A dilutive £2.2 million refinancing at security contractor Westminster (WSG:AIM) via two convertible loan note issues sends shares 16% lower to 24.3p.

The deals add potentially dilutive shares of around 10.5 million to the existing 55.1 shares, an increase of roughly 19% on the basic share count.

Loan proceeds will be used ‘for general balance sheet strength and will support ongoing costs and business development particularly around the expansion of the Managed Services division’, according to the company.

WESTMINSTER GROUP - Comparison Line Chart (Rebased to first)

Loss-making Westminster runs security operations at airports and ports across the world and is starting up a 21-year airport ferry service in Sierra Leone.

Tapping its existing Channel Islands-listed Convertible Secured Loan Note (CSLN) facility, Westminster raised £670,000 from institutional shareholders. Borrowings on that facility now total £1.4 million.

Terms of the loan agreement indicate the business can draw down an additional £2 million from lenders.

Complex Zero Coupon Convertible Unsecured Loan Notes (CULN) and 1.1 million warrants – instruments that can be converted into shares at 39p – have also been issued, raising £1.49 million net.

The dilutive impact of the Zeroes depends on the price of shares when conversion takes place. At current prices, the dilutive impact would be around 7.5 million shares, though there are some restrictions over the time period the loan notes can be converted

Issue Date: 22 Apr 2015