31 December 2023) providing for customary financial covenants that will involve quarterly compliance with financial ratios that measure balance sheet gearing and cost of debt on the income statement (including available cash, adjusted net debt / adjusted EBITDA and adjusted EBITDA / interest repayment) 3 . This reorganisation of the MND Group indebtedness will materially reduce its short-term funding needs. To fund the Company’s current short-term operational needs, M&V will grant it a €15 million bridge loan itself drawn down from a credit facility granted by Cheyne SVC. This bridge loan will be repaid by offsetting against proceeds owed on the M&V capital.
So that MND shareholders can participate in the planned capital increases, all shareholders shall be allotted one free stock warrant per share held following the second capital increase described above. These stock warrants will be exercisable from their issue date until 31 December 2020 by subscribing to one new share at €0.41, i.e. the same price as for the aforementioned share issues. These stock warrants will be negotiable and an application to listing on Euronext Paris’s Euronext Growth market will be submitted. As far as possible the Company will shorten the period between the stock warrants’ record date, allocation date and first listing date so as to minimise market risk. M&V and Cheydemont hereby undertake to waive their rights to subscribe to the free stock warrants issue in respect of the shares they hold as at issue date. Based on the shareholder breakdown as at the date of this press release and that of the planned transactions, exercise of all stock warrants to be issued would raise a further €5.45 million in capital. This transaction, which is valued at less than €8 million, will not give rise to a prospectus approved by the French financial markets authority (“AMF”).
Management believe that, following the transactions, Company liquidity risk will be negligible and that it will be able to meet its future liabilities beyond the next 12 months.
