Mighty Kingdom Ltd Secures AU$1.2 million Debt Facility with Unique Conversion Terms

Highlights:

• $1.2 million Debt Facility Secured: Mighty Kingdom Limited (ASX: MKL) establishes a $1.2 million debt facility with a 20% interest rate, supporting liquidity while awaiting R&D and DGTO rebates.
• Flexible Conversion Terms: Lender can convert outstanding debt to equity at $0.02 per share before maturity or $0.01 per share in default scenarios, subject to shareholder approval.
• Operational Restrictions: Agreement restricts asset encumbrance, material asset disposal, and dividend payments without lender consent, ensuring financial prudence.

Mighty Kingdom Limited (ASX: MKL), a game development company, has provided additional details about its recently announced debt facility. The agreement, valued at up to $1.2 million, aims to bolster the company's liquidity while it awaits R&D and DGTO rebates.

Key Debt Facility Details

The facility has a repayment deadline of April 18, 2025, or when rebates are received, whichever occurs first. Interest is set at 20% of the face value, capitalized upon drawdown. Notably, the lender has the option to convert the debt into ordinary shares at a rate of $0.02 per share, contingent on shareholder approval at an upcoming Extraordinary General Meeting (EGM).

Restrictions and Obligations

Under the agreement, Mighty Kingdom is restricted from taking certain actions without the lender's consent, such as:

• Creating encumbrances on assets outside ordinary business operations.
• Disposing of material assets or paying dividends.
• Reducing paid-up capital or incurring debt exceeding $50,000 beyond ordinary operations.

Alternate Repayment Mechanism

In case of default exceeding three months past the repayment date, the lender may convert the debt into equity at a rate of $0.01 per share, subject to shareholder approval. This provides a fallback repayment mechanism while preserving operational flexibility.

At the time of writing, Mighty Kingdom has assured compliance with ASX Listing Rules, confirming no substantial assets will be transferred to any party associated with Listing Rule 10.1.

This strategic financing initiative highlights Mighty Kingdom's efforts to stabilize its financial position and navigate forthcoming challenges in its operational landscape.

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