DX – new CEO and funding secured

DX Group has announced the appointments of its new CEO and that it is has reached agreement for the £24 million in fundraising. Lloyd Dunn is to be the new CEO with immediate effect.

DX is going through a process of restructuring and refinancing after a bumpy 12 months.

The company released a statement today saying, “The Fundraising is time critical to address the short term cash position of the Company which has become weak reflecting the previously announced challenges in the business that have impacted profitability and cash generation.”

The £24 million is going to be in the form of secured loan notes in two tranches.

The first tranche of £16.3m is to be issued principally to Gatemore Capital Management (DX Group’s largest shareholder) and to the company’s new proposed directors. The proposed directors are Ron Series, Dunn, Russell Black and Paul Goodson  who will be, respectively, Chairman, CEO and Non-executive Directors on completion of Tranche 1.

The second tranche of £7.7m is to be issued principally to Hargreave Hale, acting as investment manager for Marlborough Special Situations Fund.

DX Group commented: “The Board considers that a fundraising by way of Loan Notes with conditional conversion rights is the most appropriate route for the Company to raise the capital it needs in the timescale available.

“Refinancing of £2.0m unsecured term loan from Gatemore is included in the aggregate issue.”

Bob Holt, the Chairman of DX, commented: “I am delighted to announce details of DX’s refinancing and new leadership team.  As of today, Lloyd Dunn will be taking the helm as Chief Executive Officer and, on completion of the first tranche of the fundraising, he will join the Board along with Ron Series, who will join as Chairman, and Russell Black and Paul Goodson, who will join as Non-executive Directors.

“These changes together mark a new chapter for DX and provide firm foundations for the turnaround of the Group.  I would like to thank our shareholders, bankers, staff and customers, for their ongoing support during a difficult time for the Group, and I view the future for DX with renewed confidence.”

Dunn and Series made this joint statement: “We believe that this refinancing is a critical step in the exciting opportunity to turn DX around. Together with Russell Black and Paul Goodson, and alongside DX’s major institutional shareholders, Gatemore and Hargreave Hale, we are pleased to be directly participating in this fundraising, and we look forward to leading the wider DX team as we translate the opportunity that we see into sustainable revenue and profit growth for all stakeholders.”

Gatemore Capital Management said it is “fully supportive of this agreement” and also “pleased that the current board is behind their nominations to lead the company through a turnaround”.  
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