Blavod Extreme Spirits has secured a new loan.

The wine and spirit producer said late last week that it has set up a long-term secured loan facility with Cayman Islands-based Laurus Master Fund limited. The facility replaces the existing short-term banking facilities currently in place, Blavod said, with improved terms and more favourable rates.

The new arrangement is a US$3m, three-year revolving credit facility. Laurus has an option to pay off the outstanding balance of the facility using shares in Blavod priced at 105% of the lower of the average closing price for the 10 trading days prior to the availability of shares, which is expected to be at the company's forthcoming Annual General Meeting and the 10 trading days prior to 31 July.

In addition, Laurus will have the option to subscribe for up to 2.25m new ordinary shares in the company at a price of 105% of the average closing price for the 10 trading days prior to the granting of the options, which is also expected to be at the AGM.

Laurus will be restricted, however, to owning no more than 2.99% of the ordinary share capital in Blavod at any point in time. There are also provisions which prohibit Laurus from lending stock or holding a short position in the company's shares. The agreement also contains provisions that allow for Blavod's early repayment of the facility.

"We are pleased to enter into this relationship with Laurus," said Tony Murphy, Blavod's CFO. "The completion of this, following our recently-completed equity offering, will provide us with enhanced financial flexibility to fund the next growth phase of our company."

Blavod is expected to post its figures for the full-year to 31 March within the next few days.