Speech recognition services provider Eckoh has renegotiated the deferred payment for Symphony Telecom by Redstone.
Eckoh was still owed £2.7m from the sale of Symphony to telecoms services provider Redstone and another instalment was due to be paid. The payment times have been extended and interest will be payable. Redstone will repay £1m at the beginning of October 2011 and the other £1.7m one year later. There is a £530,000 arrangement fee payable to Eckoh, of which £180,000 was paid in July 2009. Another £125,000 is due now and the rest will be paid with the final instalment.
This debt is secured but it ranks behind the borrowings from Barclays and the new loan note being issued by Redstone.
Shares in Eckoh rose 0.5p to 7.25p each, which values the company at £14.5m.
Redstone is raising £6m from a convertible loan note issue, with the possibility of a further £2m to come. The loan note can be converted at 1.37p a share. The Redstone share price recovered 0.625p to 5.875p, which values the company at £8.5m.
Gartmore and SVG are each subscribing for an initial £3m of loan notes and will receive an arrangement fee of 0.5% of the value of the loan notes. Gartmore has an existing stake in Redstone of 14.6%, while SVG owns 19.8%.
Existing shareholders could be substantially diluted if the loan note is converted and Gartmore and SVG could own more than 90% of Redstone. This deal will require shareholder approval.
The terms of existing debt with Barclays have been changed and it will make it more difficult for Redstone to pay a dividend or raise additional debt. Barclays will have even more monitoring rights over the business. On the plus side there will be a reduction in financing costs.
Stephen Yapp will become executive chairman of Redstone after its accounts for the year to March 2009 are posted to shareholders. FinnCap is replacing Investec as nominated adviser and broker.
The potential bid talks continue.
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