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Kin Group – bailout funding reviewed (with help from Nicole Scherzinger)

By Steve Moore | Monday 15 May 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Having previously suggested future ramparoonies for the company to place into somewhat more limited, Kin Group (KIN, the former Fitbug) “is pleased to announce that it has… agreed to issue convertible unsecured loan notes with a term of three years, to raise up to £1.125 million (before expenses), to Belastock Capital L.P., an overseas based institutional investor”. Hmmm.

This is with the notes being issued at a 10% discount to nominal value in up to four tranches – with the first tranche raising £0.315 million expected to be issued today and following £0.27 million tranches expected to be issued 60 days after the previous tranche. They are convertible at the lesser of 125% of closing mid-price on 12th May 2017 (why is the actual number not provided?) and the lowest closing bid-price for the three consecutive trading days ending prior to the relevant conversion notice.

Conversion will also see a three year warrant for each new share, that exercisable at the lesser of 90% of the lowest closing bid-price for the three consecutive trading days ending prior to the relevant exercise notice and 125% of the price at which the corresponding notes were converted.

This is bailout funding (“the proceeds of this fundraising will be used by the company for general working capital purposes”) and I note amongst the conditions “the closing bid price of the company's ordinary shares (as reported by Bloomberg) not being below £0.001 (0.1 pence) for any five consecutive trading days on or prior to the relevant issue date”. It's currently 0.14p.

It thus remains bargepole ahoy, whilst I also ask, despite Belastock Capital being described as “an overseas based institutional investor”, is it really going to hold onto shares here? To use the words of esteemed philosopher Nicole Scherzinger…

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