AVS.L Regulatory News (AVS)

1 Dec 2006 07:30

InvestinMedia PLC01 December 2006 1 December 2006 InvestinMedia PLC ("InvestinMedia" or "the Group") Disposal of investment in Complete Communications Corporation Limited Owner of "Who Wants to Be a Millionaire?" quiz format Introduction InvestinMedia has conditionally, inter alia, upon the consent of shareholdersagreed to sell the Group's interest in Complete Communications CorporationLimited "CCCL", the company that indirectly owns the worldwide rights to the "Who Wants to Be a Millionaire?" quiz format. The sale by the Group of its interest in the share capital of CCCL is part ofarrangements for the sale of the entire issued share capital of CCCL for anaggregate initial consideration of £106 million out of which the initialconsideration net of expenses payable to the Group, will be approximately £36million, including approximately £2 million which will be used to subscribe for2waytraffic shares at the price of their planned placing (which will representunder 2% of 2waytraffic's enlarged share capital). Additionally, there is apossibility of a further indeterminate cash consideration being received by theGroup depending on the net assets of CCCL at completion and the outcome ofcertain litigation in the United States. In view of the size of the disposal InvestinMedia is required, under the AIMrules, to obtain prior shareholder approval for the sale of this investment. Acircular will be sent to shareholders today to provide further information onthe disposal and to convene an Extraordinary General Meeting to approve thedisposal and give the InvestinMedia directors the necessary authority tocomplete the disposal on the terms set out in the sale and purchase agreement. Background On 30 March 2006, InvestinMedia announced confirmation that CCCL, the parentcompany of Celador Productions Limited and Celador International Limited, weremaking the worldwide intellectual property rights and UK production library ofCCCL available for sale. The CCCL shareholders recognised that "Who Wants to bea Millionaire?" had been an extremely successful format but as it matured theyconcluded that the time was then right to seek an exit. Since that date a numberof bidders have emerged and, in conjunction with the other CCCL shareholders andthe creators of the "Who Wants to be a Millionaire?" concept, agreement to sellinter alia the entire issued share capital of CCCL to 2waytraffic, a companyquoted on AIM, has been reached. CCCL The Group share of the results of CCCL was: Year ended Eighteen months ended 30 September 2005 30 September 2004 £'000 £'000 Turnover 17,013 24,563Profit on ordinary activities before taxation 519 3,870Taxation on profit on ordinary activities (237) (1,292)Profit on ordinary activities after taxation 282 2,578 The Group share of the net assets of CCCL was: At 30 September 2005 At 30 September 2004 £'000 £'000 Fixed assets 3,718 1,173Current Assets 7,348 10,868Creditors: amounts falling due within one year (7,363) (8,180)Net assets 3,703 3,861 Effective interest The inclusion within the sale and purchase agreement, of the sale of the CreatorCompanies by the creators, means that the Group's 49% economic interest in CCCLwill translate into approximately 34% of the aggregate initial consideration tobe paid by the purchaser. Taxation HM Revenue and Customs have confirmed that the profit on the proposed disposalof CCCL will probably not be liable to Corporation Tax, provided that the Groupcontinues to pursue a strategy of remaining a trading group for the purposes ofthe relevant tax legislation. InvestinMedia has been advised that if asubstantial part of the proceeds from the sale of CCCL are used for theacquisition of a trading business then it is likely that the proceeds of theCCCL disposal should not be subject to Corporation Tax, which would otherwise bechargeable at 30 per cent. The Group has recently acquired the whole of theissued share capital of Fountain TV and InvestinMedia intends to utilise aproportion of the net proceeds of sale arising from the sale of CCCL inacquiring a trading business or businesses with a view to ensuring that theprofits arising on the sale of CCCL will not be subject to Corporation Tax. Information on 2waytraffic 2waytraffic is an international developer and exploiter of revenue generatinginteractive entertainment content across television, mobile and digitalplatforms for mass audiences. Founded in 2004 by former executives of Endemol,the company is based in Hilversum, The Netherlands and currently sells itsformats into 27 countries and has over 100 employees. 2waytraffic was floated onAIM on 7 April 2006. Since that date 2waytraffic has completed the acquisitionof Emexus, a mobile content provider and Intellygents, a format developer basedin The Netherlands, and reached agreement with Zebra Producciones S.A. toestablish a joint venture in Spain. 2waytraffic operates three businessdivisions: Television, 2waytraffic develops and exploits television formats for major broadcasters thatseek to convert the programme's audience into revenue-generating customers, byenabling the viewer to engage and participate with the programming. At presentthe 2waytraffic group works with broadcasters including SBS6 in The Netherlands,TV Denmark in Denmark, TV4 in Sweden, PrimaTV in Romania, TVN in Poland and VT4in Belgium. Mobile. The existing 2waytraffic group markets its mobile content business by targetingsubscribers through broadcasting ''interactive commercials'' on selectednetworks in North America (MTV, BET and Fox Reality), Central Europe (VIVA andTV2 in Hungary, Slovakia), Asia (Channel 5 & 8 in Singapore, Thailand) and SouthAfrica who address the desired target audience for these services. Digital In March 2006, prior to its flotation, 2waytraffic acquired HIPTV, a Netherlandsbased digital broadcasting platform, which enables large audiences on theinternet to simultaneously watch 2waytraffic's or third party internettelevision content on a pay per view, a pay per play or a subscription basedbasis. Clients of HIPTV include VVN, T.T.G. and Challenge T.V. Terms of the proposed sale of CCCL The sale of CCCL is conditional upon the approval of shareholders of bothInvestinMedia and 2waytraffic at EGMs being convened for this purpose. The portion of the aggregate initial consideration for CCCL, which will bepayable to the Group in respect of it's shareholding in CCCL is approximately£36 million of which approximately £2 million will be used to subscribe forfully paid 2waytraffic shares at the price of their planned placing. Inaddition, the agreement provides for additional consideration to be payable tothe CCCL vendors based on the net assets of CCCL at completion and also allowsthe CCCL vendors to continue to conduct the existing litigation commenced byCCCL in the United States against American Broadcasting Companies, Inc andothers and to receive as deferred consideration the net proceeds of suchlitigation. Under the sale and purchase agreement, InvestinMedia Holdings Limited, asubsidiary of InvestinMedia, together with the other CCCL shareholders, hasgiven commercial warranties and indemnities to 2waytraffic and on completion £30million of the aggregate initial consideration will be held in a retentionaccount against potential warranty and indemnity claims. The maximum amount ofpotential warranty and indemnity claims, which may be made against the CCCLvendors, has been limited to 50% of the aggregate consideration. Long-term strategy The purpose of the InvestinMedia demerger announced on 18 February 2004 was toseparate the investment in CCCL from the Group's other trading businesses toenable shareholder value to be more easily realised. InvestinMedia believes thatonce the proceeds of the CCCL disposal are received, the greatest shareholdervalue can be achieved by the Group continuing as a trading group, focused on themedia sector. Following the CCCL disposal the Group's businesses will consist of Fountain TV,the UK's leading independent television studio, which the Group reacquired on 6September 2006 from Medal Entertainment & Media plc ("MEM") having originallysold it to them in 2002, together with a 20.74% stake in MEM. The re-acquisition of Fountain TV was a first step in a strategy aimed atinvesting a substantial part of the proceeds of the proposed CCCL disposal inthe acquisition of a further trading business; so maintaining our position as atrading group. Although a number of potential acquisitions are being considered,the InvestinMedia board decided that no firm decisions should be made until thedisposal of CCCL has been completed. Extraordinary General Meeting The EGM is to be held at 36 Elder Street, London E1 6BT at 11am on 18 December2006. At the EGM, the following Resolution will be proposed: "THAT the directors be generally and unconditionally authorised to dispose ofthe whole of the Group's shareholding in Complete Communication CorporationLimited ("CCCL") to 2 Way Traffic N.V. under the terms of the agreement enteredinto between (1) All the shareholders in CCCL and (2) 2 Way Traffic N.V dated 1December 2006 (the Disposal SPA"), and the directors are hereby furtherauthorised to agree to such variation of the terms of the Disposal SPA as theyshall consider to be in the best interests of the Group." Recommendation The InvestinMedia board unanimously recommends InvestinMedia shareholders tovote in favour of the Resolution, as the members of the InvestinMedia boardintend to do in respect of their own beneficial shareholdings of InvestinMediaShares, representing approximately 20 per cent of the issued share capital ofInvestinMedia, as it believes it is in the best interests of the Company andshareholders taken as a whole. Undertakings The Company has received irrevocable undertakings to vote in favour of theResolution from all directors and certain other shareholders amounting inaggregate to 4,901,577 shares representing 30..04% and indications of intent tovote in favour of the Resolution from other shareholders amounting in aggregateto a further 4,133,024 shares representing together 55.37%, of the existingissued share capital. Enquiries InvestinMedia plc Cameron Maxwell, Chief Executive0207 588 7352 JM Finn & Co. Clive Carver, Corporate Finance Director0207 628 9688 This information is provided by RNS The company news service from the London Stock Exchange