Catalyst Media Regulatory News (CMX)

12 Mar 2007 07:03

Catalyst Media Group PLC12 March 2007 Not for release, publication or distribution in whole or in part in or into theUnited States, Canada, Japan, Australia, the Republic of Ireland or the Republic of South Africa CATALYST MEDIA GROUP PLC ("Catalyst" or "the Company") Proposed placing of 801,236,844 Placing Shares at 0.5p per share Proposed open offer of 1,298,763,156 Open Offer Shares at 0.5p per share Notice of Extraordinary General Meeting Certain definitions apply throughout the following announcement and yourattention is drawn to the table at the end of this announcement where thesedefinitions are set out in full. Highlights • Placing and Open Offer to raise £10.5 million before expenses (£10 million net of expenses). • All of the Placing Shares have been placed firm. • Of the 1,298,763,156 Open Offer Shares to be issued pursuant to the Open Offer, 617,488,975 Open Offer Shares are the subject of irrevocable undertakings from certain Qualifying Shareholders to take up entitlements. • The balance of 681,274,181 Open Offer Shares has been conditionally placed subject only to clawback to satisfy valid applications under the Open Offer. • The Company is also undertaking a Capital Reorganisation. • The Placing, Open Offer and Capital Reorganisation are subject to the approval of Shareholders to be sought at an EGM to be held on 4 April 2007. • Irrevocable undertakings to vote in favour of the Resolution have been received from certain institutional and other investors and the Directors in respect of 322,188,750 Existing Ordinary Shares, representing 45.1 per cent. of the Existing Ordinary Shares. • Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. Dealings are expected to commence in the New Ordinary Shares on 5 April 2007. Enquiries, please contact:Catalyst Media Group plcMichael RosenbergTel: (020) 7927 6699 Strand PartnersJames Harris/Angela PeaceTel: 020 7409 3494 EvolutionTom Price/Gina GibsonTel: 020 7071 4300 This summary should be read in conjunction with the full text of the followingannouncement. An expected timetable of principal events is set out in AppendixI. Appendix II contains definitions of certain terms used in this summary andthe full announcement. This announcement does not constitute, or form part of, an offer to sell, or thesolicitation of an offer to subscribe for or buy any of the New Ordinary Sharesto be issued or sold in connection with the Placing and Open Offer. Any decisionto invest in the New Ordinary Shares should only be made on the basis ofinformation in the Prospectus which will contain further details relating to thePlacing and Open Offer and the Capital Reorganisation and Catalyst in general,as well as a summary of the risk factors to which an investment in the NewOrdinary Shares is subject. The Prospectus is expected to be issued today. Inaddition, the Prospectus will contain a notice convening the EGM. This announcement is not an offer of securities for sale in the United States.Securities may not be offered or sold in the United States or to, or for theaccount or benefit of, US Persons absent registration or an exemption fromregistration. The New Ordinary Shares to be issued pursuant to the Placing andOpen Offer have not been and will not be registered under the Securities Act orthe securities laws of any state or other jurisdiction of the United States, andthe New Ordinary Shares issued as part of the Placing and Open Offer may not beoffered, sold, delivered, renounced or transferred, directly or indirectly,through CREST or otherwise, in the United States or to, or for the account orbenefit of, US persons (subject to certain exceptions). All persons, includingcustodians, nominees and trustees, must observe these restrictions and may notsend or distribute this announcement, or any other document connected with thePlacing and Open Offer in or into the United States. Strand Partners, which is regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively as Nominated Adviser to Catalyst, andfor no one else in relation to the Placing and Open Offer and CapitalReorganisation and will not be responsible to anyone other than Catalyst forproviding protections afforded to customers of Strand Partners or for providingadvice in relation to the Placing and Open Offer and the Capital Reorganisationor on any matter referred to herein. The contents of this announcement have been approved by Strand Partners for thepurposes of section 21(2)(b) of FSMA. The release, publication or distributionof this announcement in certain jurisdictions may be restricted by law andtherefore persons in such jurisdictions into which this announcement isreleased, published or distributed should inform themselves about and observeany such restrictions. Prices and values of, and income from, the Ordinary Shares may go down as wellas up and an investor may not get back the amount they have invested. It shouldbe noted that past performance is no guide to future performance. Personsneeding advice should consult an independent financial adviser. Not for release, publication or distribution in whole or in part in or into theUnited States, Canada, Australia, the Republic or Ireland, South Africa orJapan. CATALYST MEDIA GROUP PLC ("Catalyst" or "the Company") Proposed placing of 801,236,844 Placing Shares at 0.5p per share Proposed open offer of 1,298,763,156 Open Offer Shares at 0.5p per share Notice of Extraordinary General Meeting Introduction The Board announces that the Company is proposing to raise approximately £10.5million gross (£10 million net of expenses) by way of a placing of 801,236,844new Ordinary Shares with institutional and other investors and an open offer of1,298,763,156 new Ordinary Shares to Qualifying Shareholders, in each case atthe Issue Price. All of the Placing Shares have been placed firm. Of the1,298,763,156 Open Offer Shares to be issued pursuant to the Open Offer,617,488,975 Open Offer Shares are the subject of irrevocable undertakings fromcertain Qualifying Shareholders to take up entitlements. The balance of681,274,181 Open Offer Shares has been conditionally placed subject only toclawback to satisfy valid applications under the Open Offer. The Placing and theOpen Offer are conditional, inter alia, on Admission. Further details ofirrevocable undertakings given by Qualifying Shareholders in connection with theOpen Offer are set out under the heading "Details of the Placing and the OpenOffer" below. The Company also announces the Capital Reorganisation. The funds raised will be used primarily to repay a proportion of the InvestecFacility in accordance with its terms, to provide funds for the expenses of thePlacing and Open Offer and to provide additional working capital for the Group. Further details of the Placing and the Open Offer and the Capital Reorganisationare set out below. The Open Offer is an offer of 1,298,763,156 Open Offer Shares at 0.5p per OpenOffer Share to all Qualifying Shareholders, except certain OverseasShareholders, on the basis of 20 Open Offer Shares for every 11 ExistingOrdinary Shares held on the Record Date, and so in proportion to the number ofExisting Ordinary Shares then held. The Issue Price of 0.5p per share represents a 55.6 per cent. discount to theclosing price on AIM on 8 March 2007 of 1.125p per Existing Ordinary Share.Having examined the possible alternatives and having regard to the underlyingnet asset value per share should the Placing and Open Offer not proceed andInvestec exercises its warrant to acquire an effective 10 per cent. of theCompany's shareholding in SIS, the Directors believe that the level of discountis appropriate. In order to protect the Company's interest in the underlyingstake in SIS and to provide certainty of cash funds to the Company, irrevocableundertakings to take up their entitlements in full have been received fromQualifying Shareholders in respect of 617,488,975 Open Offer Shares and theCompany has arranged for the balance, being 681,274,181 Open Offer Shares, to beconditionally placed subject to clawback under the Open Offer. Shareholders' approval of the Resolution set out in the Notice of EGM isrequired to enable the Placing and the Open Offer to proceed. Set out below aredetails of the Placing and the Open Offer and the Capital Reorganisation and thereasons for them. Your Board considers the Placing and the Open Offer and the CapitalReorganisation to be in the best interests of the Company and the Shareholdersas a whole, and recommends that you vote in favour of the Resolution to beproposed at the EGM, which is being convened for 10.00 a.m., on 4 April 2007. Irrevocable undertakings to vote in favour of the Resolution have been receivedfrom certain institutional and other investors and the Directors in respect of322,188,750 Existing Ordinary Shares, representing 45.1 per cent. of theExisting Ordinary Shares. Application will be made to the London Stock Exchange for the New OrdinaryShares to be admitted to trading on AIM. Dealings are expected to commence inthe New Ordinary Shares on 5 April 2007. The principal reason for the Placing and Open Offer is to avoid theimplementation of one of the key terms in the Investec Facility which wouldentitle Investec to exercise a warrant to acquire an effective 10 per cent. outof the 22.19 per cent. shareholding held by the Company in SIS for a nominalvalue if the outstanding borrowings under the Investec Facility are not reducedto below £10 million by 10 April 2007. Due to the change in the SIS dividendpolicy described below, the Company will not have sufficient funds to do this ifthe Placing and Open Offer do not proceed. The Directors believe that it isimportant that Shareholders vote in favour of the Proposals in order that theCompany is able to maintain its existing shareholding in SIS. The Investec Facility also provides for a working capital facility of £1.3million to be made available to the Company once the outstanding borrowings ofthe Company falls to below £10 million and remains below £10 million includinginterest throughout the term of the loan. As this condition has not beensatisfied, the Placing and Open Offer is also required to ensure Catalyst hassufficient working capital for its present requirements. If the Placing and Open Offer do not proceed, the Directors believe that theGroup may not have sufficient working capital for its present requirements. Insuch an event, the Directors would immediately have to seek alternative sourcesof funding, which might include short term loan finance from certainShareholders. Background to Catalyst and reasons for the Placing and Open Offer Catalyst is a media company that distributes audio-visual content using digitaltechnology and provides services in the digitalisation and distribution ofbroadcast content and internet website development. Catalyst also holds its ownrights, specialising in historic entertainment and educational content, andlicensing the content globally to third parties. Catalyst owns a portal forsourcing stock footage and is in discussions with a possible purchaser for thisbusiness. Catalyst is launching an on-line gaming platform complete with a suiteof fixed odds and exclusive head to head games. It is anticipated that thesegames will be available for marketing by June of this year. In September 2005, the Company, through Catalyst Media Holdings, acquired theentire issued share capital of Alternateport, a company whose sole asset was 20per cent. of the issued share capital of Satellite Information Services. Duringthe Company's period of ownership, SIS has made several share buy-backs and as aresult Alternateport's percentage ownership has increased to 22.19 per cent. atno extra cost to itself. SIS's primary business is that of transmitting live video, audio and data fromthe UK's 59 race courses and many overseas courses to over 10,200 licensedbetting offices in the UK and Ireland. SIS has entered into agreements wherebyit has the right to transmit live horseracing to LBOs. Races taking place in theUK (and elsewhere) are transmitted by SIS via a satellite feed to LBOs as partof a fully integrated service providing betting opportunities for the customersof the LBO. SIS's television services also include other sports, such asgreyhound racing and virtual racing. Through its SISLink division, SIS is alsoone of the leading uplink contractors in Europe, providing transportable uplinkunits to a variety of clients, including television news companies and sportsevent organisers. In order to partially fund the acquisition of Alternateport in September 2005,Eureka subscribed £11.75 million for secured deep discounted bonds issued byCatalyst Media Holdings, a company which was owned as to 80 per cent. byCatalyst and 20 per cent. by Eureka. In September 2006 the Company acquired the 20 per cent. stake not held by it inCMH from Eureka for a cash consideration of £5.5 million. The Board believe itwas beneficial for the Company to increase the stake owned in SIS from 17.6 percent. to 22.19 per cent. to maximise capital asset value and dividend incomedistribution. However, under the Eureka facility, Catalyst was contractually required toredeem the outstanding balance of the deep discounted bonds held by Eureka ifthe cumulative dividends paid by SIS were less than £50 million by 5 March 2007.If the Company failed to do so, Eureka could contractually force a sale ofAlternateport at that date in order to use the sale proceeds to repay the debt.The Board was mindful of the risk of this happening before any dividend was paidas a forced sale would likely lead to a lower than market value sale price beingachieved for the Company's stake in SIS. On that basis, new financingarrangements were actively sought to overcome this possible outcome. In order to finance the acquisition of the outstanding 20 per cent. interest inCMH and the associated costs and in order to refinance the Eureka facility,Catalyst drew down £17.3 million of an £18.625 million facility that wasarranged with Investec in September 2006. The facility is secured against theassets of Catalyst Media Holdings and Alternateport, both of which, followingthat transaction, are wholly owned subsidiaries of the Company. As a result ofthat transaction Catalyst currently owns a 22.19 per cent. stake in SIS. SIS historically had a practice of declaring a substantial "super" dividendevery four or five years (such dividends having been paid in 1993, 1998 and2002). Consequently, in line with this practice, and based upon SIS boarddiscussions, the Directors believed that a significant dividend from SIS wouldbe paid in the first quarter of 2007, which would have a direct impact onprofits and earnings. Payment of such a dividend was anticipated to occur nolater than 31 March 2007. Under the terms of the Investec Facility, in the event that the outstanding debtand accrued interest due to Investec is in excess of £10 million at any timeafter 31 March 2007, the Investec Warrant will entitle Investec in certaincircumstances to acquire an effective 10 per cent. out of the 22.19 per cent.holding held by the Company in SIS at a nominal price, giving Catalyst aresultant shareholding of 12.19 per cent. in SIS. This provision reflected thebelief by the Directors that a substantial dividend would be paid by SIS priorto 31 March 2007. Investec has now agreed to extend the date from 31 March 2007to 10 April 2007. On 15 January 2007, the Company announced that the SIS board had decided that itwas no longer the intention of SIS to pay a significant dividend in the firstquarter of 2007 and that, in future, SIS's dividend policy was more likely to bethe payment of regular annual dividends consistent with annual profits insteadof significant periodic "super" dividend payments. Since this announcement wasmade the Board has been reviewing a number of refinancing opportunities in orderto raise approximately £10 million by 10 April 2007, which would allow theCompany to safeguard its existing interest in SIS and to address the short termfunding implications of the change in dividend policy by SIS. On 9 February 2007the Company announced that the Board had received assurances from certain majorshareholders that they were supportive of an equity issue at 1p per share andthat they were therefore confident that appropriate funding arrangements wouldbe secured. Following extensive discussions with Investec and after exploring alternativepossible refinancing options the Board has concluded that no alternative optionswere achievable either in the time available or due to regulatory constraints.Accordingly the Board has concluded that the Placing and the Open Offerrepresents the best available opportunity for the Company to resolve itsimmediate funding requirements and maintain value for Shareholders.Notwithstanding the assurances provided by the major shareholders referred toabove, due to, inter alia, prevailing stock market conditions, certain majorshareholders are no longer willing to support a fund raising at the levelspreviously indicated but would support it at 0.5p and accordingly the Directorsconsidered it necessary to reduce the Issue Price to 0.5p in order to securesufficient demand in the time available for the Placing and Open Offer. Thefundraising will raise approximately £10 million after expenses which, togetherwith the anticipated proceeds of £1.9 million from the sale of 1.67 per cent. ofthe Company's stake in SIS to Fred Done of BetFred bookmakers referred to below,will be sufficient to reduce the outstanding borrowings to Investec to below £10million in accordance with the terms of the facility agreement thereby enablingthe Company to maintain its shareholding in SIS and provide sufficient workingcapital to the Group for its present requirements. In the event that the sale toFred Done does not take place by 31 March 2007 the Company has entered into anarrangement with Mentor Marketing & Investments Limited, which has agreed toprovide a loan facility of up to £800,000 to the Company. If the InvestecFacility is not repaid in full prior to 30 September 2007, then Investec maystill exercise the Investec Warrant but only over a much smaller effectivepercentage of Catalyst's stake in SIS as more specifically set out below underthe heading "Investec Facility and Investec Warrant". Based on the Proposals theamount outstanding under the Investec Facility following Completion will be £9million. As the Investec Facility is not reduced to below £5 million Investecwill still be entitled to acquire an effective 1 per cent. out of the 22.19 percent. holding in SIS at nominal cost. The Directors anticipate that the board of SIS will consider paying a "normal"dividend later this year but the timing and quantum of this payment are notlikely to be determined until the audited accounts for SIS's financial yearending 31 March 2007 are available. Any dividend payment will be used by theCompany to further reduce the debt due to Investec. Whilst the Directors expecta dividend to be paid by SIS in the short to medium term, there is no guaranteethat such will be the case. On the basis of current expectations, if no suchdividend is paid by 30 June 2008, and no other sources of funding have beenreceived, the Investec Facility will exceed £10 million and as a result Investecwill have the right to subscribe for an effective 10 per cent. of the Company'sstake in SIS pursuant to the Investec Warrant. The SIS board and its five principal shareholders have agreed to offer to FredDone of BetFred bookmakers a shareholding in SIS and as such have agreed inprinciple to sell 7.5 per cent. of SIS to Fred Done pro rata to their currentshareholdings. The sale has been recommended by the independent directors andsenior management of SIS. On that basis, the Company has entered into a(non-binding) agreement in principle with Fred Done that it will sell sharesrepresenting 1.67 per cent. of SIS's issued share capital for the sum of £1.9million to Fred Done. After this sale and assuming the current funding proposalsare successfully completed, Catalyst will own 20.52 per cent. of SIS. In theevent that Investec subsequently exercises the Investec Warrant to acquire aneffective 1 per cent. of the Company's holding in SIS, Catalyst will then own19.52 per cent. of SIS. The Company intends to hold this stake for theforeseeable future in view of the anticipated growth in SIS and in anticipationof regular dividends being paid. Under the terms of the Investec Facility, theproceeds from this sale must be applied to further reduce the Investec Facility. The Directors understand that SIS is on target to meet its budgets for thefinancial year ending 31 March 2007 and that the SIS directors are confidentthat it will continue its growth in future years despite new competitionentering the market, with it having substantial cash balances available tofinance future expansion. SIS reported on 5 January 2007 that Britain's thirdbiggest betting shop chain, Coral, followed the example of the two marketleaders, William Hill and Ladbrokes, by signing a long term contract to takelive pictures, audio and data provided by SIS until April 2011. On 2 February2007 the SIS board confirmed that the fourth largest chain of betting shops,BetFred had also signed for the same period. SIS now has approximately 70 percent. of its customer base in long term contracts, thus underpinning the futurelong term profitability of the business. In addition 10 courses have renewedtheir rights agreements directly with SIS and 16 have renewed their service withBookmakers Afternoon Greyhound Services, who in turn have licensed SIS to coverand transmit coverage of these races until 2012. Additional competition that SIS faces includes a new joint venture company,Amalgamated Racing Limited ("AMRAC"), which recently announced that it waslaunching a new betting and data channel for LBOs in April 2007. AMRAC proposedthat it would bring additional competition and choice to the market and would beable to compete with SIS on price. Whilst SIS acknowledges that competition inthe sector is likely to increase, it remains confident that the predominantlyexclusive nature and extensive range of its rights contracts, together with asignificant proportion of its customers being contracted on a long term basisand its provision of a daily service with comprehensive range of bettingopportunities including UK, Irish and other overseas horse and greyhoundmeetings provides SIS with competitive advantage which will enable it tomaintain a very strong position in the market going forward. Investec Facility and Investec Warrant Following Admission, the amount owing under the Investec Facility will be £9million. Once the amount outstanding under the Investec Facility (includingaccrued interest and any further drawdown the Company wishes to make) has fallenbelow £10 million there will be available for drawdown under the InvestecFacility the sum of £1.32 million by way of a working capital loan providing thefacility plus accrued interest remains below £10 million. Interest will continueto be on the outstanding amount and must be paid in full on 31 December 2010.Interest is currently accruing at 3.5 per cent. above the Investec base ratewhich is currently 5.25 per cent. Following Admission, the interest rate willincrease with effect from 1 April 2007 to 4.5 per cent. above the Investec baserate. Until such time as the amount outstanding under the Investec Facility is reducedto less than £5 million (including accrued and estimated interest to the finaldate of repayment) any amount received by Alternateport by way of dividend fromSIS or from the sale of any interest in SIS must be paid in reduction of theInvestec Facility. On the basis that the amount outstanding under the Investec Facility as at 10April 2007 will be £9 million, the Investec Warrant will entitle Investec tosubscribe for such number of shares in CMH at nominal cost as will represent aneffective 1 per cent. of the Company's 22.19 per cent. stake in SIS. If theInvestec Facility is not repaid in full by 31 December 2010, the InvestecWarrant will rise to a 3 per cent. entitlement unless the amount outstandingunder the Investec Facility rises back above £10 million at any time when theInvestec Warrant will entitle it to subscribe for an effective 10 per cent. ofthe Company's stake in SIS. Should Investec exercise the Investec Warrant then the provisions of ashareholders' agreement entered into in September 2006 between the Company,Investec and CMH will apply. Under that agreement Catalyst has the right at any time to place Catalyst MediaHoldings in funds so as to enable it to repay all outstanding amounts under theInvestec Facility. Catalyst also has the right, during the period commencing onthe date of exercise of the Investec Warrant and ending on 31 December 2011 orone year after exercise of the Investec Warrant, whichever is the later, to buyout Investec's shares in Catalyst Media Holdings for a sum equal to 6.25 timesSIS's EBITDA minus debt plus cash. If Catalyst does not exercise its buy-out option, then Investec shall beentitled to market for sale either of Alternateport or Alternateport's shares inSIS. Capital Reorganisation The only current class of share capital of the Company is the Existing OrdinaryShares, which have a nominal value of 1p per share. Under the Act the Company isnot allowed to issue shares at below their nominal value. The Directorstherefore consider it necessary to reorganise the Company's share capital bysubdividing each Existing Ordinary Share into one new Ordinary Share of 0.1p andone Deferred Share of 0.9p in order to allow the Placing and Open Offer toproceed. The Capital Reorganisation will result in Shareholders holding one new OrdinaryShare and one Deferred Share for each Existing Ordinary Share currently held.The Ordinary Shares will have the same rights (including voting and dividendrights and rights on a return of capital) as the Existing Ordinary Shares. TheDeferred Shares will have minimal rights attaching to them and will bepractically worthless. No application will be made for the Deferred Shares to beadmitted to trading on AIM or any other recognised investment exchange. No certificates will be issued in respect of the new Ordinary Shares resultingfrom the Capital Reorganisation. Share certificates in respect of ExistingOrdinary Shares will continue to be valid. No share certificates will be issuedin respect of the Deferred Shares. Current Trading and Prospects The Company announced its audited results for the 17 month period ended 31 March2006 on 21 July 2006 and its unaudited interim results for the six months ended30 September 2006 on 30 November 2006. In the period ended 31 March 2006, Catalyst reported a loss after tax of £5.71million on turnover of £2.88 million, compared with a loss after tax in theprior year of £5.41 million on turnover of £7.04 million. The significantdecrease in turnover was primarily as a result of the disposal of Betelgeuse andGlobal Media Services which contributed £6.25 million of revenues. The Company recorded a loss for the six month period ended 30 September 2006 of£0.5 million (compared to a loss of £1.4 million for the first six months to 30April 2005 of the previous 17 month accounting period to 31 March 2006). As at30 September 2006 Catalyst had net assets of £14.5 million. In the current trading period to 31 March 2007, it is anticipated that a sale ofFootage.net will be made and further details will be given as and when thatdisposal has occurred. In addition, the Directors believe that SIS continues totrade profitably and in line with expectations. Following the Placing and Open Offer the Directors intend to review further theCompany's future direction and strategy. However it is likely that any suchreview will await the decision by the SIS board on the timing and quantum offuture dividend payments, at which time the Board will be in a better positionto determine the most suitable strategy for the Company. Principal terms of the Placing and the Open Offer In order to repay a proportion of the Investec Facility, to provide funds forthe expenses of the Placing and the Open Offer and to provide additional workingcapital for the Group, the Company is proposing to raise approximately £10.5million before expenses (£10 million net of expenses) by the issue of2,100,000,000 new Ordinary Shares pursuant to the Placing and the Open Offer atthe Issue Price. The Placing will raise £4 million, before expenses, with afurther £6.5 million before expenses, being raised through the Open Offer. Qualifying Shareholders who wish to subscribe for Open Offer Shares are invitedto apply at the Issue Price, free of expenses, pro rata to their existingshareholdings on the basis of: 20 Open Offer Shares for every 11 Existing Ordinary Shares held at the close of business on the Record Date (and so in proportion to anynumber of Existing Ordinary Shares then held). Entitlements of QualifyingShareholders to Open Offer Shares will be rounded down to the nearest wholenumber. Fractional entitlements to the Open Offer Shares will be aggregated andallotted to Placees pursuant to the Placing and Open Offer Agreement for thebenefit of the Company. The Open Offer Shares are to be paid for in full onapplication. The Placing Shares have been placed firm with institutional and other investors.Irrevocable commitments to take up their entitlements under the Open Offer infull have been received from Qualifying Shareholders in respect of 617,488,975Open Offer Shares. The balance of the Open Offer Shares has been conditionallyplaced with institutional and other investors subject to clawback to the extentrequired to satisfy valid applications under the Open Offer. The Placing and the Open Offer are conditional, inter alia, upon the passing ofthe Resolution to be proposed at the EGM, Admission and the Placing and OpenOffer Agreement becoming unconditional in all respects (save only for thecondition relating to Admission). It is expected that dealings in the NewOrdinary Shares will commence on AIM at 8.00 a.m. on 5 April 2007. If Admissionhas not occurred by 20 April 2007, application monies will be returned toapplicants without interest and at the applicants' risk as soon thereafter as ispracticable. Qualifying non-CREST Shareholders will receive with the Prospectus anApplication Form containing details of their entitlement to subscribe for OpenOffer Shares. To be valid, Application Forms must be received by CapitaRegistrars by post or (during normal business hours only) by hand at CorporateActions, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU not later than11.00 a.m. on 2 April 2007. Qualifying CREST Shareholders will receive a credit to their appropriate stockaccount in CREST in respect of their Open Offer entitlements on 13 March 2007.The latest time and date for payment, in full, under the Open Offer is 11.00a.m. on 2 April 2007. Subject to the fulfilment of the conditions of the Placing Letters and thePlacing and Open Offer Agreement, Placing Shares will be registered in the namesof the relevant Placees and Open Offer Shares will be registered in the names ofthe Qualifying Shareholders validly applying for them and it is expected thatcertificates in respect of the New Ordinary Shares will be dispatched torelevant shareholders by first class post at their own risk by 12 April 2007 or,if appropriate, delivery will be made to their CREST accounts by 5 April 2007.No temporary documents of title will be issued. Pending the receipt of definitive share certificates in respect of the NewOrdinary Shares (other than in respect of those shares settled through CREST),transfers will be certified against the register. The New Ordinary Shares will, when issued and fully paid, rank pari passu in allrespects with the Existing Ordinary Shares, including the right to receive alldividends and other distributions thereafter declared, made or paid. The Company will make an appropriate announcement to a Regulatory InformationService giving details of the results of the Open Offer on or about 3 April2007. Use of proceeds The net proceeds of the Placing and Open Offer will be applied as follows: £ millionNet proceeds of the Placing and Open Offer 10Repayment of Investec Facility (7.1)Working capital (2.9) A further £1.9 million, comprising the proposed sale proceeds from the sale of1.67 per cent. of the Company's stake in SIS will be applied to further reducethe Investec Facility. In the event that this sale to Fred Done does notcomplete by 30 April 2007, the Company has entered into an arrangement withMentor Marketing & Investments Limited, which has agreed to provide a loanfacility of up to £800,000 to the Company. Directors' and Shareholders' intentions Certain Qualifying Shareholders (excluding Directors), having entitlements underthe Open Offer in respect of, in aggregate, 688,543,521 Open Offer Shares,representing 53.0 per cent. of the Open Offer Shares to be issued pursuant tothe Open Offer, have irrevocably undertaken to take up 612,270,794 Open OfferShares. Michael Rosenberg having an entitlement under the Open Offer in respect of218,181 Open Offer Shares, representing 0.02 per cent. of the Open Offer Sharesto be issued pursuant to the Open Offer, has irrevocably undertaken to take upthese entitlements. In addition, he has agreed to subscribe for 782,000 PlacingShares. Sir David Frost having an entitlement under the Open Offer in respect of18,225,227 Open Offer Shares, representing 1.40 per cent. of the Open OfferShares to be issued pursuant to the Open Offer, has irrevocably undertaken totake up 5,000,000 Open Offer Shares. Extraordinary General Meeting Set out at the end of the Prospectus will be a notice convening theExtraordinary General Meeting to be held at 5th Floor, Portland House, 4 GreatPortland Street, London W1W 8QJ at 10.00 a.m. on 4 April 2007, at which aspecial resolution will be proposed, conditional upon Admission, to: (1) (a) to subdivide each of the Existing Ordinary Shares into one Ordinary Share and one Deferred Share; (b) to subdivide each of the authorised but un-issued ordinary shares of 1p each into 10 new Ordinary Shares; (c) increase the authorised share capital of the Company by £3,500,000 from £9,500,000 to £13,000,000 by the creation of 3,500,000,000 new Ordinary Shares; (d) confer on the Directors authority under section 80 of the Act to allot (i) the New Ordinary Shares, (ii) Ordinary Shares up to a nominal value of £800,000 pursuant to the agreement with Mentor Marketing & Investments Limited, (iii) other than pursuant to (i) and (ii) relevant securities up to an aggregate nominal value of £938,107 (representing approximately 33 per cent. of the Enlarged Share Capital); and (e) empower the Directors to allot equity securities for cash other than pro rata to shareholders provided that the power is limited to (i) the New Ordinary Shares, (ii) the allotment of Ordinary Shares up to a nominal value of £800,000 pursuant to the agreement with Mentor Marketing & Investments Limited, (iii) the allotment of equity securities for cash in connection with a rights issue or any other pre-emptive offer in favour of holders of ordinary shares where the equity securities respectively attribute to the interests of such holders are proportionate (as nearly as may be practicable) to the respective numbers of Ordinary Shares held by them and (iv) the allotment (other than pursuant to (i) to (iii) above) of equity securities up to a maximum aggregate nominal amount of £281,432 (representing approximately 10 per cent. of the Enlarged Share Capital). Prospectus The Prospectus setting out details of the Proposals and including a notice of the EGM, accompanied by the Form of Proxy and the Application Form, will be posted to Shareholders today. Copies of the Prospectus will be available free of charge at the Company's registered office and from the offices of Lewis Silkin, 5 Chancery Lane, Clifford's Inn, London, EC4A 1BL during normal office hours on any weekday (Saturday and public holidays excepted) for a period of not less than 1 month from the date of Admission. EXPECTED TIMETABLE OF PRINCIPAL EVENTS 2007Record Date for the Open Offer close of business on 8 March Prospectus and Application Form despatched 12 March Open Offer entitlements credited to CREST stock accounts of 13 MarchQualifying CREST Shareholders Recommended latest time for requesting withdrawal 4.30 p.m. on 26 Marchof Open Offer entitlements from CREST Latest time for depositing Open Offer entitlements 3.00 p.m. on 28 Marchinto CREST Latest time and date for splitting of Application Forms 3.00 p.m. on 29 March(to satisfy bona fide market claims only) Latest time and date for receipt of completed Application 11.00 a.m. on 2 AprilForms and payment in full under the Open Offer or settlement of relevant CREST instruction (as appropriate) Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 2 April Extraordinary General Meeting 10.00 a.m. on 4 April Admission and dealings expected to commence in 8.00 a.m. on 5 Aprilthe New Ordinary Shares on AIM Expected date for crediting of New Ordinary Shares to CREST 5 Aprilstock accounts in uncertificated form Expected date of despatch of definitive share certificates for by 12 AprilNew Ordinary Shares in certificated form PLACING AND OPEN OFFER STATISTICS Number of Existing Ordinary Shares 714,319,736 Issue Price 0.5p New Ordinary Shares to be issued pursuant to the OpenOffer 1,298,763,156 New Ordinary Shares to be issued pursuant to the Placing 801,236,844 New Ordinary Shares as a percentage of the Enlarged Share 74.6 per cent.Capital Number of Ordinary Shares in issue immediately afterAdmission 2,814,319,736 Market capitalisation at the Issue Price on Admission £14.07 million Gross proceeds of the Placing and Open Offer £10.5 million Net proceeds of the Placing and Open Offer £10 million International Security Identification Number (ISIN) GB0005021083 DEFINITIONSThe following definitions apply throughout this announcement, unless the contextrequires otherwise: "Act" the Companies Act 1985 (as amended) "Admission" the admission of the New Ordinary Shares to trading on AIM in accordance with the AIM Rules "AIM" the AIM Market of the London Stock Exchange "AIM Rules" the rules governing the admission to and operation of AIM as published by the London Stock Exchange from time to time "Alternateport" Alternateport Limited (registered in England and Wales under company number 4120286) "Application the application form accompanying the Prospectus on whichForm" Qualifying Shareholders may apply for Open Offer Shares under the Open Offer and which forms part of the terms and conditions of the Open Offer "Board" or the directors of the Company"Directors" "Capita a trading name of Capita IRG Plc (registered in England andRegistrars" Wales under Company number 02605568) "Capital the proposed reorganisation of the share capital of theReorganisation" Company "CMH" or Catalyst Media Holdings Limited (a subsidiary of the Company"Catalyst Media registered in England and Wales under Company number 5483806)Holdings" "Combined Code" the corporate governance code issued by the Financial Reporting Council "Company" or Catalyst Media Group plc (registered in England and Wales"Catalyst" under Company number 3955206) "Completion" completion of the Placing and Open Offer "CREST" the computerised settlement system to facilitate the transfer of title of shares in uncertificated form (as defined in the CREST Regulations) operated by CRESTCo Limited "CREST the Uncertificated Securities Regulations 2001 (as amended)Regulations" (SI 2001/3755) "Deferred the non-voting deferred shares of 0.9p each in the capital ofShares" the Company to be created by the Capital Reorganisation "EMI Scheme" the enterprise management incentive scheme of the Company "Enlarged Share the entire issued ordinary share capital of the Company onCapital" Admission "Eureka" the Eureka Interactive Fund Limited (registered in the Cayman Islands under registration number 93858) "Evolution Evolution Securities Limited (registered in England and WalesSecurities" under Company number 2316630) "Existing the 714,319,736 ordinary shares of 1p each in issue at theOrdinary date of this announcementShares" "Extraordinary the extraordinary general meeting of the Company convened forGeneral Meeting" 10.00 a.m. on 4 April 2007, and any adjournment thereofor "EGM" "Form of Proxy" the form of proxy enclosed with the Prospectus for use by Shareholders at the EGM "FSA" or the Financial Services Authority in the UK"FinancialServicesAuthority" "FSMA" Financial Services and Markets Act 2000 (as amended) "Fully Diluted the Enlarged Share Capital and assuming full exercise of allShare Capital" outstanding warrants and options on Admission, conversion of the Notes and payment of the maximum amount that may become due under certain agreements "Group" Catalyst Media Group plc and its subsidiaries at the date hereof "Investec" Investec Bank (UK) Limited (registered in England and Wales under company number 489604) "Investec the £18.625 million facility that has been arranged withFacility" Investec, of which the Company has drawn down £17.3 million "Investec the warrant issued by the Company pursuant to the warrantWarrant" instrument entered into by the Company on 29 September 2006 "Issue Price" 0.5p per New Ordinary Share "LBO" licensed betting office "Loan Note the loan note instrument entered into by the Company on 20Instrument" February 2003 "London Stock London Stock Exchange plcExchange" "New Ordinary the Placing Shares and the Open Offer SharesShares" "Notes" the £160,000 6 per cent. convertible secured loan notes 2006 issued by the Company under the Loan Note Instrument "Official List" the Official List of the UK Listing Authority "Open Offer" the conditional offer by the Company to Qualifying Shareholders to subscribe for the Open Offer Shares on the terms and subject to the conditions set out in the Prospectus and in the Application Form "Open Offer the 1,298,763,156 new Ordinary Shares which are the subject ofShares" the Open Offer "Optionholders" holders of options under the Share Option Schemes "Ordinary ordinary shares of 0.1p each in the capital of the Company toShares" be created by the Capital Reorganisation "Overseas holders of Existing Ordinary Shares with registered addressesShareholders" outside the UK or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the UK "participant the identification code or membership number used in CREST toID" identify a particular CREST member or other CREST participant "Placees" each of the persons to whom Placing Shares are issued pursuant to the Placing "Placing" the conditional placing by the Company of the Placing Shares at the Issue Price pursuant to the Placing and Open Offer Agreement and the Placing Letters "Placing and Open the conditional agreement dated 12 March 2007 between (1) theOffer Company, (2) the Directors, (3) Strand Partners and (4)Agreement" Evolution Securities "Placing the letters from the Company to the Placees relating to theLetters" Placing "Placing the 801,236,844 new Ordinary Shares which are to be issued byShares" the Company pursuant to the Placing "Proposals" the proposals set out in the Prospectus including the Placing and the Open Offer "Prospectus" the prospectus issued by the Company in respect of the Placing and the Open Offer, together with any supplements or amendments thereto "Prospectus the Prospectus Rules made by the UKLA under Section 73A(4) ofRules" FSMA "Qualifying CREST Qualifying Shareholders whose Existing Ordinary Shares on theShareholders" register of members of the Company on the Record Date are in uncertificated form "Qualifying Qualifying Shareholders whose Existing Ordinary Shares on thenon-CREST register of members of the Company on the Record Date are inShareholders" certificated form "Qualifying holders of Existing Ordinary Shares on the register of membersShareholders" of the Company at the Record Date, other than certain Overseas Shareholders "Record Date" the close of business on 8 March 2007 "Reef Warrant the warrant instrument entered into by the Company on 26 MayInstrument" 2005 "Registrars" or Capita Registrars"ReceivingAgent" "Resolution" the special resolution to be proposed at the Extraordinary General Meeting "Securities United States Securities Act of 1933, as amended, and theAct" rules and regulations promulgated thereunder "Shareholders" holders of Existing Ordinary Shares, and following the Capital Reorganisation, holders of Ordinary Shares "Share Option the Newsplayer Group PLC 2000 Share Option SchemePlan" "Share Option the Share Option Plan and the EMI SchemeSchemes" "SIS" or Satellite Information Services (Holdings) Limited (registered"Satellite in England and Wales under company number 01939932)InformationServices" "Strand Strand Partners Limited (registered in England and Wales underPartners" company number 02780169) "Strand the warrant dated 5 September 2005 issued in favour of StrandWarrant" Partners giving it the right to subscribe for new Ordinary Shares "subsidiary" shall have the meaning given to that phrase in section 736 of the Act "UK Listing the Financial Services Authority acting in its capacity as theAuthority" competent authority for the purposes of Part VI of FSMA "United Kingdom" the United Kingdom of Great Britain and Northern Irelandor "UK" "United States" the United States of America, its territories and possessions,or "US" any state of the United States of America and the district of Columbia and all other areas subject to its jurisdiction "US person" a citizen or permanent resident of the United States, as defined in Regulation S promulgated under the Securities Act This announcement does not constitute, or form part of, an offer to sell, or thesolicitation of an offer to subscribe for or buy any of the New Ordinary Sharesto be issued or sold in connection with the Placing and Open Offer. Any decisionto invest in the New Ordinary Shares should only be made on the basis ofinformation in the Prospectus which will contain further details relating to thePlacing and Open Offer and Capital Reorganisation and Catalyst in general, aswell as a summary of the risk factors to which an investment in the New OrdinaryShares is subject. The Prospectus is expected to be issued today. In addition,the Prospectus will contain a notice convening the EGM. This announcement is not an offer of securities for sale in the United States.Securities may not be offered or sold in the United States or to, or for theaccount or benefit of, US Persons absent registration or an exemption fromregistration. The New Ordinary Shares to be issued pursuant to the Placing andOpen Offer have not been and will not be registered under the Securities Act orthe securities laws of any state or other jurisdiction of the United States, andthe New Ordinary Shares issued as part of the Placing and Open Offer may not beoffered, sold, delivered, renounced or transferred, directly or indirectly,through CREST or otherwise, in the United States or to, or for the account orbenefit of, US persons (subject to certain exceptions). All persons, includingcustodians, nominees and trustees, must observe these restrictions and may notsend or distribute this announcement, or any other document connected with thePlacing and Open Offer in or into the United States. Strand Partners, which is regulated in the United Kingdom by the FinancialServices Authority, is acting exclusively as Nominated Adviser to Catalyst, andfor no one else in relation to the Placing and Open Offer and CapitalReorganisation and will not be responsible to anyone other than Catalyst forproviding protections afforded to customers of Strand Partners or for providingadvice in relation to the Placing and Open Offer and the Capital Reorganisationor on any matter referred to herein. The contents of this announcement have been approved by Strand Partners for thepurposes of section 21(2)(b) of FSMA. The release, publication or distributionof this announcement in certain jurisdictions may be restricted by law andtherefore persons in such jurisdictions into which this announcement isreleased, published or distributed should inform themselves about and observeany such restrictions. Prices and values of, and income from, the Ordinary Shares may go down as wellas up and an investor may not get back the amount they have invested. It shouldbe noted that past performance is no guide to future performance. Personsneeding advice should consult an independent financial adviser. Not for release, publication or distribution in whole or in part in or into theUnited States, Canada, Australia, the Republic or Ireland, South Africa orJapan. This information is provided by RNS The company news service from the London Stock Exchange