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Funding Knight bought by GLI Finance
Funding Knight was placed into administration on 28th June and immediately bought by GLI for £750,000 with the promise of a further £1million of capital to finance ongoing operations.
GLI Finance is a specialist provider of finance to small and medium sized enterprises. Its ordinary shares are quoted on the AIM (GLIF) and its issued zero dividend preference shares are listed and traded on the main market of the London Stock Exchange (GLIZ). The loans are provided to SMEs through a variety of finance platforms in which GLI Finance has an equity stake.
The platforms in which GLI Finance is invested vary by geography, industry, size of lending and by type of lending. They include Global trade Finance, UK and US SME Lending, Offshore Lending, UK invoice discounting, European invoice discounting, Global multi-asset crowd funding and UK property-backed lending.
GLI Finance's ordinary shares closed virtually unchanged on the day, but has fallen from a peak of 58p in July 2015 to a low of 22.1p on Monday 27th June. The ordinary share price closed at 28.75p before the result of the EU referendum was announced.
Here is the press release on the London Stock Exchange:
The board of GLI announced in its strategic review update released on 16 February 2016 that it had not been possible to agree a way forward between GLI and FundingKnight, an online peer to peer lending platform. As a result, GLI became a passive investor with respect to its interests in Funding Knight Holdings Limited ("FKH"), the holding company for the FundingKnight group. These include a 23.4% interest in FKH's issued ordinary share capital with a carrying value of £2.481 million, a £1.001 million investment in FKH's preference share capital together with accrued interest of £0.290 million thereon and £0.525 million of loans provided by GLI to FKH.
On 28 June 2016, Greg Palfrey and Steve Adshead of Smith & Williamson LLP ("S&W") were appointed as administrators to FKH. The board of GLI is pleased to announce that, shortly after S&W's appointment, the Company agreed to acquire the respective entire issued share capitals of Funding Knight Limited ("FundingKnight", FKH's operating subsidiary) along with FKH's other subsidiaries, Funding Knight Services Limited and Funding Knight Corporate Services Limited, both of which are dormant (the "Acquisition"). Consideration of £0.75 million was paid in cash at completion of the Acquisition. As part of the terms of the Acquisition, GLI has also committed to provide Funding Knight with at least £1 million of further capital to finance its ongoing operations.
Funding Knight recorded unaudited turnover and a post-tax loss of approximately £0.61 million and £1.17 million respectively in the financial year ended 31 March 2016. FundingKnight's unaudited net assets at 31 March 2016 were approximately £0.13 million. £0.45 million of the consideration for the Acquisition will be applied by S&W in partial settlement of the Company's loan to FKH. The remainder of GLI's interests in FKH will be written down to £nil in the Company's balance sheet.
Andy Whelan, CEO of GLI said
"We believe FundingKnight is a fundamentally good business with strategic value. By acquiring the business at a low entry price, we will help secure the continued employment of the FundingKnight team and provide reassurance to the investors in FundingKnight loans and FundingKnight's SME client base that have existing loans or are seeking to borrow. In the medium term, we will be seeking to maximise the potential of FundingKnight in a way which is consistent with our strategic plans."