ThirdForce plc

31 March 2006

 

In March 2003, when ThirdForce plc (the "Company”) acquired The Electric Paper Company Limited, the Chairman of the Company, Mr. Pat McDonagh, entered into a preference share agreement, pursuant to which he agreed, in certain circumstances, to subscribe for preference shares in the Company, which shares were convertible into ordinary shares, at the discretion of Mr. McDonagh, if not redeemed within 3 years from the date of their subscription (the "Agreement"). Details of the Agreement were set out in the circular to shareholders of the Company dated 7th March 2003. The Agreement provided that the board of the Company could, in its absolute discretion, by a resolution passed by 75% or more of the directors, decide to defer all or part of Mr. McDonagh's obligation to subscribe for preference shares.

The board has, by a unanimous vote, on which Mr. McDonagh abstained, agreed to terminate the Agreement on the basis that Mr. McDonagh enters into a new agreement which provides that:

-          Mr. McDonagh shall, between 1 April 2006 and 31 March 2009, pay (either directly or by way of reimbursing the Company) the interest charged to the Company on outstanding loan balances of up to €4m;

-          Mr. McDonagh maintains the guarantee of the Company’s increased overdraft facility up to a limit of €7.5m until 31 March 2009 and up to a limit of €5m from then until 31 March 2011; and

 

-          In the event that during the period in which Mr. McDonagh is guaranteeing the facility the Company's bank issues a demand notice, Mr. McDonagh will lend to the Company the shortfall between the amount of the demand and the amount the Company can pay from its own funds up to a maximum of the limit guaranteed. Any such loan will be interest free until 31 March 2009 and thereafter will bear interest at a normal commercial rate. Such loan may be converted into ordinary shares in the Company at any time after 31 March 2009, on similar terms as to payment as the conversion rights under the Agreement, subject to receiving any appropriate waivers and to the passing by shareholders of resolutions, inter alia, authorising the allotment of shares upon exercise of the conversion rights, and, if the loans are not so converted, they will be repayable in full on 1 April 2011 to the extent the Company's financial position permits. However, if the said appropriate waivers and shareholders resolutions are not obtained and/or passed, then the loans will be repayable in full on 1 April 2011".

The independent directors believe that the new agreement reached is advantageous to the Company and other shareholders as it has secured Mr. McDonagh’s continuing support of its banking facilities and interest payments while reducing the likelihood of the potential dilution of other shareholders in the Company through the potential conversion of the preference shares to ordinary equity. Accordingly, the independent directors, having consulted with Dolmen Securities Limited, the Company's nominated adviser, consider that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

 

Ends.

 

Enquiries:

Brendan O’Sullivan

CEO ThirdForce plc

Dublin, Ireland

Tel. +353 1 2891989

This announcement has been issued through the Companies Announcement Service of

the Irish Stock Exchange.

 

END