CBO Cabouchon

RNS Number:7812B
Cabouchon PLC
09 August 2004



CABOUCHON Plc ("Cabouchon" or the "Company")


Acquisition of Seven Arts Filmed Entertainment Limited


Disposal of Cabouchon International Limited, The Cabouchon Collection Plc and
The Costume Jewellery Co. Limited


The Company was established with a view to exploiting a perceived demand for
costume jewellery. The Directors have, however, become increasingly disappointed
by the trading performance of the Company and have been considering the most
appropriate way to preserve shareholder value.


In this context the Directors decided that they should consider both acquisition
opportunities and the disposal of the current business.


The Board has reviewed several acquisition targets and is now pleased to
announce that the Company has, today, entered into an agreement (the '
Acquisition Agreement') to acquire on a conditional basis all of the issued
share capital of Seven Arts Filmed Entertainment Limited ('New Seven Arts') for
a total consideration of #4,800,000 to be satisfied by the issue of 9,600,000
new ordinary shares in the Company at #0.50 per share following a consolidation
of the Company's issued share capital so that shareholders receive one new
ordinary share of #0.50 for each ten existing ordinary shares of #0.05. ('
Acquisition')  These new ordinary shares will represent approximately 72.8 per
cent. of the issued share capital of the Company after issue but before the
issue of the Preference Shares referred to below.


New Seven Arts is a motion picture production and distribution company. The
proposed Acquisition will, if approved, proceed on the terms of the Acquisition
Agreement. It is proposed that Peter Hoffman, an experienced film producer, and
the chief executive of New Seven Arts will, if the Acquisition is approved,
become the Chairman and Managing Director of the Company. Mr Hoffman has been
involved in the production of many motion pictures some of which are well-known.
From April 1986 to March 1992 he was President and Chief Executive Officer of
Carolco Pictures, Inc. which, during his tenure, produced such feature length
pictures as Terminator 2, Basic Instinct and Total Recall. Mr Hoffman left
Carolco to set up Cinevisions, the pre-cursor to New Seven Arts, and has since
that time produced many further motion pictures.


The Acquisition, when completed, will constitute a Reverse Takeover as defined
in the AIM Rules and due to its size and the fact that its implementation will
change the nature of the Company's business accordingly requires the approval of
Shareholders at an Extraordinary General Meeting of the Company as required by
the AIM Rules. An Extraordinary General Meeting ('EGM') has accordingly been
convened for this purpose and will be held on 2 September 2004 at 10.30 a.m. If
the resolutions proposed at the EGM ('Resolutions') are passed by Shareholders
it is expected that completion of the Acquisition will occur as soon as
practicable following passing of the Resolutions.


The Acquisition will, if approved by Shareholders, involve a material change of
strategy but is one which will give Shareholders the opportunity to be involved
in a business with a successful production record and the prospects for a more
exciting future.


The Company has also conditionally agreed to sell the current business and
assets of the Company (the 'Disposal') to Ms Julie Ann Wing, the Managing
Director. This Disposal will be effected by the sale of the Company's entire
interest in the issued shares of Cabouchon International Limited, the Company's
trading subsidiary and in The Cabouchon Collection Plc and The Costume Jewellery
Co Limited which are both dormant subsidiaries. The consideration for the
purchase will be the assumption by Ms Wing of #138,000 of existing Company debt
in the form of loans made to the Company by its directors and of all the
obligations of Cabouchon International including taking over responsibility for
all employees.


The Disposal will involve the resignation of Ms Wing as a director of the
Company. Both Mr Jake Hughes and Mr David Pearl will also resign as directors of
the Company and will have no further involvement in the business after its sale
to Ms Wing. It is then intended that Mr Peter Hoffman, and Mr Rufus Pearl will
be appointed as replacement directors. Ken Bone will remain a director of the
Company. Following the aforesaid appointments and resignations the Board will be
made up as follows:



Peter Hoffman (Chief Executive)
Ken William Bone (Finance Director)
Rufus Benjamin Pearl (Non-Executive Director)


Mr Peter Hoffman will be the Chairman of the Company. It is the intention of the
Board to appoint a further non-executive director when a suitable candidate is
identified.


Subject to the satisfaction of the conditions to which the Acquisition Agreement
is subject and to the Acquisition proceeding it is proposed that the name of the
Company be changed to "Seven Arts Pictures Plc".


This will reflect more appropriately the Company's proposed change of business
direction. A special resolution to this effect will be proposed at the EGM.


Conditional on Completion the Company proposes to issue 3,000,000 zero%
Convertible Redeemable Preference Shares of #1 each to Armadillo Investments plc
("Armadillo") in consideration for the issue to the Company of 3,000,000
Ordinary Shares of #1 each in Armadillo ('Armadillo Shares'). The Company
proposes to sell the Armadillo Shares to provide working capital for its
business and has come to an agreement with Armadillo whereunder Armadillo will
use its best endeavours to procure purchasers for the Armadillo Shares at a
price of #0.50 per Armadillo Share. With the exception of approval of the
arrangements the Company proposes entering into with Armadillo the completion of
the Acquisition is not dependent upon the provision of finance to the Company by
any third party.


Admission of the issued share capital of Seven Arts Pictures Plc to AIM
following completion of the proposals will be conditional on the Company selling
the Armadillo Shares prior to Admission as described above.


A circular is being posted today to all Cabouchon Shareholders, giving further
details of the proposals and convening the EGM for 2 September 2004.





-end-


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