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Pulse satisfies key conditions for recapitalisation


Wednesday 20th July 2011

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Moves to recapitalise Pulse Utilities have gained momentum, with the company reporting it has satisfied two key conditions of a heads of agreement it has with lines company Buller Electricity.

One of the conditions was changed so that 40 percent of the aggregate face value of convertible notes will now be converted into an interest free five-year loan, compared to the 25 percent previously announced, Pulse said today.

The balance owing will convert to ordinary shares at the rate of three new shares for every $1 of notes.

The agreement of each note holder to the variation had been received , Pulse, an electricity retailer and smart meter company, said.

To satisfy the second key condition, Pulse had entered conditional subscriptions agreements with qualified investors to secure $1.5 million of new funding at an issue price of 5c per share.

The variation to the convertible notes and the $1.5m of private placements remained conditional on shareholder approval, which would be sought at Pulse's annual meeting on August 18.

Buller Electricity had also provided an advance of $900,000 to Pulse, and increased its guarantee of Pulse's electricity market prudential obligations from $2.8m to $4.5m.

"This support substantially eases the company's cash flow pressures for the rest of winter and puts the company in a secure position while it seeks to finalise the agreement," Pulse said.

Earlier this month Pulse said it expected its after tax loss for the year to March 2011 would be $7.56m. That was a bigger loss than previously expected, and took into account a $592,000 increase in the provision for doubtful debts, and recognition of $297,133 more in fair value losses on electricity hedges.

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