Kin Group Plc (LON:KIN) has requested the suspension of trading in its shares on AIM from today as it continues discussions to raise additional funding after Belastock Capital LP said it will not now proceed with the release of three further tranches of its Convertible Loan Note financing.
In a statement today, the digital wellness provider for corporate organisations said it has been informed by Belastock that, due to the continued recent falls in the company's share price, the institutional investor will not proceed with the three further tranches of the loan note.
Kin announced on 15 May 2017 that it has agreed to issue convertible unsecured loan notes with a term of three years to raise up to £1.125mln in four tranches, to Belastock to fund its general working capital requirements.
READ: Kin Group nudges higher as lender waives loan note condition
The first tranche of notes, with a subscription price of £315,000 were issued on that same date, with the remaining three tranches due to be issued at 60 day intervals thereafter. The second tranche was set to be issued in mid-July.
However, one of the conditions attaching to the issue of subsequent notes, which could be waived by Belastock, is that the closing price of Kin’s shares would not fall below 0.1p for any five consecutive trading days on or prior to the relevant issue date.
The company noted that this condition was not met at the close of business on 12 June 2017.
Kin had announced 13 June on that Belastock had “confirmed its ongoing support for the Company and that it is the current intention of Belastock to subscribe for the remaining tranches of the Notes”.
However, the group said that Belastock has now indicated that due to the further fall in Kin's share price, it has decided that it will not proceed with the remaining tranches of the notes, which would have raised £765,000 net for Kin over the next four months.
“Significant, unexpected shortfall in its available working capital”
The firm pointed out that the loan notes were a key part of the company's plans for short term development capital and the withdrawal of this support has meant it now has “a significant, unexpected shortfall in its available working capital.”
Kin said it is seeking to raise additional funding to fill this gap and has been in dialogue with NW1, its largest shareholder and senior secured creditor, and other parties.
However, the firm added: “There is no guarantee that this fundraising will be completed successfully and so the Company has requested suspension of trading in its ordinary shares on AIM pending clarification of its financial position.”
It said the shares will remain suspended from trading on AIM whilst discussions continue and the company said it will issue further announcements as appropriate.
Kin shares were suspended at 0.05p.