UK Bond Network has brought the first bond issued by an AIM listed business into the alternative finance space via an innovative dual structure convertible which includes both a bond and an equity option.
The AIM listed business is called Venture Life, which last week acquired Periproducts Limited - a UK-based oral care products company - for a total estimated cash consideration of approximately £5.6 million. To fund the purchase Venture is issuing 2.4m ordinary shares raising £1.7m as well as £2.0 million through a convertible bond issue, of which £1.5 million has been already underwritten.
Directors at Venture Life have indicated that they may participate in the issue of the convertible bonds to ensure that, together with that £1.5 million, at least £1.9 million of bonds in aggregate will be issued.
Jerry Randall, Chief Executive Officer of Venture Life, commented:
"I am delighted that we have agreed terms for the proposed acquisition of Periproducts. The product range of Periproducts is a premium range in the medicated mouthwash category, and significantly strengthens our oral care portfolio. The products hold a strong position in the UK pharmacy channel, and have been present there for over 15 years. […]”
The Convertible bonds will carry a coupon of between 7% to 9%, with the exact rate being determined by participating bond investors through UK Bond Network's auction process. If the maximum amount of £2.0 million is raised by the convertible bond issue, and each bondholder were to convert the whole amount of their bonds into ordinary shares, then the bondholders would be required to pay a conversion price of 87.5 pence per ordinary share.
Convertible bonds may be repaid by Venture Life at any time on or after March 3 2018, with full repayment of the principal amount of the convertible bond due on 3 March 2019.
Eligible investors who wish to participate to the convertible bond offering will need to become a member of UK Bond Network's platform. In relation to the bond issue, there is a pre-auction period - commenced last Friday - for investors to review the offering, followed by a two week live auction period, starting at 9.00 am on 17 February 2016 and ending at 4.30 pm on 2 March 2016, at the end of which the final convertible bond issue size and coupon will be determined.
This is another real coup for UK Bond Network – pulling in a fast growing AIM business such as Venture might encourage other listed businesses to use its innovative platform. If this auction goes well, expect many more AIM businesses to use alternative funding solutions. For more details on the convertible bond from an investment point of view, see our Investor Analysis piece here.
