JZ CAPITAL
PARTNERS LIMITED (the "Company" or "JZCP")
(a closed-ended investment company
incorporated with limited liability under the laws of Guernsey with
registered number 48761)
LEI 549300TZCK08Q16HHU44
Extension of Maturity of
Subordinated Loan Notes
as a Smaller Related Party Transaction
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014, WHICH FORMS PART
OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("MAR").
26 August 2022
JZ Capital Partners Limited, the London listed fund that has investments in US
and European microcap companies and US real estate, is pleased to
provide an update in relation to its subordinated 6 per cent. loan
notes maturing on 11 September 2022
(the "Subordinated Loan Notes") issued to David W. Zalaznick and John (Jay) Jordan II (who as Shareholders know
are the founders and principals of the Company's investment
adviser, Jordan/Zalaznick Advisers, Inc. ("JZAI")) and their
affiliates (together, being the "Subordinated
Noteholders").
As announced on 23 June 2022, the
Company intended to seek to negotiate an extension of the maturity
of the Subordinated Loan Notes, with the Company now being pleased
to announce that, subject to the satisfaction of certain
conditions, such an extension of just over 12 months' duration has
been secured. The Subordinated Loan Notes will now, subject to the
satisfaction of those conditions, be extended on an interim basis
to 30 September 2022 before being
further extended to 30 September
2023. In return and consistent with the existing Investment
Policy of the Company, it has also been agreed that, subject to the
satisfaction of certain of those same conditions and following the
Company's senior facility agreement provided by WhiteHorse Capital
Management, LLC (the "Senior Facility") being paid off in
full in due course, the Company will make mandatory redemptions
from time to time of the Subordinated Loan Notes from the net cash
proceeds generated from certain realisations achieved by the
Company. The Company will continue to be able, subject to
compliance with certain financial tests of the Senior Facility, to
make voluntary redemptions of the Subordinated Loan Notes. All
other terms of the Subordinated Loan Notes (including their
interest rate at 6 per cent. per annum payable semi-annually) will
remain unchanged and the Subordinated Loan Notes will continue to
be fully subordinated to the Senior Facility.
The amendments to the Subordinated Loan Notes as described in
this announcement is considered to be a smaller related party
transaction of the Company pursuant to chapter 11 of the listing
rules made by the Financial Conduct Authority pursuant to section
73A of the Financial Services and Markets Act 2000, as amended (the
"Listing Rules") (insofar as they apply to the Company by
virtue of its voluntary compliance with the same). As such, whilst
shareholder approval for such amendments is not required, this
announcement made in accordance with Listing Rule 11.1.10 R(2)(c) is required to be made by the
Company. Further details of the amendments, along with the
application of the Listing Rules to the same are set out below.
The extension of the Subordinated Loan Notes is, as previously
explained and subject to the Company's compliance with the
financial covenants of the Senior Facility, expected to facilitate
the repayment of the Company's zero dividend preference shares
("ZDPs") due on 1 October
2022. The extension has also been negotiated and secured for
the reason that, whilst following the transformational realisation
of the Company’s interest in Testing Services Holdings and the
anticipated redemption of the ZDPs its cash reserves will be at a
healthy level, the Company needs to maintain cash liquidity to
invest in accordance with its existing Investment Policy to
maximise the value of its existing portfolio investments where
appropriate as well as in the current uncertain economic climate to
support them and so as to meet existing obligations as they fall
due. The Company remains focused upon its existing Investment
Policy as approved by Shareholders (which includes not making
further investments outside, as mentioned above, of existing
obligations or to support existing portfolio companies, and with
the intention of realising the maximum value of the Company's
investments and, after repayment of all its indebtedness, to return
capital to Shareholders).
Extension of Maturity of Subordinated
Loan Notes
Shareholders are reminded that the Company's issuance of the
Subordinated Loan Notes to the Subordinated Noteholders was the
subject of a circular issued to Shareholders by the Company dated
28 May 2021 and approved by
Shareholders in an extraordinary general meeting of the Company
held on 18 June 2021.
The principal terms of the Subordinated Loan Notes (save for the
amendments thereto as described in this announcement), along with
the associated documentation (including the Note Purchase Agreement
("NPA"), the Security Documents and the Subordination and
Intercreditor Agreement) are as set out in the aforementioned
circular. The only changes made to these arrangements are to allow
for the extension of the maturity of the Subordinated Loan Notes
and to provide for mandatory redemptions of the same in certain
circumstances once the Company's Senior Facility has been paid off
in full in due course. All other terms of the Subordinated Loan
Notes (including their interest rate at 6 per cent. per annum
payable semi-annually) will remain unchanged and the Subordinated
Loan Notes will continue to be fully subordinated to the Senior
Facility.
Specifically, the maturity of the Subordinated Loan Notes will,
with effect from 9 September 2022 and
subject to the satisfaction of certain conditions (including (i)
the senior lender to the Senior Facility consenting to the
amendments to the Subordinated Loan Notes (which has already been
obtained), and (ii) no event of default under the NPA or the Senior
Facility), first be extended on an interim basis to 30 September 2022, being the time immediately
prior to the repayment of the ZDPs due on 1
October 2022.
Such maturity date will then, with effect from 30 September 2022 and subject to the satisfaction
of certain other conditions (including (i) no event of default
under the NPA or the Senior Facility, (ii) the payment in full of
all interest accrued and then due on the Subordinated Loan Notes,
and (iii) compliance with the covenants in the Senior Facility
which demonstrate that the Company is permitted to effect the
repayment of the ZDPs), subsequently be extended by a further 12
months to 30 September 2023.
Shareholders are reminded that the repayment of ZDPs remains
subject to compliance with the financial covenants of the Senior
Facility including the aforementioned covenants demonstrating that
the Company is permitted to effect the repayment of the ZDPs.
In return and consistent with the Company's existing Investment
Policy, it has also been agreed that, with effect from 30 September 2022 and conditional upon the
satisfaction of the same conditions as those applying to the
further extension and following the Senior Facility being paid off
in full in due course, the Company will make mandatory redemptions
from time to time of the Subordinated Loan Notes from the net cash
proceeds generated from certain realisations (being asset sales in
excess of $500,000) achieved by the
Company. Any such mandatory redemptions will also be subject to the
Company being permitted, if no event of default under the NPA has
occurred and is continuing, to retain an amount of those net cash
proceeds as are necessary for it to be in compliance with the NPA's
minimum liquidity covenants. As mentioned above, the Company will
continue to be able, subject to compliance with certain financial
tests of the Senior Facility, to make voluntary redemptions of the
Subordinated Loan Notes.
In order to effect the above changes, the Company has entered
into an amendment to the existing NPA with the Subordinated
Noteholders, with the senior lender to the Senior Facility also
having consented to those amendments. For the avoidance of doubt,
the interim extension is to become effective on 9 September 2022 but remains conditional upon the
satisfaction of the conditions applying to that extension as
described above, and the further extension and the additional
mandatory redemption provisions are to become effective on
30 September 2022 but remain
conditional upon the satisfaction of the conditions applying to the
further extension as also described above. The Company will make
further announcements in relation to the fulfilment of the
conditions and the effectiveness of the amendments as and when
required.
Unless otherwise defined herein, capitalised terms used in this
section of this announcement have the meanings given to them in the
aforementioned circular of the Company dated 28 May 2021.
As mentioned above, the amendments to the Subordinated Loan
Notes as described in this announcement is considered to be a
related party transaction under chapter 11 of the Listing Rules
(with which the Company voluntarily complies and insofar as the
Listing Rules are applicable to the Company by virtue of such
voluntary compliance).
JZAI is as also earlier mentioned the Company's investment
adviser pursuant to an investment advisory and management agreement
dated 23 December 2010 between the
Company and JZAI, as amended from time to time, and, under the
Listing Rules, would therefore be considered a related party of the
Company (as defined in the Listing Rules). As founders and
principals of JZAI, Messrs Zalaznick and Jordan are associates of
JZAI and would also be considered related parties of the Company.
In addition, each of them are substantial Shareholders of the
Company as they are each entitled to exercise or to control the
exercise of 10 per cent. or more of the votes able to be casted at
a general meeting of the Company. As such, each of them would be
considered to be related parties of the Company on this basis as
well. The amendments to the Subordinated Loan Notes as described in
this announcement, which involve Messrs Zalaznick and Jordan as
related parties of the Company, would be considered to involve a
transaction or arrangement between the Company and its related
parties. Accordingly, Messrs Zalaznick and Jordan as related
parties and such amendments as described herein as a transaction or
arrangement between them would be considered to be a related party
transaction under Chapter 11 of the Listing Rules.
Such amendments to the Subordinated Loan Notes as described in
this announcement do however fall within Listing Rule 11.1.10 R and constitute a smaller related party
transaction under the Listing Rules. This announcement is therefore
being made in accordance with Listing Rule 11.1.10 R(2)(c).
Market Abuse Regulation
The information contained within this announcement is considered
by the Company to constitute inside information as stipulated under
MAR. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.
The person responsible for arranging the release of this
announcement on behalf of the Company is David Macfarlane, Chairman of JZCP.
______________________________________________________________________________________
For further information:
Kit Dunford / Ed
Berry
FTI Consulting |
+44 (0)7717 417 038 / +44 (0)7703
330 199 |
David Zalaznick
Jordan/Zalaznick Advisers, Inc. |
+1 (212) 485 9410 |
Sam Walden / Martin
Chapman
Northern Trust International Fund Administration Services
(Guernsey) Limited |
+44 (0) 1481 745385 /
+44 (0)1481 745183 |
Important Notice
This announcement includes statements
that are, or may be deemed to be, "forward-looking statements".
These forward-looking statements can be identified by the use of
forward-looking terminology, including the terms "believes",
"estimates", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements relate to
matters that are not historical facts. By their nature,
forward-looking statements involve risks and uncertainties because
they relate to events and depend on circumstances that may or may
not occur in the future. Forward-looking statements are not
guarantees of future performance. The Company's actual investment
performance, results of operations, financial condition, liquidity,
policies and the development of its strategies may differ
materially from the impression created by the forward-looking
statements contained in this announcement. In addition, even if the
investment performance, result of operations, financial condition,
liquidity and policies of the Company and development of its
strategies, are consistent with the forward-looking statements
contained in this announcement, those results or developments may
not be indicative of results or developments in subsequent periods.
These forward-looking statements speak only as at the date of this
announcement. Subject to their legal and regulatory obligations,
each of the Company, Jordan/Zalaznick Advisers, Inc. and their
respective affiliates expressly disclaims any obligations to
update, review or revise any forward-looking statement contained
herein whether to reflect any change in expectations with regard
thereto or any change in events, conditions or circumstances on
which any statement is based or as a result of new information,
future developments or otherwise.