GLI Finance is asking shareholders to vote in favour of its restructuring and refinancing proposals, as it warns that it could face administration or insolvency without the support.
The Aim-listed alternative finance group has proposed rebranding and restructuring its business to focus on its property-backed lending through Sancus BMS, which it said was the only part of its group with “tangible value.”
GLI Finance said in a stock market update this morning that it also wants to raise up to £4m of new equity and refinance existing bonds by issuing up to £15m of new debt.
GLI also wants to extended its credit facility with the Honeycomb Investment Trust to a maximum of £75m, from the current £45m.
The facility was due to expire on 28 January 2021 but GLI said it has secured an 18-month extension and is also seeking to push this further to January 2024.
A spokesperson confirmed that the restructuring would involve selling off stakes in fintech lending platforms such as Funding Options that it holds within its Fintech Ventures portfolio, which GLI Finance said has “diminishing returns.”
Shareholders will be able to vote at an extraordinary general meeting on 4 December.
The update warned that if the resolutions are not passed, there is a “material risk” that the company may not have sufficient cash resources to pay the 2020 final capital entitlement in full to satisfy the solvency test set out under Guernsey company law.
“The board believes that in the event that the proposals are not approved, then alternative sources of debt or equity financing are very unlikely to be available, or be available on preferential terms.
“The group could then face administration or other insolvency proceedings which would, in the board’s opinion, result in shareholders receiving no value for their current shareholdings.”