This story has been corrected to replace erroneous mentions of Royal Bank of Scotland with the correct bank, Bank of Scotland. The following wording was also added for clarification: “after the company requested a restructured borrowing agreement”. Fund Strategy apologises for errors in the original article.
Midas Capital’s bank lender is taking 20% of the company in a debt-for-equity swap after the company requested a restructured borrowing agreement.
Of the £36.5m owed to Bank of Scotland, £14m will be converted into preference shares and £12m into a new senior debt facility. The remainder of the money owed will be converted into ordinary shares worth 19.99% of the group.
The bank facility restructure plans have been agreed with Bank of Scotland but are subject to shareholder approval.
The group says the move will result in a more suitable capital structure for the business, which has been beset with financial trouble in recent months.
In a move to retain key employees, Midas will allocate 15% of the company’s shares to create a management incentive scheme. This follows the departure last month of Daniel Lockyer, a fund manager from subsidiary wealth management firm iimia.
Simon Edwards, the chief executive of Midas, will now focus solely on the activities of the Liverpool-based fund management business, and will step down from the board. Anthony Moore has been appointed chief financial officer and a company director.
In a statement to the stock exchange, Colin Rutherford, the executive chairman, said trading is in line with expectations despite a difficult economic environment.
“We have reached a constructive outcome with BoS and we are pleased with their long term support for Midas. The capital structure of the business will be stabilised under these proposals and our key teams can focus fully on investment performance and customer service in a more stabilised working environment,” he said.