Placing
17 Febbraio 2004 - 8:00AM
UK Regulatory
RNS Number:4921V
Medal Entertainment & Media PLC
17 February 2004
Strictly embargoed until: 07.00, 17 February 2004
MEM TO RAISE #3.23 MILLION VIA PLACING
Medal Entertainment and Media plc ("MEM" or "the Company") today announces that
the Company intends to raise #3.23 million via a Placing of 4,307,488 New
Ordinary Shares at 75p per Share with institutional and other investors. The
proceeds will be used to provide additional finance to develop further the
Company's business.
Use of proceeds
* Driven by the continued significant growth in DVD sales the Company
plans to develop new publishing and programming relationships with industry
partners in addition to the new rights deals secured with Channel 4 and the
BBC.
* In addition to further developing DD Video as a specialist publisher,
the Company aims to invest in a new DVD imprint that will specialise in
entertainment products sold via retailers.
* The Directors believe that valuable equity in new TV formats can be
secured by offering producers access to MEM's studio and distribution
facilities, and combining this with, from time to time, a level of
development funding for individual projects. By operating in this way, MEM
can avoid the risks associated with acquiring an existing production company
whilst fulfilling its ambition to secure participation in the TV format
market.
* The Company aims to turn DD Video's Chester-based direct marketing
fulfilment centre from a cost base into a profit centre by developing a
separate division which can offer fulfilment services to third parties.
Further investment is planned in racking, layout, marketing andcommercial
infrastructure.
* With multi-channel television in approximately 12 million households,
the Company believes that potential customers for DD Video's specialist
titles can now be accessed via direct response TV commercials. The Company
plans to create a division to carry out this activity, subject to an
extensive test marketing campaign.
Steve Ayres, Chief Executive of MEM, commented: "It is our aim to create an
integrated audio visual publishing and TV production business building on the
progress already made. This Placing will enable us to achieve that aim by
exploiting synergies across the new group structure. Our enhanced ability to
acquire and develop rights, together with the new production arm gives us the
potential to find successful programme formats, negotiate rights deals and then
exploit publishing and distribution to maximise revenues."
The Placing is conditional upon the passing by Shareholders of the Resolutions
to be proposedat an extraordinary general meeting of the Company which has been
convened for 10.00 a.m. on 11 March 2004 at the offices of Nabarro Nathanson,
Lacon House, 84 Theobald's Road, London, WC1X 8RW.
For further information, please contact:
Steve Ayres, Chief Executive John West / Claire Melly
MEM plc Tavistock Communications Limited
Tel: 020 8427 2277 Tel: 020 7920 3150
Introduction
The Board of MEM intends to carry out a Placing of 4,307,488 New Ordinary Shares
with institutional and other investors to raise approximately #3.23 million
before expenses representing approximately 28.9 per cent. of the Enlarged Issued
Share Capital of the Company. The Placing is conditional uponthe passing by the
Shareholders of the Resolutions to be proposed at an extraordinary general
meeting of the Company which has been convened for 10.00 a.m. on 11 March 2004
at the offices of Nabarro Nathanson, Lacon House, 84 Theobald's Road, London,
WC1X 8RW.
Reasons for the Placing
The Placing proceeds will be used to provide additional funds to develop further
the Company's business and in particular to concentrate on the five principal
areas of the Company's organic growth strategy (further details of which are set
out in the paragraph headed "Business Development" below).
The Placing
The Company proposes to raise approximately #3.23 million (before expenses) by
way of the issue of the Placing Shares at 75p per share. The Placing will raise
approximately #3.0 million after the deduction of expenses. The Directors have
chosen not to carry out the Placing on a pre-emptive basis to current
shareholders as they believe that the Placing will represent an opportunity for
theCompany to broaden its shareholder base and therefore, potentially, to
increase the liquidity of the Company's shares and its public profile.
As agent for the Company, Durlacher has agreed, pursuant to the Placing
Agreement, to use its reasonable endeavours to place all of the Placing Shares
with institutional and other investors. The Placing Agreement is conditional,
inter alia, on the resolutions being passed at the EGM and on admission to
trading on AIM of the Placing Shares.
The Placing Shares will rank pari passu in all respects with the existing
Ordinary Shares.
In addition to the funds raised pursuant to the Placing, the Company also
intends to secure additional bank facilities of up to #2,000,000 from its
bankers which willalso be applied to pursuing the Company's growth strategy as
detailed below. This facility would be drawn down as and when required.
Business Development
The Company's stated strategy is to build a group of companies engaged in the
acquisition,creation and exploitation of intellectual property rights. In
August 2002, the Company acquired its two core businesses of Leisureview (DVD
and video publishing with a particular strength in factual and nostalgia
programming trading as "DD Video") and Fountain TV (13,200 sq. ft freehold TV
studio in Wembley). Since acquisition, Leisureview and Fountain TV have achieved
results in line with market expectations and trading since the announcement of
the interim results for the six months ended 30 September 2003 has been
encouraging. The Directors believe that this level of progress will continue for
the remainder of the current financial year to 31 March 2004.
The Company has signed heads of agreement with a domestic and international
programme sales business, Strawberry Entertainment, of which it will own 90 per
cent., which complements the activities of Leisureview and extends the Group's
international distribution capabilities.
The Directors wish to continue to grow the Company both through acquisition, as
suitable opportunities arise, and organically. The organic growth strategy
focuses on specific developments in five key areas and the proceeds of the
Placing will be used to fund these developments.
The key areas of organic development identified by the Directors are as follows:
The development of DD Video and Strawberry Entertainment
Driven by the continued significant growth in DVD sales the Company plans to
develop new publishing and programming relationships with industry partners in
addition to the new rights deals secured with Channel 4 and the BBC.
The creation of a new DVD imprint
In addition to further developing DD Video as a specialist publisher, the
Company aims to invest in a new DVD imprint that will specialise in
entertainment products sold via retailers.
The creation of a TV production arm
The Directors believe that valuable equity in new TV formats can be secured by
offering producers access to MEM's studio and distribution facilities, and
combining this with, from time to time, a level of development funding for
individual projects. By operating in this way, MEM can avoid the risks
associated with acquiring an existing production company whilst fulfilling its
ambition to secure participation in the TV format market.
The reorganisation of the fulfilment centre
The Company aims to turn DD Video's Chester-based direct marketing fulfilment
centre from a cost base into a profit centre by developing a separate division
which can offer fulfilment services to third parties. Further investment is
planned in racking, layout, marketing and commercial infrastructure.
The creation of a Direct Response TV division
With multi-channel television in approximately 12 millionhouseholds, the
Company believes that potential customers for DD Video's specialist titles can
now be accessed via direct response TV commercials. The Company plans to create
a division to carry out this activity, subject to an extensive test marketing
campaign.
The Directors firmly believe that the areas of development described above will
allow the Company to grow significantly in a relatively low risk manner when
compared to a growth strategy fuelled primarily by acquisitions.
Extraordinary General Meeting
An EGM will be held at the offices of Nabarro Nathanson, Lacon House, 84
Theobald's Road, London WC1X 8RW at 10.00 a.m. on 11 March 2004.
Recommendation
The Directors consider that the terms of the Placing are in the bestinterests
of the Company and the Shareholders as a whole. Accordingly, the Directors
unanimously recommend that Shareholders vote in favour of the Resolutions as
they have irrevocably undertaken to do so in respect of their own beneficial
holdings amounting in aggregate to 661,096 Ordinary Shares representing
approximately 6.20 per cent. of the Company's current issued share capital.
A circular to shareholders will be posted today and will also be available from
the offices of Nabarro Nathanson, Lacon House, 84 Theobald's Road, London WC1X
8RW and from the offices of Durlacher Limited, 4 Chiswell Street, London EC1Y
4UP.
Expected Timetable of Principal Events
Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 9 March 2004
Extraordinary General Meeting 10.00 a.m. on 11 March 2004
Admission to trading on AIM of the Placing Shares 15 March 2004
Placing Statistics
Number of Ordinary Shares being placed 4,307,488
Placing Price per Ordinary Share 75p
Number of Ordinary Shares being placed as
a percentage of the Enlarged Issued Share Capital 28.9 per cent.
Number of Ordinary Shares in issue immediately
after the Placing 14,919,732
Market capitalisation following the Placing at
the Placing Price #11.2 million
Gross proceeds of the Placing #3.2 million
Net proceeds of the Placing receivable by the Company #3.0 million
Terms used in this announcement have the same meaning as those defined in the
circular being posted to Shareholders today.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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