Pulse Utilities Satisfies Two Key Conditions of Agreement with Buller Electricity Limited
Further to the announcement of 20 June, Pulse Utilities New Zealand Ltd is pleased to advise that it has satisfied two key conditions of the heads of agreement (Agreement) with Buller Electricity Limited (BEL). The purpose of the Agreement is to recapitalise the company and secure the company’s position as an established low cost energy supplier.
Convertible Note Condition
As set out in the announcement of 20 June the Agreement contained a condition that Pulse was to obtain the unanimous support of its convertible note holders to vary the terms of their notes so that:
· 25% of the aggregate face value of the notes was restructured into an interest free five year term loan; and
· the balance of the notes held were then to convert into ordinary shares at the rate of 3 new shares for every $1 of notes held.
Following a request from Pulse, BEL has agreed to amend this condition so that the proportion being restructured into an interest free loan increased from 25% to 40% with the balance owing then converting to shares on the basis previously agreed and set out above.
The agreement of each note holder to this variation has now been received.
Private Placement Commitments
The Agreement also contained a condition that the Company was to obtain subscription commitments for $1.5 million of new shares at an issue price of $0.05 per share from qualified investors. Pulse has also satisfied this condition having entered conditional subscription agreements with various qualified investors to secure this $1.5 million of new funding.
Satisfaction of these conditions was a critical milestone for ensuring that the recapitalisation contemplated under the Agreement and necessary to secure the future of the Company, was successful. The Board extends its sincere thanks to note holders and new investors for their support.
Implementation of the variation to the convertible notes and the $1.5 million of private placements, remains conditional on shareholder approval. This approval will be sought at Pulse’s annual meeting to be held on 18 August.
The Agreement envisages BEL increasing its holding in the Company to more than 20%. Accordingly, approval will be sought under the Takeovers Code and requires the preparation of an independent advisers report. The Company has appointed Simmons Corporate Finance Limited to prepare this report which will be provided to shareholders ahead of the annual meeting.
As a demonstration of its continuing support and commitment to the Company, BEL has also provided additional funding support to the Company. An advance of $900,000 has been made to the Company and BEL has also increased its guarantee of Pulse’s electricity market prudential obligations from $2.8m to $4.5m.
This support substantially eases the Company’s cash flow pressures for the rest of winter and puts the Company in a secure position while it seeks to finalise the Agreement. The Board is highly optimistic of the future prospects for the Company given the significant support shown for the Company by BEL, note holders and new investors.