RNS Number : 2170H
09 July 2012
9 July 2012
ADVFN plc ("ADVFN" or the "Company")
Management buy-out of Equity Holdings Ltd ("Equity Holdings")
ADVFN is pleased to announce that it has signed an agreement for the sale of its wholly-owned subsidiary, Equity Holdings, to a newly formed holding company, Bashco Ltd, an entity 100% owned and controlled by Brian Basham who is currently part of the management team of Equity Holdings.
Equity Holdings is the holding company of Equity Development Limited ("Equity Development") which produces research material for distribution in the UK used by brokers, fund managers and investors. Brian Basham is a founder and director of Equity Holdings and Equity Development.
In the view of the board of ADVFN, it appears unlikely that Equity Holdings would have been able to produce an acceptable level of profitability in the foreseeable future while remaining the Company's subsidiary. This sale to the management provides the opportunity for Equity Holdings to attract new, external capital and removes the requirement for any further funding from ADVFN.
Equity Holdings contributed a net loss after tax to ADVFN of approximately GBP7,400 for the year ended 30 June 2011 (audited) and a net loss after tax of approximately GBP9,300 for the six month period ended 31 December 2011 (unaudited). The book value of the assets attributable to the Equity Holdings business was approximately GBP933,000 as at both 30 June 2011 (audited) and 31 December 2011 (unaudited).
The deferred consideration for the transaction is GBP1.2 million split GBP200,000 in cash and a zero per cent unsecured convertible loan note for GBP1 million.
The consideration of GBP200,000 is payable to ADVFN in cash over 5 years and split equally into four payments of GBP50,000 as follows:
Payment one on 2nd anniversary of completion
Payment two on 3rd anniversary of completion
Payment three on 4th anniversary of completion
Payment four on 5th anniversary of completion
The loan note automatically converts on the 5th anniversary of completion.
The Company expects to use the proceeds of the transaction in the operations of ADVFN.
Since Brian Basham is a director of Equity Holdings and Equity Development, this transaction is classified as a related party transaction for the purposes of the AIM rules. The directors of ADVFN consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable in so far as its shareholders are concerned.
Contacts / Enquiries:
ADVFN plc Tel: +44 (0) 207 070 0909 Clem Chambers, CEO Grant Thornton Corporate Finance Tel: +44 (0)20 7383 5100 Gerry Beaney/Salmaan Khawaja
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