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Bluestone Global announces restructure

It comprises:

•             A Deed of Compromise with the ATO (“ATO Deed”) whereby debts of $28.7 million can be compromised with a payment of $6 million

•             Completing a Restructure Implementation Deed (“Deed”) with Valdez Group Pty Limited on behalf of the Valdez Consortium (“VAL”) whereby, subject to terms and conditions outlined below, VAL will invest $4.5 million in BUE as follows:

•             Take up a 15% placement in BUE at a price of $0.008

•             Provide a secured $2 million loan facility

•             Participate in and sub-underwrite $2 million in a proposed pro rata rights issue

•             Board and management changes including the appointment of Anthony Kelson to the Board and Stephen Sasse as CEO, subject to terms and conditions outlined below.

ATO Deed of Compromise

The Company has reached a binding settlement with the Australian Taxation Office in relation to its outstanding tax liabilities. The ATO Deed requires the Company to make two payments over 12 months totalling $6 million – being $4 million within one month of the date of the ATO Deed and $2 million within 12 months of the date of the ATO Deed. On the final payment, the ATO will compromise the debt of $28.6 million as at 1 November 2013, together with any interest charges incurred between that date and settlement. Carried forward tax losses of the Consolidated Group will also be compromised and therefore will not available for future offset against taxable income.

An attached proforma balance sheet (Appendix A) has been prepared based upon an unaudited balance sheet as at 31 October 2013. The proforma balance sheet has been prepared highlighting the amounts payable to the ATO and the impact of the tax liabilities compromised.

Restructure Implementation Deed – Valdez Consortium

BUE is also pleased to announce that it has entered into a Deed with VAL. The Deed remains conditional on a number of factors including receipt of regulatory approval, Board and management changes, shareholder approval, certain third party consents and the restructure of the put option granted by the Company in relation to the Guildford Receivable, as announced on 24 December 2012, such that the financial risk of the option being exercised is removed.

The Deed represents a fundamental step in the restructure of the Company’s operations with the key elements of the Deed being as follows:

1. VAL will take up a 15% placement in BUE at a price of $0.008, subject to the Company’s available placement capacity (“Placement”). The Placement is conditional on BUE securing commitments for the additional $2 million of the $4 million secured loan facility outlined below.

2. VAL has agreed to provide BUE with $2 million of a proposed 2 year, $4 million secured loan facility (“Loan”) at an interest rate of 10% per annum payable at repayment of the loan. BUE require commitments for an additional $2 million in loan notes from other parties as a condition of the drawdown. The $4 million will be used to satisfy the initial payment under the ATO Deed.

3. Subject to the drawdown of the Loan and the appropriate shareholder approvals including the receipt of an independent expert’s report, BUE to issue 200,000,000 options to VAL (and 200,000,000 options to the other parties taking the loan notes) with an exercise price of $0.012 per option exercisable at any time within a 24 month period from the date of the grant of the options.

4. BUE to conduct a pro-rata rights issue at a price of $0.008 to raise approximately $4 million. VAL has agreed to take up its full entitlements under the rights issue and will also sub-underwrite it by an amount of $2 million. The timing and detailed terms of the proposed rights issue are subject to finalisation by the BUE Board.

5. Subject to receipt of the appropriate shareholder approvals, VAL to receive BUE shares linked to the pre-tax operating profit of BUE for the financial year ending 30 June 2016 (excluding the effect of any mergers, divestments or adjustments for non-recurring or abnormal matters) ("Performance Share Profit") as follows

•             164,598,945 shares if the Performance Share Profit meets or exceeds $7.5 million

•             109,732,630 shares if the Performance Share Profit is between $4.5 million and $7.5 million and

•             78,817,702 shares if the Performance Share Profit is between $4 million and $4.5 million.

The impact on the capital structure of the company as outlined by this Deed is explained further in Appendix B.

BUE will provide market updates as to the status of the implementation of the restructure.

Board and Management Changes

On completion of the Placement, the Board will appoint Mr Anthony Kelson as a Director of BUE and Mr Stephen Sasse as CEO.

Anthony has 15 years experience in the professional services sector having worked in the accounting and taxation field and in more recent years in various management positions and consulting on engagement structures for independent contractors.

Since 2004 Anthony has held the position of chief executive officer of Freelance Global Limited, responsible for all aspects of the business including developing, implementing and reviewing the global strategic plan and preparing global and jurisdictional business plans. Anthony has a Bachelor of Business with a major in Accounting and Human Resource Management

The appointment of Stephen as CEO will bring to a close the search the Company has undertaken since July 2013 for a replacement CEO. Stephen has held senior executive roles in the Leighton Group, including Leighton Holdings, John Holland and Transfield Construction. His early career included human resources, industrial relations and WHS responsibilities for a number of blue chip companies, including Shell, ICI, Goodman Fielder and National Foods. He has an unparalleled track record in productivity improvement and cost reduction, including major restructures, acquisitions, mergers and shared service models the effective delivery of major projects and the design and development of WHS governance frameworks.

Since July 2013 Mr Baljit Singh has taken on the role of executive chairman of BUE responsible for the daily operations of the company. Following the appointment of Mr Sasse as CEO, Mr Singh will no longer undertake the executive role and will also step down as chairman, remaining as a director of the company. At this time Andrew Plympton will be appointed chairman of the company.

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