London Capital Group proceeds with plans to sell control to Charles Henri-Sabet

If you’re not doing great it is tough to raise more money. But certainly not impossible.

Embattled UK spreadbetting firm London Capital Group (LON:LCG) has announced an update to its plans – first revealed back in early May on LeapRate – to raise money from outside investors. And the amount it wants to raise is not trivial – LCG has a market value of just under £14M (about $24 million), and it wants to raise more than that in new equity.

LCG logo newLCG issued a press release via the London Stock Exchange today stating that it plans to raise up to £17.5M through a proposed convertible note financing, essentially selling control of the company as part of the deal to Charles-Henri Sabet (see more on Sabet below). Between £12.5-£15.0M of the amount would come from Sabet, and the rest, £0.5-2.5M, from other investors.

All the proposals are subject to LCG shareholder approval, at a general shareholders’ meeting scheduled for July 3.

If the deal doesn’t go ahead, then:

– if LCG shareholders scuttle the deal by voting against it on July 3, LCG will pay Sabet’s GLIO holdings a fee of £225,000, and

– if Sabet backs out, GLIO will pay LCG a fee of £112,500.

Not really huge ‘breakup fees’ though, if either party back out.

Assuming the deal goes ahead Mr. Sabet will become Executive Chairman of LCG, with existing Chairman Giles Vardey stepping down but remaining (at least for a while) a non-executive director of the Company.

Charles-Henri Sabet has previously been a significant and successful investor in online trading platforms. Mr Sabet founded e-trading company Synthesis Bank in 1999, eventually becoming a white label of Saxo Bank. Saxo Bank bought Synthesis in 2007. Sabet then remained with Saxo for about a year, acting as Saxo’s Head of Global Trading.

Matchmaker for the deal was current LCG CEO Kevin Ashby, who himself had bought 5% of LCG not long ago.

LCG shares remained mired in a five-year slump, hitting a 52-week and indeed all-time low earlier this month.

The complete LCG press release can be seen here.

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