Midas strikes debt deal with BoS

INVESTMENT group Midas Capital has ceded significant powers to its banker after reaching an agreement over debts worth £36.5m.

The group, which operates the fund manager Midas Capital Partners in Liverpool, has agreed with Bank of Scotland to convert the debt into a combination of preference shares and a new loan facility.

And chief executive Simon Edwards, a former chief investment manager of the Merseyside Pension Fund, has agreed to leave the board and revert to his previous role as chief of Midas Capital Partners.

The deal – subject to shareholder approval – ends months of speculation over the future of the group. In January it was forced to reassure the market after its shares lost 63% of their value.

Under the terms of the deal £14m will be converted into preference shares which will accrue dividends at an annual rate of 10% above the inter-bank lending rate.

They will also give the Bank of Scotland veto rights on certain decisions such as acquisitions, disposals and new share issues. And the bank will be able to appoint a non-executive director.

Midas must buy back the shares within seven years and if £2.5m of the nominal value is not repaid by September 30, 2011 the bank can subscribe for a further 10% of the company’s ordinary shares – giving it an aggregate holding of 29.9%.

Some £12m of the original debt will become the group’s new senior debt facility to be repaid in four years. The balance will be applied to new ordinary shares.

In a trading update the group said conditions continued to be “challenging” but the business is trading in line with expectations.

The group, headquartered in Exeter, held around £5.5m in cash as at March 20 and group funds under management at February 28 were £1.9bn. Net redemptions are in line with expectations.

In another boardroom change Anthony Moore, group director of finance since 2004, has been appointed as chief financial officer.