TIDMTAL
RNS Number : 3692Q
Ten Alps PLC
17 June 2015
Ten Alps plc
("Ten Alps" or the "Company")
Proposed Acquisition of Reef Television Limited
Proposed placing and subscription to raise GBP4.5 million
Proposed Share Capital Reorganisation, Debt Conversion
(including the issue of Preference Shares) and Capital
Reduction
Board Changes
Restoration of Dealings
Ten Alps plc (AIM: TAL), multimedia producer of high quality TV
and radio together with integrated publishing and communications
content, is pleased to announce that it has agreed to acquire Reef
Television Limited, an award-winning producer of innovative content
for multiple broadcasters, for a total consideration of
approximately GBP5 million (comprising GBP2 million initial
consideration and deferred consideration of up to GBP3 million plus
an additional amount of earn-out consideration). The Company has
conditionally raised GBP4.5 million (before expenses) by way of a
Placing of 173,900,000 New Ordinary Shares and a Subscription of
51,100,000 New Ordinary Shares at 2 pence per New Ordinary Share to
fund the Acquisition and for working capital purposes generally.
The Acquisition constitutes a reverse takeover of the Company for
the purposes of the AIM Rules for Companies and therefore requires
Shareholder approval at a General Meeting to be held on 10 July
2015.
An Admission Document containing details of the Proposals and a
notice of General Meeting will be posted to Shareholders today and
is available to view on the Company's website at
www.tenalps.com.
The suspension relating to the existing shares of Ten Alps will
be lifted today and therefore trading in the Company's shares will
recommence at 10.00 a.m. As announced earlier today N+1 Singer is
acting as the Company's Nominated Adviser and Broker.
HIGHLIGHTS
Acquisition, Placing and Capital Restructure
-- Proposed acquisition of Reef Television, an award-winning
producer of innovative content for multiple broadcasters
-- Share consolidation (10 for 1) and refinancing to raise
approximately GBP4.5 million (gross) through a Placing and
Subscription of 225,000,000 New Ordinary Shares at a price of 2
pence (on a post consolidation basis)
-- The proceeds of the Placing will be used for the following purposes:
o internal investment in TV, content marketing and digital
communications (up to approximately GBP0.6 million);
o to fund the initial consideration payable in respect of the
proposed Acquisition (GBP2 million); and
o to provide general working capital to the Group (up to
approximately GBP1.4 million).
-- Debt Conversion, waiver and repayment resulting in a
reduction of the Company's remaining debt obligations to GBP2
million
Acquisition Rationale
-- Reef acquisition signals the first step in a strategy to grow
the Ten Alps business through both acquisition and organic
growth
-- Addition of Reef diversifies and further strengthens the
offering, with experience in daytime and factual entertainment
formats
-- The Enlarged Group will be a medium-sized independent
television producer at a time when the demand for 'indie'
programming is steadily growing
-- The combined business will benefit from a significantly
larger catalogue of current and past programming which can be sold
into other broadcast and digital markets worldwide
-- The Enlarged Group will be in a position to address
opportunities for growth in the US market, where the appetite for
UK-made programming is strong
-- The Board aims to develop the Enlarged Group as a
multi-platform producer with a focus on both television production
and on high-quality digital content creation, including corporate
communications and content marketing.
-- Focused on creating an attractive media asset portfolio in growth markets both in the UK and internationally
Board Appointments
-- Strengthened New Board with the appointments of Luke Johnson
and Jonathan Goodwin as Non-Executive Directors, with Bob Geldof
and Timothy Hoare stepping down from the Board.
General Meeting
-- The Resolutions will be proposed at the General Meeting of the Company on 10 July 2015
Mark Wood, Chief Executive Officer commented:
"This is a significant moment in the turnaround of Ten Alps. The
proposed acquisition of Reef Television is an important first step
in a strategy to achieve greater scale and momentum in our TV and
digital content businesses. The new capital structure will enable
us to invest in faster growth, with the guidance of our experienced
Board members appointed today. Together, as an enlarged Group, we
intend to bring in the commercial and creative talent needed to
drive growth across Television, Communications and Publishing both
organically and via selective acquisitions."
Richard Farmbrough, CEO of Reef Television, added:
"We see the new Ten Alps as a key player in the TV production
landscape and are excited by the opportunity to be part of this
smart new company. For some time we have been looking to partner
with another production business in order to give us the firepower
to extend into new territories and engage with the new platforms
which are changing the shape of the television market."
Peter Bertram, Chairman of Ten Alps, said:
"We are delighted to welcome Luke Johnson and Jonathan Goodwin
and look forward to their valuable contributions to take the Group
to the next stage of its development. The Board would also like to
thank Bob Geldof and Timothy Hoare for their long service and
significant contributions to Ten Alps. We wish them well for the
future I'm pleased they support our strategy for building a high
quality integrated multimedia business."
Capitalised terms have the same meaning as those set out in the
Admission Document.
For further information please contact:
Ten Alps plc +44 (0) 20 7878 2311
Peter Bertram, Chairman
Mark Wood, CEO
c/o Emer Donohoe
www.tenalps.com
N+1 Singer (NOMAD to Ten Alps) +44 (0) 20 7496 3000
Shaun Dobson / Jen Boorer / Lauren Kettle
FTI Consulting
Charles Palmer / Emma Appleton / Rob Mindell +44(0) 20 3727
1000
INTRODUCTION
The Company is pleased to announce that it has agreed to acquire
Reef Television Limited, an award-winning producer of innovative
content for multiple broadcasters, for a total consideration of
approximately GBP5 million (comprising GBP2 million initial
consideration and deferred consideration of up to GBP3 million plus
an additional amount of earn-out consideration). The Company has
conditionally raised GBP4.5 million (before expenses) by way of a
Placing of 173,900,000 New Ordinary Shares and a Subscription of
51,100,000 New Ordinary Shares to fund the Acquisition and for
working capital purposes generally. The Acquisition constitutes a
reverse takeover of the Company for the purposes of the AIM Rules
for Companies and therefore requires Shareholder approval at the
General Meeting. The Issue Price of 2 pence per New Ordinary Share
represents a 63.6 per cent. discount to the equivalent Closing
Price (as adjusted by the Share Capital Reorganisation) of 5.5
pence per Ordinary Share on 29 May 2015, being the last dealing day
in the Company's Ordinary Shares prior to their suspension from
trading on AIM. N+1 Singer is acting as the Company's nominated
adviser and broker.
The Company is also proposing to effect a Debt Conversion (which
will result in a reduction of the Company's remaining long-term
debt obligations to GBP2 million and a reduction in certain
short-term debt obligations), the Share Capital Reorganisation and
the Capital Reduction, as well as the adoption of the New Articles,
all of which is subject to Shareholder approval at the General
Meeting.
The Placing and the Subscription are conditional, among other
things, on Admission becoming effective, the Placing Agreement
between the Company and N+1 Singer becoming unconditional and not
being terminated (in accordance with its terms) and the passing by
the Shareholders of the Resolutions at the General Meeting. Subject
to all relevant conditions being satisfied (or, if applicable,
waived), it is expected that the New Ordinary Shares will be
admitted to trading on AIM on or around 13 July 2015.
BACKGROUND ON TEN ALPS
Ten Alps is a multimedia producer of high quality TV and radio
programmes together with integrated publishing and communications
content. The Company has recently undertaken a comprehensive
process of restructuring to deal with underperforming units and
appointed a new Chief Executive in December 2014 to develop and
lead a strategy aimed at revenue and profit growth across all
business sectors. The Company is now focused on achieving its
performance targets and is expecting a return to profitable
operations in the financial year ending 30 June 2016. It is also
implementing plans to diversify revenues, bringing in new
management talent in TV, growing digital and events revenues in
publishing and developing new revenue streams around provision of
digital content marketing and corporate communications
services.
By continuing to implement the current plans and evolving the
focus of the Group to the growth of quality, reliable revenues, the
Directors believe that the Group's assets in Broadcasting,
Communications and Publishing will be significantly stronger, which
should have a positive impact on value in the coming years. To
ensure the Group is successful in the implementation and delivery
of its growth strategies, it aims to increase investment in talent
and develop its existing resources, as well as achieving growth
through targeted acquisitions.
Broadcasting
The key aim of the Group's broadcasting business remains that of
producing high quality programming which is intelligent, engaging
and entertaining and meets the needs of key broadcast customers.
The Group's three production units - Blakeway, Brook Lapping and
Films of Record - have a reputation for quality programming in
their own genres and count the BBC, ITV, Channel 4, Channel 5, Sky
and Discovery among their long-standing clients.
The broadcasting business is also extending into new genres,
including popular factual series, and aims to continue to increase
its diversity and range. The division's key performance indicators
include core market growth, enhanced overall performance and
investment opportunities. The Directors believe the Group is
starting to make good progress by winning commissions not only in
the United States but also in China, Japan and Korea, including a
GBP2 million commission for a four-part series on US politics.
As the focus of the Group shifts to the quality of its revenues
and the growth of its business, there will be a need to make
strategic additions to its talent pool and reinforce areas such as
business development teams. The Directors believe that this
investment is of particular importance in its broadcasting
department to ensure the Group can deliver the growth strategy of
the division.
Communications
The Group's communications division has a track record in
managing corporate social responsibility websites and developing
applications for global blue-chip organisations including BMW,
Siemens, Nationwide and Transport for London. It is supported by a
high-calibre team with web development, design, animation and
account management skills.
The division has restructured its new business team and will be
looking for further recruits in the coming months to grow key
identified market sectors. It is in these key market sectors which
the Company believes it has a clear advantage, thanks to its
combination of high-level video and digital design skills in its
core areas which include education, health, finance, employability,
environment and safety. The division will also expand into new
areas of activity including the provision of video, animation and
editorial content for corporate websites and social media, with a
view to expanding into the wider digital content marketing and
corporate communications sphere.
Publishing
The division targets high-value business-to-business ("B2B")
audiences in finance, SME business, healthcare, pharmacy, farming,
trade and logistics. While historically the business was primarily
print-oriented, in recent months there has been success in
developing digital channels and launching events as additional
revenue streams. The Group continues to monitor advertising sales
run-rates, the cost of selling and new business targets, as they
remain critical to the division.
Over the last few years the Group has implemented a major
rationalisation programme of this division and the Directors
believe that the Group now has the right foundations to build upon.
The Group has exclusively UK-based assets, managed by a focused and
streamlined team that can seek to enhance the quality of the
services it provides and to expand its offering further.
BACKGROUND TO THE ACQUISITION
The Company believes that a targeted acquisition of a similar
business in the television industry that would complement its
existing broadcasting business would give the Group significant
opportunities for growth. The Directors have reviewed a number of
potential opportunities and have entered into the Acquisition
Agreement to acquire Reef Television, an award-winning producer of
innovative content for multiple broadcasters in both peak time and
daytime slots which has successfully made many hundreds of hours of
factual programmes for clients including the BBC, Channel 4,
Discovery, ITV, Channel 5 and UKTV.
Award-winning Reef creates formats and develops ideas across a
range of factual and entertainment programmes, being especially
strong in daytime UK TV, producing programmes such as 'Put Your
Money Where Your Mouth Is', 'Penelope Keith's Hidden Villages' and
'Selling Houses with Amanda Lamb'. It also has an in-house
production and editing facilities department that includes the
latest camera technology and ten fully HD Avid suites.
The business generates revenue from a combination of factual and
entertainment series and one-off production commissions, with the
BBC and Channel 4 representing over 75 per cent. of its production
sales in the year to 31 December 2014, and royalty revenue
generated from the resale of its content to other broadcasters
through distributors.
The Directors believe that the acquisition of Reef Television
offers the Company increased high-quality day and peak time factual
and entertainment TV output which would complement the Group's
existing factual TV base, which could bring new revenues and
leverage higher margins from improved utilisation of existing
infrastructure.
Terms of the Acquisition
It is proposed that Reef Television will be purchased for the
Initial Consideration of GBP2 million payable in cash, subject to a
post-Completion net asset adjustment (upwards or downwards), Loan
Note Consideration of up to GBP1.5 million and Deferred
Consideration of up to GBP1.5 million and an additional amount of
earn-out consideration. The Loan Note Consideration and the
Deferred Consideration will be settled in cash or Ordinary Shares,
at the Company's discretion, subject to a maximum of 50 per cent.
of the Loan Note Consideration and the Deferred Consideration being
able to be settled in Ordinary Shares. Any issue of new Ordinary
Shares to the Vendors will be subject always to the resultant
shareholding of the Vendors being not greater than 29.99 per cent.
of the issued share capital of Ten Alps, as enlarged by the issue
of that tranche of Ordinary Shares. The Ordinary Shares will be
valued at the average mid-market closing share price of the Company
over the five Business Days prior to the finalisation of the
relevant accounts.
The Loan Note Consideration is redeemable and the Deferred
Consideration is payable in three tranches of up to GBP500,000
each, subject to the level of gross profitability of Reef
Television for the financial years ended 30 June 2016, 30 June 2017
and 30 June 2018. In respect of the 2016 financial year, the
maximum Loan Note Consideration and Deferred Consideration payment
of GBP1,000,000 is subject to Reef Television achieving at least
GBP1,800,000 in gross profits and to be adjusted downwards
thereafter on a straight-line basis to a minimum level of
GBP1,500,000, below which point none of the first tranche of Loan
Note Consideration and Deferred Consideration will be paid. The
same performance metrics will apply to the second and third
tranches of Loan Note Consideration and Deferred Consideration due
in respect of the 30 June 2017 and 2018 financial years, with the
target gross profit ranges of GBP2,000,000 to GBP1,500,000 and
GBP2,200,000 to GBP1,500,000, respectively. If there is an
over-achievement in either of the 2016 or 2017 years the excess
will be carried forward to the next financial year of assessment
and if there is an over-achievement on either of 2017 or 2018 years
the Vendors will have the ability to claim back amounts not paid
due to under-performance in previous years.
An additional amount of earn-out consideration is payable by the
Company if the aggregate gross profit for the three years exceeds
GBP6 million. Subject to certain conditions, the Company will pay
50 per cent. of such gross profit excess to the Vendors in either
cash or by the issue of Ordinary Shares (in respect of up to 50 per
cent. of this additional consideration) at the Company's
option.
Completion of the Acquisition is conditional upon approval of
the Proposals by Shareholders at the General Meeting.
FINANCIAL INFORMATION ON REEF
The following financial information relating to Reef has been
extracted from the Historical Financial
Information set out in Part IV of the Admission Document:
Year ended Year ended Year ended
31 December 31 December 31 December
2014 2013 2012
GBP'000 GBP'000 GBP'000
Revenue 5,735 3,833 4,062
Gross Profit 1,489 1,037 1,105
Profit before tax 470 147 300
Total equity and liabilities 1,679 1,663 808
TELEVISION MARKET OPPORTUNITY AND REASONS FOR THE
ACQUISITION
The Enlarged Group will be a medium-sized independent television
producer at a time when the demand for 'indie' programming is
steadily growing, with the market showing every sign of continued
expansion in the future.
In the UK, one key factor driving growth in the industry is a
commitment by mainstream broadcasters, including the BBC, Channel
4, Channel 5 and Sky, to maintain or increase spending on
outsourced commissioned programming. The BBC has also indicated
that as part of organisational restructuring in its programming
areas, it will significantly increase the opportunities for outside
suppliers to pitch for the new production commissions, which is
expected to impact from 2017 onwards.
Furthermore, the number of channels and platforms commissioning
factual productions is increasing and there has been a marked
increase in the level of interest in high-end factual programming
worldwide as audience demand has grown. Sky and Al Jazeera, who are
both existing customers of the Group, have increased their spending
in this area, whilst Netflix has recently commissioned a major
factual series and indicated it will continue to invest in this
area. With a strong track record in each of its programme-making
units, the Group is now able to win commissions outside the UK on
the strength of a reputation for high-quality editorial and visual
content, coupled with dependability in terms of delivery times. The
Group has recently produced documentaries for broadcasters in the
US, China, Japan and Korea.
The Directors believe the Acquisition will add strength and
experience in daytime TV programming, an area which has shown
consistent growth, and in popular factual formats and series. The
production of series delivers higher margins than one-off
programmes and the addition of Reef's commercial and production
skills will help focus the business on pitching for more of this
kind of business.
The combined business will benefit from a significantly larger
catalogue of current and past programming which can be sold into
other broadcast and digital markets worldwide. The Directors intend
to focus on selling formats as well as produced programmes, while
with additional investment in commercial resource the Enlarged
Group will be in a position to address opportunities for growth in
the US market, where the appetite for UK-made programming is
strong.
As a producer of approximately 300 half hours of new programming
a year, the Directors believe that the television division within
the Enlarged Group will be seen as a serious partner by major UK
broadcasters, which will pave the way for more ambitious,
larger-budget pitches. The three core Ten Alps production houses -
Blakeway, Brook Lapping and Films of Record - have outstanding
reputations for high-quality factual programming and documentaries,
while the addition of Reef diversifies and further strengthens the
offering, with experience in daytime and factual entertainment
formats.
STRATEGY OF THE ENLARGED GROUP
The Board aims to focus the Enlarged Group to grow revenues in
the expanding, high-margin television and digital content markets.
The Board intends to utilise a portion of the net proceeds of the
Placing to bring in the commercial and creative talent needed to
drive organic growth and will continue to review further
opportunities for inorganic growth through strategic acquisitions,
where it sees relevant opportunities at acceptable valuations.
Television
As well as creating a TV business with suitable scale, the
Acquisition brings with it a strong, commercial management team,
which can help to strengthen the strategy and ambitions of the
broader TV business. There will be a drive to pitch for
larger-budget, repeatable series across serious factual and factual
entertainment programming. Another objective will be to increase
significantly non-UK revenues through co-production partnerships,
target growth in royalty revenues through sale of current and past
catalogues on a more ambitious scale and a drive to sell series and
formats into other major markets, including the US.
Communications
The second strand of the new strategy is to make the Enlarged
Group a bigger player in the fast-growing corporate and commercial
market for high-quality digital content. Already an established
offering in the US, the trend for investing in image-rich website
and active social media management is growing in the UK. The Group
intends to expand into content marketing, brand building and
corporate communications, targeting large-scale international
organisations seeking high-quality content and editorial
production.
As a foundation to this strategy, the Group is continuing to
build its digital offering by developing its own digital programme
platform. This will build experience in targeting younger
demographics and will also assist in pitching for larger-scale
commissions, which can require digital and social media management
as well as programme delivery.
The Group already has experience developing and managing
websites and applications for major organisations including BMW,
Nationwide, Sanofi and Siemens. The Company recently renewed its
contract with Transport for London to create and manage its
London-centric digital road safety education campaign for
pre-school children. At GBP1 million per annum, the contract value
represents an increase of 30 per cent. over the previous contract
and covers a period of 3.5 years.
By combining existing web and application management skills with
market-leading video skills, the Directors believe that the Group
is in a strong position to pitch to major corporates and other
organisations to manage video-based content marketing and corporate
communications. The Group's digital team works across all sectors
of the business and an area of focus will be to add new digital and
social media management skills as digital revenues increase. As
more UK organisations seek to upgrade their websites and develop
more pro-active message management and storytelling, both online
and through other channels, the demand for such services is
starting to grow. The Company has already established new
commercial relationships with large-scale global organisations in
this area and will aim to build on its early successes.
Publishing
The Group's publishing business is focused on B2B audiences in a
number of high-value areas, including finance, SME management,
pharmaceuticals, farming and trade. In a series of recent
divisional changes, the Group has redesigned and relaunched core
print titles, developed websites and made provision for the
delivery of its content to mobile devices, in addition to building
event revenues with awards and specialised conferences. The aim is
to increase the size and value of the specialist audiences targeted
in each of these areas and to build steadily on these high-value
databases.
Another area for potential growth in revenues and increase in
profit margin is in the provision of planning guides and trader
directories to households across the UK. This section of the
Group's business, with revenues of more than GBP1.7 million per
annum, is managed in partnership with the local authority building
control under a five year contract renewed in October 2014, which
coordinates activities across all UK local authorities. The
division is now focused on accelerating a transition from provision
of printed booklets to populating the Group's proprietary "Home and
Build" website, which is targeted to become a large-scale directory
of 'trusted' local trades people which have local authority
endorsement.
With a commitment to focusing investment and management time on
the most promising areas of growth, the Board will continue to be
receptive to approaches concerning non-core areas of activity. A
key objective is to create greater value in all products and
operations by ensuring they are high-quality, profitable
digitally-focused and of increasing importance to their
customers.
CURRENT TRADING AND PROSPECTS
Ten Alps
The interim results for the six months ended 31 December 2014,
as announced on 30 March 2015, showed revenue from continuing
operations of GBP10.17 million (2013: GBP11.71 million) with an
EBITDA loss of GBP0.64 million (2013 loss: GBP0.53 million). The
operating loss was GBP0.73 million (2013 loss: GBP0.71 million).
Net loss was GBP1.0 million (2013 loss: GBP1.01 million) before a
disposal gain of GBPNil (2013: GBP0.24 million) in the period.
As part of the restructuring process, the Group has reduced its
cost base and focused the business on high quality media sectors
particularly in TV and content marketing. Furthermore, as part of
the Proposals, the Directors intend to reduce the Group's debt
position considerably, leaving it in a stronger financial position.
Whilst there is still work to do, the first six months of the
current financial year have put the Group in better shape to meet
the challenges it has faced and to take advantage of emerging
opportunities, a position which will be strengthened further
through the implementation of the Proposals. The Board continues to
believe that the measures taken have placed the Group in a stronger
position to benefit from the opportunities the media sector
offers.
Reef
Reef's audited results for the year ended 31 December 2014
showed revenue from continuing operations of GBP5.74 million (2013:
GBP3.83 million) with EBITDA of GBP0.52 million (2013: GBP0.20
million). The operating profit was GBP0.47 million (2013: GBP0.15
million). Net profit was GBP0.37 million (2013: GBP0.11 million).
Gross margins were 25.96 per cent. in 2014 (2013: 27.05 per cent.)
and net margin was 6.42 per cent. (2013: 2.87 per cent.). Reef has
continued to trade satisfactorily through the first half of
2015.
Enlarged Group
The Directors and Proposed Directors expect that the combined
sales, technical and operational resources available to the
Enlarged Group following Completion. Ten Alps is now well
positioned to execute its strategy as a multi-platform producer
with a focus on both television production and on high-quality
digital content creation, including corporate communications and
content marketing which will enable it to grow organically and via
selective acquisitions.
DIRECTORS AND PROPOSED DIRECTORS
Directors
Details of the current Directors of Ten Alps are as follows:
Peter Bertram, Chairman
Peter is currently Non-executive Chairman of Phoenix IT Group
plc and Senior Independent Non-Executive Director of Microgen plc.
He was previously Chairman of Alphameric plc and AttentiV Systems
Group plc and also a Non-executive director of Anite plc and Psion
plc. Peter was chief executive of Azlan Group plc from 1998 until
its takeover in 2003. He is a fellow of the Institute of Chartered
Accountants in England and Wales.
Mark Wood, Chief Executive Officer
Mark Wood is Chief Executive of Ten Alps. Mark is known in the
media industry for his digital expertise and for refocusing
traditional media businesses. He was Chief Executive at Future from
2010 to 2014 and accelerated the growth of Future's digital
business. Future was named Consumer Digital Publisher of the Year
in the industry's annual awards three years in succession from
2011. Mark was Chief Executive of ITN, the television news
organisation, from 2002 to 2010, where he developed a range of
digital ventures, including a leading online image business. He
began his career as a foreign correspondent for Reuters and was
based in Berlin, Moscow, Bonn and Vienna. Mark is a director of
Future plc and Citywire Holdings Limited and is a member of the PwC
Advisory Board.
Nitil Patel, Chief Financial Officer
Nitil has been a key member of the team from the inception of
Ten Alps. He worked with Sayers Butterworth before joining TV
production business Planet 24, where he worked as an accountant on
productions such as the Big Breakfast. He is a member of the
Institute of Chartered Accountants in England and Wales.
Timothy Hoare, Non-Executive Director
An investment banker, Timothy Hoare was the Chairman of
Canaccord Genuity Limited until July 2013. Since then he has
assumed a role on Canaccord Financial's Global Advisory Board. He
also has substantial experience in the financing of mining and
media companies. He is currently a partner at Hannam &
Partners.
Following these proposed changes, it has been agreed that
Timothy Hoare will resign as a Director immediately following the
conclusion of the General Meeting. In addition, Bob Geldof, the
Founder of Ten Alps has resigned as a Director of the Company with
immediate effect. Both Bob and Timothy have strongly supported the
restructuring of the business and the Board would like to thank
them for their long service and significant contributions to Ten
Alps.
Proposed Directors
It is proposed that the following will be appointed to the Board
of the Company, with effect from Completion:
Luke Johnson, Proposed Non-Executive Director
Luke Johnson is the Chairman of private equity house Risk
Capital Partners LLP. He is Chairman and part-owner of Patisserie
Holdings plc and Bread Ltd. He is also Chairman and majority owner
of cruise holiday website operator Cruise.co.uk and Neilson Active
Holidays. In 1993 Luke took control of Pizza Express with partners,
subsequently becoming Chairman, and grew the business from 12 owned
restaurants to over 250, and the share price from 40p to over 900p.
Luke was Chairman of Channel 4 from January 2004 to January 2010,
during which time he appointed a new CEO, restructured the board
and saw the organisation enjoy record ratings, revenues and
surplus.
Jonathan Goodwin, Proposed Non-Executive Director
Jonathan Goodwin founded Lepe Partners in 2011. Lepe Partners is
a merchant bank created to help entrepreneurs and CEOs in the
media, consumer and internet sectors grow their businesses. Prior
to founding Lepe, Jonathan was CEO and Co-founder of LongAcre
Partners, where he built the company into Europe's leading
mid-market media and corporate finance house prior to selling it to
Jeffries in 2007. To date, Jonathan has advised on over 100
transactions in the media and internet space. In 2006, Jonathan
created the Founders Forum, an entrepreneur's event held annually
in London, New York, Brazil and India. In 2009, Jonathan also
Co-Founded PROfounders Capital, an early stage fund backed by
entrepreneurs for digital entrepreneurs. Previously, Jonathan
focused on the media sector at Apax Partners and later joined the
MBI team of Talk Radio, backed by News Corporation and Liberty
Media. Talk Radio then became the foundation for The Wireless Group
PLC, where Jonathan was Group Managing Director. Jonathan is also
currently on the advisory board of Opera Solutions and Kelkoo.
Key Reef Management
Richard Farmbrough, CEO
Richard Farmbrough founded Reef Television in March 2003. After
graduating from Durham University and completing a post-graduate
course at the Courtauld Institute, Richard started his career in
BBC Entertainment. He then moved to the in-house arts department,
working on programmes such as The Story of Painting, Bookworm and
Home Front. He was previously at Talkback Productions, where he
directed the Bafta-nominated first series of Channel Five's 'House
Doctor', as well as co-creating and producing the hit show 'Your
Money or Your Life'. Richard produced 'The Art Club' for CNN and
was Executive Producer at Spire Films where he made 'Return of the
Architect' for BBC Four. At Reef, Richard is responsible for
developing company strategy and heading up senior management. He
has been Executive Producer on most Reef projects and currently
oversees the company's programme development. On completion,
Richard will hold the position of Commercial Director of the Ten
Alps Television division in addition to CEO of Reef Television.
Paul Hanrahan, Managing Director
Paul's career in television has included roles as head of
production, unit manager and he has been a production manager for
many of the major broadcasters. During his time at Reef Television,
Paul received a Broadcast 'Hot Shot' award in 2005, which
acknowledges emerging talent within the industry. Paul is also a
member of the council of PACT, the trade association representing
the commercial interests of UK independent television, film,
digital, children's and animation companies, having served since
2013, with a particular interest in ensuring that the rights and
revenue streams of all independents are protected. Paul has
operational responsibility for the day-to-day running of Reef
including specific responsibilities for business, legal and
financial affairs. Other responsibilities include managing Reef's
intellectual property. With a strong knowledge of the international
market place, he works closely with both distributors and
international broadcasters.
PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION
On 16 June 2015, the Company entered into the Acquisition
Agreement with the Vendors pursuant to which the Company has agreed
to acquire the entire issued share capital of Reef for an initial
consideration of GBP2 million with Loan Note Consideration and
Deferred Consideration, dependent upon the performance of the
business, of up to GBP3 million, of which up to 50 per cent. will
be satisfied by the issue of new Ordinary Shares, at the Company's
discretion, with the remaining Loan Note Consideration and Deferred
Consideration being settled in cash. An additional amount of
earn-out consideration will be paid if an amount in excess of a
GBP6 million gross profit target is met with 50 per cent. of such
excess gross profit payable to the Vendors in cash and Ordinary
Shares.
Completion of the Acquisition Agreement is conditional, amongst
other things, upon the Placing Agreement becoming unconditional in
all respects.
SHARE CAPITAL REORGANISATION
Under the Act, a company is not allowed to issue shares at a
price per share which is lower than the nominal value of its
shares. On the last dealing day in the Company's Ordinary Shares
prior to their suspension from trading on AIM, the Company's
Closing Price was 0.55 pence per Existing Ordinary Share, which is
below the current nominal value of the Existing Ordinary Shares,
being 2 pence per share. Accordingly, subject to Shareholder
approval, the Directors propose to reorganise the Company's share
capital as explained below, with a view to reducing the nominal
value of the Ordinary Shares.
Pursuant to the Share Capital Reorganisation, it is proposed
that each Existing Ordinary Share with a nominal value of 2 pence
will be sub-divided and redesignated into one Ordinary Share of
0.01 pence and one Deferred Share of 1.99 pence. Immediately after
such sub-division and redesignation, it is proposed that, the
Ordinary Shares will be subject to a 10 for 1 consolidation
resulting in Ordinary Shares of the Company with a nominal value of
0.1 pence each.
Save as explained below with regards to fractional entitlements,
following the Share Capital Reorganisation each Shareholder will
hold such number of Ordinary Shares as is equal to 10 per cent. of
the number of Existing Ordinary Shares that he or she held
immediately beforehand, with a nominal value per Ordinary Share of
0.1 pence.
With regards to fractional entitlements, where such
consolidation results in any member being entitled to a fraction of
a share, such fraction shall, so far as is possible, be aggregated
with the fractions of Ordinary Shares to which other members of the
Company may be entitled. It is proposed that the Directors will be
authorised to sell (or appoint any other person to sell) to any
person, on behalf of the relevant members, all the Ordinary Shares
representing such fractions at the best price reasonably obtainable
to any person and to distribute the net proceeds of sale of such
Ordinary Shares (less expenses) representing such fractions in due
proportion amongst the persons entitled (except that if the amount
due to a person is less than GBP5 the sum may be retained for the
benefit of the Company).
It is proposed that the Ordinary Shares resulting from the Share
Capital Reorganisation will have exactly the same rights as those
currently accruing to the Existing Ordinary Shares under the
Existing Articles, including those relating to voting and
entitlement to dividends.
The Deferred Shares will have very limited rights and will
effectively be valueless. They will have no voting rights and will
have no rights as to dividends and only very limited rights on a
return of capital. They will not be admitted to or listed on any
stock exchange and will not be freely transferable. The rights
attaching to the Deferred Shares are set out in the New Articles.
The Directors intend to cancel the Deferred Shares as part of the
Capital Reduction, as contemplated by Resolution 11.
Resolution 2 contained in the Notice of General Meeting will, if
passed by Shareholders, effect the proposed Share Capital
Reorganisation as detailed above. If approved, the record date for
the Share Capital Reorganisation will be at 6.00 p.m. on 10 July
2015 and admission to trading and dealings in the new Ordinary
Shares arising from the Share Capital Reorganisation will become
effective at 8.00 a.m. on 13 July 2015.
For Shareholders who hold their entitlement to New Ordinary
Shares in uncertificated form through CREST application will be
made for the New Ordinary Shares, arising as a result of the Share
Capital Reorganisation, to be credited to the relevant CREST
accounts on 13 July 2015.
New share certificates in respect of the New Ordinary Shares are
expected to be posted at the risk of Shareholders by 20 July 2015
to those Shareholders who hold their shares in certificated form.
These will replace existing certificates which should then be
destroyed. Pending the receipt of new certificates, transfers of
New Ordinary Shares held in certificated from will be certified
against the Register.
CREST accounts of Shareholders will not be credited in respect
of any entitlement to Deferred Shares.
The Company's ISIN and SEDOL will change as a result of the
Share Capital Reorganisation, with effect from 13 July 2015, and
the Ordinary Shares will be quoted and traded in Pounds Sterling.
The new ISIN will be GB00BX7RGN99 and the new SEDOL will be
BX7RGN9.
THE PLACING AND SUBSCRIPTION
The Placing
The Company is proposing to raise approximately GBP3.5 million
(before expenses) through the placing by N+1 Singer, as agent of
the Company, of the Placing Shares at the Issue Price. The Issue
Price represents a discount of 63.6 per cent. to the equivalent
Closing Price (as adjusted by the Share Capital Reorganisation) of
an Ordinary Share on the last dealing day in the Company's Ordinary
Shares prior to their suspension from trading on AIM.
The Placing has been undertaken pursuant to the Placing
Agreement. Under the terms of the Placing Agreement, N+1 Singer has
agreed to use its reasonable endeavours to procure institutional
and other investors to subscribe for the Placing Shares. The
Placing is not being underwritten.
The Placing Agreement is conditional on, amongst other
things:
-- the passing of the Resolutions (without amendment) at the General Meeting; and
-- Admission becoming effective by not later than 8.00 a.m. on
13 July 2015 (or such later time and/or date as the Company and N+1
Singer may agree (being not later than 8.00 a.m. on 31 July
2015)).
The Placing Agreement contains certain warranties given by the
Company in favour of N+1 Singer in relation to, inter alia, certain
matters relating to the Group and its business. In addition, the
Company has agreed to indemnify N+1 Singer in respect of certain
liabilities it may incur in respect of the Placing. N+1 Singer has
the right to terminate the Placing Agreement in certain
circumstances prior to Admission, in particular, in the event of a
material breach of the warranties.
It is expected that the Placing Shares will be allotted and
issued at 8.00 a.m. on 13 July 2015, subject to Admission.
The Subscription
In December 2014, the Company entered into the Subscription
Agreement with certain existing Shareholders and Directors,
including Peter Bertram, Mark Wood, Nitil Patel and Timothy Hoare
(together, the "Investors"), to subscribe, at the Company's option
and discretion, for new Ordinary Shares up to an aggregate value of
approximately GBP1 million.
The Company served written notice to the parties of the
Subscription Agreement on 29 May 2015 and, accordingly, resolved to
issue to the Investors 51,100,000 New Ordinary Shares at the Issue
Price. The participation of the Directors in the Subscription is
subject to the Independent Shareholders passing Resolution 7 in the
Notice of General Meeting.
Use of Proceeds
The Company is proposing to raise gross proceeds of
approximately GBP4.5 million from the issue of the Placing Shares
and Subscription Shares. Ten Alps intends to use the net proceeds
of the Placing and Subscription of approximately GBP4 million
(after associated cash costs of approximately GBP0.5 million) for
the following purposes:
-- internal investment in TV, content marketing and storytelling
(up to approximately GBP0.6 million);
-- to fund the initial consideration payable in respect of the
Acquisition of GBP2 million; The participation of the Directors in
the Subscription is subject to the Independent Shareholders passing
Resolution 7 in the Notice of General Meeting; and
-- provide general working capital to the Group (up to approximately GBP1.4 million).
The expected use of the net proceeds of the Placing Shares and
the Subscription Shares referred to above represents the Directors'
current intentions based on the Company's present plans and
business condition. The Company will retain broad discretion in the
allocation and use of the net proceeds.
If Shareholders were not to approve the Resolutions at the
General Meeting which will give the Directors the required
authority to allot the Placing Shares and the Subscription Shares
and to disapply the statutory pre-emption rights, the Placing would
not proceed, and the Company would therefore use its existing
authorities to allot the Subscription Shares (provided that the
Independent Shareholders have passed Resolution 7) and only receive
approximately GBP1 million (gross) from the Subscription
Agreement.
DEBT REPAYMENT AND CONVERSION
Background
The Company currently has three tranches of long-term debt
obligations outstanding, totalling GBP9.06 million, including
interest accrued to date.
In April 2012, as part of a debt restructuring and equity
fundraising, the Debt Holders assumed an outstanding debt facility
held by the Company at the time with Bank of Scotland plc (the
"Bank"), with a balance of approximately GBP4.43 million (the "Debt
Facility"). As part of the transfer, the Debt Holders assumed an
interest rate of 4 per cent. per annum above monthly LIBOR,
consistent with the terms of the Debt Facility, but security
previously held by the Bank was released and the only security
provided was held in respect of the Secured Loan Notes, described
in more detail below. The Debt Facility is repayable in full on 11
February 2016 and the outstanding balance (including accrued
interest) as at today's date is GBP4.68 million.
In December 2010 (the terms of which were amended and restated
in June 2011 and March 2013), the Company issued secured loan notes
of approximately GBP2.1 million to Herald (the "Secured Loan
Notes"), the proceeds of which were used for general working
capital requirements. The Secured Loan Notes are secured by a fixed
and floating charge over the assets of all Group companies but are
subordinated to the Debt Facility. Interest is charged at a rate of
6 per cent. per annum above monthly LIBOR with a repayment date of
31 March 2016.
In March 2013 and September 2013, the Company issued unsecured
loan notes of approximately GBP192,500 and GBP1.25 million,
respectively, to Herald, to be used to fund business development
and for general working capital requirements (the "Unsecured Loan
Notes"). Interest is charged monthly at a rate of 6 per cent. over
LIBOR with a repayment date of 31 March 2016.
The aggregate outstanding balance in respect of the Secured Loan
Notes and the Unsecured Loan Notes as at today's date is GBP4.38
million (including accrued interest).
Terms of the Debt Conversion
As part of the Company's negotiations with the Debt Holders to
reduce its outstanding debt obligations, certain of the Debt
Holders have agreed to waive interest accrued to date in respect of
the Debt Facility and the Loan Notes amounting to approximately
GBP1.02 million in aggregate. In addition, when assuming the Debt
Facility from the Bank, the Debt Holders agreed to a schedule
setting out staged diminishing reductions in the outstanding
principal amount due for early repayment. As such, the outstanding
principal due in respect of the Debt Facility will be reduced from
a total of GBP4.43 million to approximately GBP4.00 million if the
Proposals are approved by Shareholders.
The Company is proposing to convert a total of approximately
GBP2.80 million of the remaining outstanding debt (comprising
approximately GBP1.98 million of the Debt Facility and
approximately GBP0.82 million of the Loan Notes) by way of the
issue of the Debt Conversion Shares at the Issue Price. The Company
is also proposing to convert approximately GBP2.72 million of the
remaining outstanding debt of the Loan Notes by way of the issue of
the Preference Shares. In addition, the Company has agreed to issue
31,762 Preference Shares to the John Booth Charitable Foundation.
Furthermore, the Company is also proposing to repay GBP16,258 of
its outstanding debt obligations, following completion of the Debt
Conversion, and GBP63,505 of interest accrued to date in respect of
the Debt Facility from the proceeds of the Placing. As a result,
the Company will have remaining long term debt obligations of GBP2
million, comprising the Debt Facility only, of which GBP1 million
will be owed to Herald and GBP1 million will be owed to the John
Booth Parties, which will continue on the existing terms save that
the repayment date will be extended from 11 February 2016 to 31
December 2017.
Short Term Debt
In addition to its current long term debt obligations, the
Company owes the Short Term Debt with principal of GBP250,000 to
Herald, Artemis Alpha Trust plc and Banque Heritage SA, attracting
an interest rate of 3 per cent. above monthly LIBOR. As at the
Latest Practicable Date the principal and accrued interest amounted
to GBP257,933.60. The Company is proposing to convert GBP150,000 of
principal of the Short Term Debt held by Herald, together with
accrued interest amounting to GBP4,712 by way of the issue of the
Preference Shares. The Short Term Debt is due on 30 June 2015 and
the Directors intend to repay the remaining obligations, held by
Artemis Alpha Trust plc and Banque Heritage SA and amounting to
GBP103,221 of principal and accrued interest, on such date from
working capital.
Preference Shares
The principal terms of the Preference Shares are as follows:
(a) they are convertible at 2.5 pence per Ordinary Share at the
holder's option (which would give rise to the issue of 116,345,240
new Ordinary Shares if the Preference Shares were converted in full
and no dividend had accrued);
(b) they are redeemable at the Company's option on the date
falling five years after their issue;
(c) they have a dividend of 4.5 per cent. per annum (which
increases to 13.5 per cent. per annum if they are not converted or
redeemed within five years of their issue) which is payable on 31
July each year, or accrued and repayable when the Preference Shares
are converted or redeemed; and
(d) they are freely transferable.
LEPE OPTION SHARES
The Company engaged Lepe in June 2014 to assist it with its
acquisition strategy. Pursuant to its terms of engagement, Lepe
will be issued with 2,766,660 New Ordinary Shares as part of the
Proposals.
DILUTION
Shareholders who are not participating in the Placing,
Subscription, Debt Conversion or subscribing for Lepe Option Shares
will be diluted by approximately 93 per cent. following completion
of the Proposals.
CAPITAL REDUCTION
In order to create distributable reserves which will allow the
Company to pay dividends in future should the Directors choose to
do so, the Company is proposing to reduce the Company's share
capital and share premium account as set out in Resolution 10 of
the Notice of General Meeting. Following shareholder approval, the
Company will seek the approval of the Court of Session in Scotland
to the Capital Reduction and, if granted, the Company expects the
Capital Reduction to be effective on or around September 2015.
RULE 9 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "TAKEOVER
CODE")
The Company is registered in Scotland and Shareholders are
protected under the Takeover Code.
Under Rule 9 of the Takeover Code, where any person acquires,
whether by a single transaction or a series of transactions over a
period of time, interests in securities which (taken together with
securities in which he is already interested and in which persons
acting in concert with him are interested) carry 30 per cent. or
more of the voting rights of a company which is subject to the
Takeover Code, that person is normally required by the Takeover
Panel to make a general offer to all the remaining shareholders of
that company to acquire their shares. Similarly, when any person
individually or a group of persons acting in concert, already holds
interests in securities which in aggregate carry not less than 30
per cent. of the voting rights of such a company but does not hold
shares carrying more than 50 per cent. of such voting rights, that
person may not normally acquire further securities without making a
general offer to the shareholders of that company to acquire their
shares. An offer under Rule 9 must be made in cash and at the
highest price paid by the person required to make the offer, or any
person acting in concert with him, for any interest in shares of
the company during the 12 months prior to the announcement of the
offer.
Under the Takeover Code, a concert party arises where persons
acting together pursuant to an agreement or understanding (whether
formal or informal and whether or not in writing) co-operate to
obtain or consolidate control of the company. Control means an
interest or interests in shares carrying in aggregate 30 per cent.
or more of the voting rights of the company, irrespective of
whether the holding or holdings give de facto control. Herald
Investment Trust plc, Herald Investment Management Limited, Herald
Venture Limited Partnership, Herald Venture Limited Partnership II
and Herald Venture Limited Partnership III are deemed to be acting
in concert (as defined in, and for the purposes of, the Takeover
Code) by reason of the investments of each such entity being
managed since their inception by Herald Investment Management
Limited. Directors and key employees of Herald are also deemed to
be in concert with them. John Booth, a director of Herald, holds
Ordinary Shares directly in his own name and beneficially through
JBCF.
In 2012, the Company completed a conditional subscription to
raise GBP3 million to expunge certain bank debt facilities and fund
working capital. The conditional subscription included
participation by the Concert Party and, as a result of which, took
the Concert Party's beneficial interest to an aggregate of
115,055,978 Ordinary Shares, representing approximately 45.56 per
cent. of the then issued share capital, as enlarged by the
subscription. Under such circumstances, the Concert Party would
normally be obliged to make a general offer, pursuant to Rule 9, to
all other Shareholders to acquire their Ordinary Shares.
At the time, the Takeover Panel agreed to waive the obligation
of the Concert Party to make a general offer, subject to approval
of the independent shareholders (being the then Shareholders of the
Company with the exception of the Concert Party), which was
obtained at a general meeting of the Company held on 25 April 2012.
Any further increases in the Concert Party's interests in Ordinary
Shares beyond the level currently held will be subject to the
provisions of Rule 9.
Following the implementation of the Proposals, the Concert Party
will be interested in an aggregate of 172,016,777 Ordinary Shares,
amounting to 41.02 per cent. of the Enlarged Issued Share Capital.
In addition, Herald will hold 2,876,869 Preference Shares and the
John Booth Charitable Foundation will hold 31,762 Preference
Shares, which are not aggregated with the holdings of Ordinary
Shares for the purposes of the Takeover Code as they are
non-voting.
RELATED PARTY TRANSACTIONS
The following elements of the Proposals constitute related party
transactions for the purposes of Rule 13 of the AIM Rules.
Debt Conversion
The Debt Conversion constitutes a related party transaction by
virtue of the issue of the Debt Conversion Shares and Preference
Shares to Herald and to the relevant John Booth Parties, all of
whom are substantial shareholders of the Company.
Placing and Subscription
The issue of the Subscription Shares under the terms of the
Subscription Agreement constitutes a related party transaction by
virtue of the issue of the Subscription Shares to Peter Bertram,
Mark Wood, Nitil Patel and Timothy Hoare, all of whom are Directors
of the Company.
The issue of the Placing Shares and the Subscription Shares
under the terms of the placing Agreement and the Subscription
Notices to herald Investment Trust, John Booth and JBCF constitute
related party transactions by virtue of their substantial
shareholdings in the Company.
Issue of Fee Shares
The issue of 2,500,000 and 5,000,000 New Ordinary Shares to
Timothy Hoare and Bob Geldof respectively in respect of accrued but
unpaid fees due to each of them constitutes a related party
transaction as they are a director and a former director
respectively.
Related party opinion
The Directors, having consulted with N+1 Singer, the Company's
nominated adviser, consider the terms of the Debt Conversion and
the terms of Herald Investment Trust's and john Booth and JBF's
participation in the Placing and Subscription and the terms of
Herald Investment Trust's and John Booth and the John Booth
Charitable Foundation's participation in the Placing and
Subscription to be fair and reasonable insofar as Shareholders are
concerned. As none of the Directors are considered to be
independent in relation to the Subscription, N+1 Singer, the
Company's nominated adviser, has stated that it considers the terms
of the Subscription to be fair and reasonable insofar as
Shareholders are concerned. The Directors (other than Timothy
Hoare), having consulted with N+1 Singer, the Company's nominated
adviser, consider the terms of the issue of the Fee Shares to each
of Timothy Hoare and Bob Geldof to be fair and reasonable insofar
as Shareholders are concerned.
GENERAL MEETING
The General Meeting will be held at the offices of Nabarro LLP,
125 London Wall, EC2Y 5AL at 9.00 a.m. on 10 July 2015.
The following Resolutions are to be proposed at the General
Meeting:
Ordinary resolutions
Resolution 1 is to approve the Acquisition as it constitutes a
reverse takeover of Ten Alps and Shareholder approval of the
Acquisition is therefore required under the AIM Rules.
Resolution 2 is to create the Preference Shares, to sub-divide
each Existing Ordinary Share into one new ordinary share of 0.01
pence in the capital of the Company and one new deferred share of
1.99 pence in the capital of the Company, and then consolidate the
resulting ordinary shares of 0.01 pence each on a 10 for 1 basis
into new Ordinary Shares of 0.1 pence each. This resolution also
authorises the Directors to deal with fractional entitlements that
arise under the Share Capital Reorganisation.
Resolution 3 is to authorise the Directors, for the purposes of
section 551 of the Act, to allot shares in the Company or grant
rights to subscribe for or convert any security into shares in the
Company of up to a maximum aggregate nominal amount of
GBP392,021.60 in connection with the Proposals and a further
nominal amount of GBP139,800 generally. The general authority is
equal to approximately one third of the Enlarged Issued Share
Capital. Resolution 3 also authorises the directors of the Company
from time to time to allot up to a further nominal amount of
GBP139,800 for use only in connection with a fully pre-emptive
rights issue. Save as disclosed in this document there are no
immediate plans to exercise these authorities. The authorities will
expire at the date of the annual general meeting in 2016 or, if
earlier, 10 October 2016.
Resolution 4 is to reappoint Peter Bertram, as a director of the
Company.
Resolution 5 is to reappoint Mark Wood as a director of the
Company.
Resolution 6 is to reappoint Nitil Patel as a director of the
Company.
Resolution 7 is to approve the participation of the Directors in
the Subscription. The voting on this resolution shall be conducted
by a poll and only the Independent Shareholders shall be entitled
to vote in respect of this resolution.
Resolution 8 is to approve the issue of New Ordinary Shares to
Timothy Hoare and Bob Geldof in respect of accrued but unpaid fees
due to each of them. The voting on this resolution shall be
conducted by a poll and only the Independent Shareholders shall be
entitled to vote in respect of this resolution.
Special resolutions
Resolution 9 is to disapply statutory pre-emption rights up to
an aggregate nominal amount of GBP392,021.60 in connection with the
Proposals, a rights or other pre-emptive issue and any other issue
of equity securities for cash up to an aggregate nominal amount of
GBP41,940 (representing approximately 10.0 per cent. of the
Enlarged Issued Share Capital). The authority will expire on the
date of the annual general meeting in 2016 or, if earlier, 10
October 2016.
Resolution 10 is to approve the adoption of new articles of
association for the Company in substitution for the current
articles of association of the Company which will include
provisions in respect of the new classes of Deferred Shares and
Preference Shares. A summary of the New Articles and the principal
changes arising from the adoption of the New Articles, other than
changes which are of a minor, technical or clarifying nature, are
set out in the Admission Document and the Existing Articles and the
New Articles are available for review at the Company's website at
www.tenalps.com.
Resolution 11 is to approve the Capital Reduction.
IRREVOCABLE UNDERTAKINGS
Insofar as they are interested in Ordinary Shares, the Directors
and persons connected with them have given irrevocable undertakings
to the Company to vote in favour of the Resolutions (and, where
relevant, to procure that such action is taken by the relevant
registered holders if that is not them), in respect of their entire
beneficial holdings totalling, in aggregate, 13,404,000 Ordinary
Shares, representing approximately 4.84 per cent. of the Existing
Total Voting Rights.
In addition, certain other Shareholders have given irrevocable
undertakings to the Company to vote in favour of the Resolutions to
be proposed at the General Meeting (and, where relevant, to procure
that such action is taken by the relevant registered holders if
that is not one of them) in respect of their holdings totalling, in
aggregate, 190,272,561 Ordinary Shares, representing approximately
68.77 per cent. of the Existing Total Voting Rights.
In total, therefore, the Company has received irrevocable
undertakings to vote in favour of the Resolutions in respect of
holdings totalling in aggregate 203,676,561 Ordinary Shares,
representing approximately 73.61 per cent. of the Existing Total
Voting Rights.
DIVIDEND POLICY
The New Board's objective following Completion is to continue to
grow the Enlarged Group's business and it is expected that any
surplus cash resources will, in the short to medium term, be
reinvested into development of the Group's business. In view of
this, the New Board will not be recommending a dividend for the
foreseeable future and intend only to commence the payment of
dividends when it becomes commercially prudent to do so, having
regard to the availability of the Enlarged Group's distributable
profits and funds required to finance future growth.
ADMISSION AND SETTLEMENT
As the Acquisition constitutes a reverse takeover of the Company
under the AIM Rules for Companies, Shareholder consent to the
Acquisition is required at the General Meeting. If the Resolutions
are duly passed at the General Meeting, the admission of the
Ordinary Shares to trading on AIM will be cancelled (immediately
prior to Admission) and the Enlarged Issued Share Capital will be
admitted to trading on AIM.
Application will be made to London Stock Exchange for the
Enlarged Issued Share Capital to be admitted to trading on AIM.
Admission is expected to take place at 8.00 a.m. on 13 July
2015.
The total number of New Ordinary Shares to be issued pursuant to
the Proposals and the percentage of the Enlarged Issued Share
Capital represented by each issue immediately following Admission
will be as follows:
Number of New Percentage of
Ordinary Shares Enlarged Issued
Share Capital
Placing 173,900,000 41.46
Subscription 51,100,000 12.18
Debt Conversion 140,214,078 33.43
Lepe Option Shares 2,766,660 0.66
Fee Shares 23,750,000 5.66
If Admission does not take place on or before 8.00 a.m. on 13
July 2015 (or such later time and/or date as the Company and N+1
Singer may agree (being not later than 8.00 a.m. on 31 July 2015))
the Placing and Debt Conversion will not proceed as they are
conditional upon each other.
The New Ordinary Shares will rank pari passu in all respects
with the Existing Ordinary Shares, including the right to receive
all dividends and other distributions declared, paid or made after
their allotment and issue.
The Existing Articles and New Articles permit the Company to
issue shares in uncertificated form. CREST is a computerised
paperless share transfer and settlement system which allows shares
and other securities to be held in electronic rather than paper
form. The Ordinary Shares are already admitted to CREST and
therefore the New Ordinary Shares will also be eligible for
settlement in CREST. CREST is a voluntary system and Shareholders
who wish to retain certificates will be able to do so upon request.
The New Ordinary Shares due to uncertificated holders are expected
to be delivered in CREST on 13 July 2015.
RECOMMENDATION
Your Board believes the Proposals and the Capital Reduction to
be in the best interests of the Company and the Shareholders as a
whole. Accordingly, the Directors unanimously recommend you to vote
in favour of the Resolutions to be proposed at the General Meeting
as they have irrevocably undertaken to do in respect of their
beneficial holdings, amounting, in aggregate, to 13,404,000
Existing Ordinary Shares, representing 4.84 per cent. of the
Existing Total Voting Rights.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
2015
Publication date of the Admission 17 June
Document
Latest time and date for receipt 9.00 a.m. on
of Forms of Proxy 8 July
General Meeting 9.00 a.m. on
10 July
Record date for Share Capital Reorganisation 6.00 p.m. on
10 July
Admission of the Existing Ordinary 13 July
Shares and New Ordinary Shares
CREST accounts expected to be credited 13 July
with the New Ordinary Shares
Completion of the Acquisition 14 July
Definitive share certificates expected 20 July
to be despatched by
ADMISSION STATISTICS
Number of Ordinary Shares in issue
at the date of the Admission Document 276,666,012
Basis of share consolidation under 1 Ordinary Share
Share Capital Reorganisation for every 10 Existing
Ordinary Shares
Ordinary Shares in issue following
the Share Capital Reorganisation 27,666,601
Number of Subscription Shares to be
issued 51,100,000
Number of Placing Shares to be issued 173,900,000
Number of Debt Conversion Shares to
be issued 140,214,078
Number of Lepe Option Shares to be
issued 2,766,660
Number of Fee Shares to be issued 23,750,000
Enlarged Issued Share Capital on Admission 419,397,339
New Ordinary Shares as a percentage 93.40 per
of the Enlarged Share Capital cent.
Issue Price per New Ordinary Share
(after consolidation) 2 pence
Gross proceeds receivable by the Company
pursuant to the Placing and Subscription GBP4.5 million
Market capitalisation of the Company
at Admission at the Issue Price GBP8.39 million
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Zinc Media (LSE:ZIN)
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