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Challenger Acquisitions Increases Interest in New York Wheel to 3% on £1million raise

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Further Investment in New York Wheel Investor LLC

Challenger Acquisitions Limited (LSE:CHAL), the leader in the Giant Observation Wheel industry has raised £1.0 million by means of the issue of secured convertible notes.

The Company has also signed an agreement to invest a further US$1.0 million for one additional common unit in New York Wheel Investor LLC, the company set up to fund the equity component of the US$500 million New York Wheel Project on Staten Island which commenced construction in May 2015. The NYW Project includes a 630ft observation wheel, a 68,000 sq ft terminal and retail building and a 950 space parking garage and is expected to be operational in mid 2017. Challenger made an initial investment of US$3.0 million in New York Wheel Investor LLC in May 2015 for an interest of 2.4%. On completion of the Additional Investment, which is being undertaken on the same terms as the initial investment, Challenger will hold four common units which currently represents an approximate 3% interest in New York Wheel Investor LLC.

The balance of the funds raised from the Secured Convertible Notes will be used for general corporate purposes.

Mark Gustafson, the Company’s Chief Executive Officer said: “We are delighted to increase our investment in the New York Wheel project, a US$500 million entertainment complex on Staten Island. Construction is well underway since May last year with approximately US$170 million spent to date. We strongly believe that an investment in this iconic project represents exactly why Challenger was created and that the value of this investment will grow significantly as this project approaches its mid-2017 opening date. In the meantime we continue to evaluate our pipeline of 25 giant observation wheels worldwide, where our involvement could range from design through to investment, and look forward to providing updates throughout 2016.”

Principal terms of the Notes

· The aggregate principal amount of the Secured Convertible Notes is £4 million, of which £1.0 million has been issued
· A noteholder may convert all or part of the principal amount of its Secured Convertible Notes into Ordinary Shares at any time at a fixed conversion price of 80p per Ordinary Share
· The Secured Convertible Notes are unlisted, secured, transferable and convertible and mature on 30 June 2019
· Interest is accrued at 8% per annum and payable quarterly, or upon conversion:

o in cash;
o by issuing ordinary shares of the Company in respect of such accrued interest conversion amount at a price of 80p per Ordinary Share, ordinary shares of the Company;
o as to one-eighth of such interest amount, by either making payment in cash to the relevant noteholder or by issuing Ordinary Shares (at the election of the Company) at a price of 80p per Ordinary Share; and as to seven-eighths of such interest amount, by issuing Secured Convertible Notes of equal amount

· The Secured Convertible Notes are secured by one common unit of New York Wheel Investor LLC (representing a total value US$1 million) issued to Challenger in the Additional Investment and related rights under the Subscription Agreement relating to the Additional Investment
· At any time the Company can redeem all or any part of the outstanding Secured Convertible Notes from the holder at a 10% premium to the principal amount of such Notes
· The Secured Convertible Notes may be redeemed by the noteholder following certain noteholder redemption events, which include: payment default; material breach by the Company not cured within fifteen trading days; the Company’s failure to convert the Secured Convertible Notes on properly tendered notice of conversion; the Company or any of its subsidiaries suffer an insolvency event; the Company’s shares being delisted from the London Stock Exchange or ceasing to trade on the London Stock Exchange save for a suspension of trading of the Company’s share capital on London Stock Exchange which is due to a transaction being undertaken by the Company
· The Convertible Notes and related documentation are governed under the laws of England

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