£7m loan allows Cobra to look at a year of ‘huge growth’

Cobra has opened the door to private equity investment after agreeing a £7m loan from investment company Wainford Holdings.

Cobra completed the deal with Wainford this week. Its owner Dominic Wainford, who now has a 6% shareholding in Cobra, has been appointed as a non-executive director.

Wainford’s investment will allow Cobra to reduce other borrowings, to meet the deferred payments on companies it has acquired in the past two years, as well as give it extra working capital.

A statement to the London Stock Exchange said the deal would allow Cobra to create “280 tranches of secured convertible loan notes, each note having a par value of £25,000”.

Wainford will take £4.5m of the loan notes immediately; a further £2.5m will become available within six months. Wainford could then covert the notes into Cobra shares if it has not repaid the loan within two years.

Steve Burrows, chief executive of Cobra, said the deal put the company in a strong cash position.

However, despite ruling out any more immediate plans to raise funds, he said the business would consider private equity backing to help it expand.

“We would certainly look at them [private equity],” he said. “We would talk but it would have to be on the right terms for us.”

He added: “We are not looking for cash any more. We are not looking for [new] acquisitions ... we have done the deal that we are looking to do.”

He said Cobra was still consolidating its acquired businesses but expected 2009 to 2010 to be a year of huge growth.

Burrows added that the funds would also allow the business to launch its capital release scheme, in which it planned to take small stakes in brokers in return for equity.

The scheme has been delayed for almost a year.