Original URL: http://www.theregister.co.uk/2009/08/21/spinvox_debt/
SpinVox: £30m debt due by Christmas
Only 131 shopping days till payback time
Exclusive SpinVox's July round of funding has left it burdened with a £30m debenture that must be paid before Christmas, according to documents just filed at Companies House.
The debenture is held by Tisbury Master Fund Ltd, whose director John Botts has now become chairman of SpinVox, SpinVox's PR company told us this week. Botts became an investor in and director of SpinVox in 2006. He also chairs the hedge fund sponsor Tisbury Capital Management, and United Business Media.
Tisbury is responsible for three loans to SpinVox. One of these loans has a clear supporting schedule, and it's described as a "Mezzanine" loan of £30m and was created on July 30. This is due to be repaid on December 20.
Mezzanine debt is typically used to finance buyouts, "where it can be used to prioritize new owners ahead of existing owners in the event that a bankruptcy occurs," according to the Investor's Dictionary. Because it is considered riskier, lenders typically ask for some equity. SpinVox issued new equity last month, and converted some ordinary shares to preference shares.
Tisbury's two other loans are also documented in the document, but the precise size and repayment schedule of these is less clear.
In its 2007 accounts, SpinVox refers to a "Senior" Loan made by Tisbury on 6 July 2007, but no amount has been listed. The 2007 acounts also show that on 6 July 2007, SpinVox issued PIK (payment in kind) notes to the value of £16m, due to mature in July 2010.
Tisbury also made available a "Junior Loan" facility of up to £27m in February this year, which was restated in April. SpinVox has not disclosed how much of the Junior loan was taken up.
We asked SpinVox about the £30m obligation it now has to Tisbury. In a statement through its PR company, Brunswick, SpinVox told us: "We are fully aware of their repayment schedule and comfortable with our position."
What can SpinVox do now? The company has three options available to it. It can attempt to generate the £30m in cash from operations, it can sell the company, or it can attempt to refinance once again in December. ®