12/08/2008 - 11:18

Advanced Engine secures $2m loan

12/08/2008 - 11:18

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Malaga-based Advanced Engine Components Ltd has secured a $2 million loan from a party related to a major shareholder to fund working capital requirements on the back of ongoing growth in sales demand.

Advanced Engine secures $2m loan

Malaga-based Advanced Engine Components Ltd has secured a $2 million loan from a party related to a major shareholder to fund working capital requirements on the back of ongoing growth in sales demand.

The company today said private company 698 Capital Asia Pacific Ltd has agreed to provide the Sales Financing Facility in exchange for 5 million options to acquire shares at 20c each before December 2010, subject to shareholder approval.

Should ACE shareholders approve the option issue the facility's interest rate will be reduced to 0.75 per cent below the National Australia Bank 's base rate.

ACE will be able to draw down the whole or part of the facility at any time before May 31 2009.

ACE said the ongoing growth in sales demand has increased working capital requirements.

"The Facility provides suppliers and customers with confidence in ACE's financial capability to meet commitments on a timely basis," the company said.

 

Below is the full announcement:

 

Advanced Engine Components Limited ("ACE") is pleased to announce that 698 Capital Asia Pacific Ltd ("698"), a party related to ACE's major shareholder, has agreed to provide a $2 million Sales Financing Facility ("Facility").

Draw down of the Facility will be available upon execution of the formal documentation. Execution should occur on or around 14 August 2008.

The key terms of the Facility are:

(a) ACE can draw down in whole or in part at any time up until 31 May 2009;

(b) Interest will be charged at the Base Rate shown by "National Australia Bank Indicator Rate - Business Lending" as at the date of execution;

(c) a $17,500 facility fee is payable on execution;

(d) all monies drawn down must be repaid by 30 June 2009 or earlier should ACE complete a capital raising in excess of $2 million;

(e) the amount of draw down must not exceed 80% of the sum total of outstanding debtors and cash on hand; and

(f) normal Events of Default provisions will apply.

In addition, subject to ACE shareholder approval at the 2008 Annual General Meeting, ACE will issue 698 with 5 million options to acquire shares at 20 cents per share on or before 31 December 2010. Should ACE shareholders approve the option issue the Facility interest rate will be reduced to 0.75% below the NAB Base Rate.

Provision of the Facility comes on the back of year on year sales growth from FY2005 to FY2008, an upward sales trend quarter on quarter since December 2005, record sales in the June 2008 Quarter and sufficient orders on hand to exceed (subject to delivery) June quarter sales in the September 2008 quarter.

ACE appointed Mike Hill as Chief Operating Officer in July 2008. Mike's key strengths include sales, marketing, logistics and organizational management. Mike will oversee the appointment of the China Sales Manager (announced 30 May 2008) and enhance ACE's product delivery capability to cope with the increasing sales.

The ongoing growth in sales demand has increased working capital requirements. The Facility provides suppliers and customers with confidence in ACE's financial capability to meet commitments on a timely basis. In addition, the Facility and the exercise price of the share options demonstrate the confidence of 698, the major shareholder, in the immediate and long term future of ACE.

 

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