Further to the Company’s announcement of 4 March 2022 announcing the variation of terms attached to the Convertible Loan note between the Company and Mr. William Newton (“BN”), Cornerstone FS plc (AIM: CSFS), the cloud-based provider of international payment, currency risk management and electronic account services to SMEs, announces that on 28 September 2022 BN assigned to Atlantic Partners Asia (“APA”), a strategic partner of the Group, the convertible loan instrument (the “Facility”) originally executed between BN and the Company on 17 March 2021 (the “Assignment”). Concurrent with the Assignment, under the terms of the Facility the Company gave notice to draw down on the Facility and APA has 5 working days to transmit £350,000. Upon receipt of funds the Company will contemporaneously issue APA with Loan Notes immediately convertible into 4,375,000 new ordinary shares (“New Shares”) in the Company at a conversion price of 8 pence per share.
Headquartered in Singapore, APA provides currency and payments solutions to high-net-worth individuals, SMEs and multinational companies around the globe, and specialises in Asian currencies. APA has been a partner of Cornerstone since April 2019 primarily undertaking transactions on behalf of the Group (with Cornerstone receiving commission) in cases where the Group does not have the requisite regulatory authority, such as accessing funds in local Asian jurisdictions while also cross-referring business to Cornerstone.
This strategic investment into Cornerstone by APA represents the expansion of the relationship between the two parties, with the intention of diversifying payment solutions, creating a wider global reach and leveraging Cornerstone’s flexible and scalable technology. This also creates some additional commercial opportunities and efficiencies across both parties.
Convertible Loan Note Facility
The Assignment included amending certain terms of the Facility – namely, that in the event of a drawdown and the Company issuing APA with unsecured convertible loan notes (the “Loan Notes”), the Loan Notes could be converted at a subscription price reduced from 26.5 pence to 8.0 pence. (This represents a 6.7% premium to the closing mid-market price of 7.5 pence on 28 September 2022, and a 23.1% premium to 6.5 pence placing price at which shares were issued in the Placing notified on 5 August 2022). All other details of the Facility were unchanged and were as set out previously.
On 28 September 2022, Cornerstone drew down on the Facility and APA has 5 working days to transmit £350,000. Upon receipt of funds the Company will contemporaneously issue APA with Loan Notes immediately convertible into 4,375,000 New Shares in the Company at a conversion price of 8 pence per share. The proceeds will be used for working capital purposes.
Upon receipt of funds application will be made for the admission of the4,375,000 New Shares to trading on AIM (“Admission”). A further announcement confirming the expected Admission Date will be made at that time. On Admission, the New Shares will rank pari passu in all respects with the Company’s existing ordinary shares.
Total Voting Rights
Following Admission, the total issued share capital of the Company will consist of 48,036,199 ordinary shares, with no shares held in treasury. As such the total number of voting rights in the Company will be 48,036,199ordinary shares. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA’s Disclosure Guidance and Transparency Rules.
James Hickman, Chief Executive Officer of Cornerstone, said: “We are delighted to have received this strategic investment from Atlantic Partners Asia and to be deepening our partnership with them. They have played an important role in the growth of our Asia business to date, and with their expansive Asian currency network, we look forward to working together to drive more progress in a region that offers a significant cross-border payments opportunity.”
Jeremy Brown, Chief Operating Officer of APA, added: “We are thrilled to announce the expansion of our partnership with Cornerstone. This will mean significantly improved payment options in and out of Asia at a time when SMEs need it most. This partnership enhances strong growth, provides access to scalable technology capabilities, and aligns with our core mission of delivering premium Asian Currency Solutions“
Related Party Transaction
As BN is a substantial shareholder (as defined in the AIM Rules) of the Company and an Executive Director of the Company, the Assignment is classified as a related party transaction under Rule 13 of the AIM Rules.
All the directors of the Company excepting BN and Phil Barry (being Dan Mackinnon, Gareth Edwards, James Hickman and Judy Happe) are considered to be independent directors for the purposes of Rule 13 (“Independent Directors”).
The Independent Directors, having consulted with the Company’s Nominated Adviser, SPARK Advisory Partners Limited, consider that the terms of the Assignment are fair and reasonable insofar as shareholders are concerned.