Last checked at 5 Jun 2009 13:30
5 June 2009
Proposed acquisition of Progressive Digital Media Group Limited
Approval of waiver of obligations under Rule 9 of The City Code
Re-Admission to trading on AIM
Proposed name change to Progressive Digital Media Group plc
and
Notice of Extraordinary General Meeting
The Board of TMN Group plc is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of Progressive Digital Media Group Limited ("Progressive") through the issue of 291,942,672 new Ordinary Shares to Michael Danson, Progressive's sole shareholder and non executive director of TMN Group plc.
Mike Danson, founder of Progressive, commented:
"I am convinced that in these difficult economic times, an Enlarged Group will be better placed to trade successfully in the challenging market, take advantage of increased scale, greater financial stability and flexibility and ultimately deliver strong levels of growth over the medium term by capitalising on exciting opportunities in the B2B and B2C markets.
My team and I are excited by the opportunity to work within the Enlarged Group and are confident we can make a positive contribution to delivering shareholder value in what should be a very successful business."
Peter Harkness, Non-Executive Chairman of TMN Group, commented:
"We are very excited by the opportunity to acquire Progressive Digital Media. Putting together the two businesses makes a far stronger and broader organisation which is better placed to capitalise on some exciting growth opportunities ahead. In the medium term, the Board is confident that this acquisition will successfully generate significant shareholder value.
We understand the frustration expressed by some shareholders at the length of time taken to announce this transaction but we assure those people that this delay has been entirely due to the need to do everything in careful compliance with market rules. We thank both shareholders and staff for their patience and all those who have worked so hard behind the scenes in reaching today's announcement."
For further information contact:
Hudson Sandler 0207 796 4133
Nick Lyon / James White
Investec Investment Banking 0207 597 5970
Erik Anderson / Ben Poynter / Avital Lobel
This summary should be read in conjunction with the full text of the Re-Admission Document which is expected to be made available to Shareholders electronically in 'read-only' format on the TMN Group website at http://www.tmnplc.com/tmn/investors/reports/ where it can be printed.
The Acquisition will be subject to certain conditions including approval of Shareholders at an Extraordinary General Meeting which is expected to be convened for this purpose at 10 a.m. on 24 June 2009. Notice of this meeting is set out in the Re-Admission Document. Certain definitions and terms used in this announcement are set out at the end of this announcement.
Investec, which is authorised and regulated by the Financial Services Authority in the United Kingdom, is acting exclusively as Nominated Adviser and Broker to TMN in connection with the Re-Admission and the Acquisition and is not acting for any other person and will not be responsible to any other person for providing the protections afforded to customers of Investec or for advising on the transaction and arrangements proposed in the Re-Admission Document.
This announcement does not constitute, or form part of, an offer or invitation to purchase or subscribe for any securities in any jurisdiction. The Re-Admission Document is expected to be published by the Company on the date of this announcement and any acquisition of new Ordinary Shares in the Company should be made only by reference to such Re-Admission Document.
This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the Directors' current intentions, beliefs or expectations concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and the Group's markets.
By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual results and developments could differ materially from those expressed or implied by the forward-looking statements. Factors that might cause such a difference, include, but are not limited to the risk factors set out in Part II of the Re-Admission Document.
Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements in this announcement are based on certain factors and assumptions, including the Directors' current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's operations, results of operations, growth strategy and liquidity. Whilst the Directors consider these assumptions to be reasonable based upon information currently available, they may prove to be incorrect. Prospective investors should therefore specifically consider the risk factors contained in Part II of the Re-Admission Document that could cause actual results to differ before making an investment decision. Save as required by law or by the AIM Rules for Companies, the Company undertakes no obligation to publicly release the results of any revisions to any forward-looking statements in this announcement that may occur due to any change in the Directors' expectations or to reflect events or circumstances after the date of this announcement.
Proposed acquisition of Progressive Digital Media Group Limited
Approval of waiver of obligations under Rule 9 of The City Code
Re-Admission to trading on AIM
Proposed name change to Progressive Digital Media Group plc
and
Notice of Extraordinary General Meeting
1. Introduction and Summary
The Board of TMN Group is pleased to announce that it has conditionally agreed to acquire the entire issued share capital of Progressive Digital Media Group Limited ("Progressive") through the issue of 291,942,672 new Ordinary Shares to Michael Danson, Progressive's sole shareholder and non executive director of TMN Group.
Under the AIM Rules for Companies, the Acquisition constitutes a reverse takeover. Accordingly the Acquisition is conditional on the approval by the Existing Shareholders at the Extraordinary General Meeting which is being convened for this and other purposes on 24 June 2009 at 10 a.m. Approval of the Independent Shareholders is also required to approve a Whitewash Resolution as the Concert Party will hold the majority of the Enlarged Share Capital post-Acquisition.
If the Resolutions are duly passed at the Extraordinary General Meeting then it is expected that the Enlarged Share Capital will be re-admitted to trading on AIM on 25 June 2009. At that point the Acquisition will complete and Mark Smith, Craig Dixon, Vince Smith and Bruce Fair will stand down from the Board and Kenneth Appiah and Simon Pyper will join the Board.
Further details of the Acquisition and the Acquisition Agreement are set out below and in Re-Admission Document which is available to Shareholders electronically in "read only" format on the TMN Group website at http://www.tmnplc.com/tmn/investors/reports/ and in hard copy on written request as set out in paragraph 16 below.
2. Information on TMN Group
TMN Group was established in 1999 under the name "themutual.net" as an internet community in which members could obtain a stake and receive information free of charge through a message board system. Themutual.net was listed on AIM in 2000 and gained expertise in the email marketing sector. TMN Group is now one of the UK's leading online digital marketing organisations, operating through four key channels: Affiliate Marketing, Email Marketing, Publishing and Online Research. These channels are serviced by a number of different companies within the group and include:
TMN Media - email marketing and website publishing
TMN Media specialises in email and website marketing, with access to highly profiled, permission-based email addresses, millions of visitors to its websites and distribution technology that ensures strong deliverability. TMN Media manages a comprehensive portfolio of email databases in the UK and offers a full online advertising solution. TMN Group also operates websites including MutualPoints and Plum Prizes.
EDR - digital agency
TMN Group acquired EDR, an online interactive advertising agency, in November 2005. EDR was established in 2000 to offer full services in email broadcast, sales and delivery. TMN Group's EDR division fulfils the full planning and buying requirements for numerous blue chip clients' lead generation marketing campaigns. In 2006, EDR divested its owned and managed lists to TMN Media and now focuses on email strategy and investment, with access to over 30 million opt-in email addresses from around 100 email lists. EDR is an important email-buying agency and plans campaigns across a large number of third party lists, including TMN Media.
AffiliateFuture - affiliate marketing
Launched in 2002, AffiliateFuture, the Company's affiliate marketing business, is an important affiliate network specialising in travel, telecoms, retail and finance delivering thousands of transactions per week to hundreds of clients who range from small businesses to major international operators. AffiliateFuture operates primarily on a CPA (Cost Per Acquisition) model, whereby clients pay an agreed percentage of, or a fixed amount for, sales or leads that are generated by the network, as such directly linking results to advertising costs. AffiliateFuture was acquired in 2008 as part of the acquisition of Internet Business Group plc.
iD Factor/ICD Research - online research
ICD Research carries out consultative research utilising online focus groups. Specialist online market research agency, iD Factor, was formed in 2001 to offer online survey management and fieldwork services to the market research industry and was acquired by TMN Group in December 2005 for a consideration of £1.2 million. Core services of this division include sample provision, the design and implementation of web based surveys as well as full data processing and tabulation.
Tapps - email marketing and lead generation
Tapps is a prominent email marketing specialist in The Netherlands offering advertisers access to branded email lists. In 2007 Tapps launched Premium Brand Survey which allows advertisers to build prospect leads in a high quality environment.
3. Information on Progressive
The Progressive Group was created to acquire, invest and manage assets that operate in markets which demonstrate significant growth potential. Progressive is wholly owned by Michael Danson who is also a non executive director of TMN Group. Michael Danson has considerable experience of managing business-to-business media companies. He was previously the CEO of Datamonitor plc (a company he founded in 1988) until its sale to Informa Acquisitions Limited, a wholly-owned indirect subsidiary of Informa plc, in July 2007 for approximately £502 million.
At the request of the board of Informa plc, Michael Danson remained with Datamonitor plc to support the smooth transition of responsibilities to the new owners and, in May 2008, he left to pursue a number of business and charitable interests. To date, Michael Danson has made a number of investments within the business-to-business media sphere, which includes the acquisition of certain business-to-business publishing titles from Wilmington Group plc and the recommended takeover of SPG Media Group plc.
Progressive is a business-to-business media company providing a large range of products and services across a number of industry sectors. Revenues are principally derived from business conferences and events, controlled circulation magazines and web-based reference portals. A significant level of investment has been made in the group of companies since acquisition to move them from traditional business-to-business print, conference and events assets towards more data rich online models. The company has over 200 sales personnel, 400 product creators, 65 developers and over 100 websites through which it can deliver content.
Having made this significant investment, Progressive is now well placed to capitalise on the solid scalable platform that has been created and leverage its data rich assets across multiple products and platforms, the financial benefits of which will substantially come through in the financial year ending 31 December 2010.
The businesses comprising the Progressive Group at the time of the Acquisition have not formed one legal group or sub-group throughout the three year period to 31 December 2008. Accordingly financial information for Progressive's main trading businesses, SPG Media Group Limited, and Progressive Media Markets & Dewberry Redpoint has been set out in Part III of the Re-Admission Document.
4. Current trading and prospects
Progressive
Performance in the current financial year to date has been encouraging with sales, revenue and operating profit performing in line with expectations and ahead of last year. Whilst there has been some softening in performance in the more discretionary spend areas such as automotive and design, performance elsewhere has compensated and supports management's view that Progressive's broad industry base and wide product set provide a stable platform from which to deliver long term profitable growth. Progressive has made significant investment in the last financial year in broadening its product offering, delivery capabilities and levels of service which it expects to leverage in the coming financial year and beyond.
TMN Group
On 30 January 2009 the Company released its trading update in which the Directors stated that, "profit will be approximately 50 per cent. below the Board's expectations" for the financial year ended 30 April 2009.
The trading conditions experienced by the Group remain challenging and the Directors continue to carefully manage the Group's profitability, cost base and expenditures. Trading in the current financial year has stabilised in recent months, albeit at lower levels, and although the benefits of the cost reduction programme implemented last year will begin to appear in the current financial year, visibility of earnings remains poor and the outlook for the markets in which the Company operates remains uncertain. Should trading not improve, the Directors believe the Company may need to renegotiate banking covenants in order to meet its near term financial obligations. The Directors may seek to dispose of certain assets within the business to generate additional near term cash or pursue alternative sources of funding in case a renegotiation of its banking covenants is not successful.
5. Background to and reasons for the Acquisition
The recent deterioration in the macro-economic environment has had a significant impact on the trading performance of the Company. Whilst the Directors have reacted swiftly to implement a programme of cost savings, the benefit of which will be received predominantly in the current financial year to 30 April 2010, this has been outweighed by the considerable decline in email display advertising revenues and particularly in the financial services and automotive sectors to which the Company has a large exposure. Trading in the current financial year has stabilised, albeit at lower levels, and although the benefits of the cost reduction programme implemented last year will begin to appear in the current financial year, visibility of earnings remains poor and the outlook for the markets in which it operates remains uncertain.
The Directors and Proposed Directors believe that the acquisition by TMN Group of Progressive will provide a number of benefits to existing TMN Group Shareholders, including:
The Directors and Proposed Directors believe that the Enlarged Group will be well positioned to deliver significant shareholder value in the medium and long term which the Group otherwise would not be able to deliver as an independent company.
The existing TMN Group businesses will continue to be run as an independent entity within the Enlarged Group and focus on similar markets, benefiting from the support of additional capital to maximise the existing TMN Group's revenue potential.
6. Terms of the Acquisition
Pursuant to the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire from Michael Danson the entire issued share capital of Progressive through the issue of 291,942,672 new Ordinary Shares at Completion which will represent 79 per cent. of the Enlarged Share Capital. The Acquisition Agreement is conditional upon, inter alia, the Resolutions being duly passed at the Extraordinary General Meeting.
The Acquisition Agreement contains certain warranties from Michael Danson to the Company which are in a customary form for such a transaction. The aggregate liability of Michael Danson under the Acquisition Agreement shall not exceed the value of the Consideration Shares he receives by reference to the closing price of an Ordinary Share on 18 February 2009 (the business day on which trading in the Ordinary Shares was suspended following the announcement that TMN Group was in discussions which might or might not lead to a reverse takeover for TMN Group).
In determining the number of Consideration Shares to be issued and therefore the relative valuation of TMN Group and the Progressive Group, the Directors have taken into consideration the current trading and prospects of both TMN Group and the Progressive Group, the expected relative financial contributions of the two companies and the benefits that Progressive and the Proposed Directors will bring to the overall operations of the Enlarged Group.
Application will be made to the London Stock Exchange for the Consideration Shares to be admitted to trading on AIM. It is expected that such admission will occur on 25 June 2009.
The Consideration Shares will, when issued, rank pari passu in all respects with the Existing Ordinary Shares including the right to receive dividends and other distributions declared following Re-Admission.
7. Lock-in arrangement
Michael Danson who holds 28.0 per cent. of the Existing Ordinary Shares and will hold 84.87 per cent. of the Enlarged Share Capital, has undertaken to the Company (subject to certain limited exceptions including transfers to family members or to trustees for their benefit and disposals by way of acceptance of a recommended takeover offer of the entire issued share capital of the Company) not to dispose of the Ordinary Shares held by him (and his connected persons (within the meaning of section 252 of the 2006 Act) (the "Restricted Shares")) following Re-Admission or any other securities issued in exchange for or convertible into, or substantially similar to, Ordinary Shares (or any interest in them or in respect of them) at any time prior to the second anniversary of Re-Admission (the "Lock-in Period").
8. The City Code
General
The City Code governs, inter alia, transactions which may result in a change of control of a public company to which the City Code applies. Under Rule 9 of the City Code ("Rule 9"), any person or group of persons acting in concert (as such term is defined in the City Code) who acquires shares which, taken together with shares already held by him or shares held or acquired by persons acting in concert with him, carry 30 per cent. or more of the voting rights of a company which is subject to the City Code is normally required to make a general offer to all the remaining shareholders to acquire their shares.
Similarly when any person or persons, acting in concert, already holds more than 30 per cent. but not more than 50 per cent. of the voting rights of a company, a general offer will normally be required if any further shares are acquired by any such person.
An offer under Rule 9 must be made in cash and at the highest price paid within the preceding 12 months for any shares in the company by the person required to make the offer or any person acting in concert with him.
Persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate to obtain or consolidate control of a company.
The Concert Party Members are Michael Danson, the vendor of Progressive and Simon Pyper who is an Existing Shareholder and who is also involved in the business of Progressive as a director. The Concert Party Members have agreed with the Company that they are acting in concert for the purposes of the City Code.
Assuming that the Resolutions are duly passed and the Consideration Shares issued under the terms of the Acquisition Agreement, the Concert Party will hold, in aggregate 313,661,948 Ordinary Shares representing approximately 84.88 per cent. of the Enlarged Share Capital of which Michael Danson will hold in his private capacity 313,640,181 Ordinary Shares representing approximately 84.87 per cent. of the Enlarged Share Capital. The relevant holdings of the Concert Party Members assuming that the Resolutions are duly passed and the Consideration Shares issued under the terms of the Acquisition Agreement are set out in Part VI of the Re-Admission Document together with detail of the Concert Party Members.
In the absence of a waiver granted by the Panel, Rule 9 of the City Code would require the Concert Party to make a general offer for the balance of the Ordinary Shares in issue immediately following the Acquisition. The Panel has agreed, subject to the approval on a poll by the Independent Shareholders of the Whitewash Resolution set out in the Notice of Extraordinary General Meeting and summarised below, to waive the obligation that would otherwise arise under Rule 9, resulting from the issue of the Consideration Shares pursuant to the Acquisition, for a general offer to be made by the Concert Party for the balance of the issued Ordinary Shares not already held by the Concert Party.
Following implementation of the Acquisition and Re-Admission (including the issue of the Consideration Shares) both Michael Danson in his own personal capacity and the Concert Party Members between them will hold more than 50 per cent. of the Company's voting share capital and (in the case of the Concert Party Members, for so long as they continue to be treated as acting in concert) any further increase in Michael Danson's personal shareholding or the Concert Party's aggregate shareholding will not be subject to the provisions of Rule 9. However, in the case of all Concert Party Members other than Michael Danson, the Panel should be consulted before any such individual Concert Party Member increases their holding through 30 per cent., or, if such holding is already more than 30 per cent. (but not more than 50 per cent.), before any increase in their holding.
9. Directors, Proposed Directors and employees
It is proposed that each of Mark Smith, Craig Dixon, Vince Smith and Bruce Fair will resign and that the Proposed Directors will join the Company's board of directors with effect from Re-Admission. Accordingly, the Enlarged Group's board of directors will consist of Michael Danson, Simon Pyper, Kenneth Appiah and Peter Harkness. Further details regarding the Directors and Proposed Directors are set out in the Re-Admission Document.
Other TMN Group employees
Other than the board changes described above, there is currently no intention following Re-Admission to make any material changes to TMN Group's staffing levels, nor to any conditions of employment, including pension rights, as a result of the proposed transaction. There is also no current intention to change the places of business of the TMN Group or re-deploy fixed assets.
10. Corporate Governance
The Directors and Proposed Directors recognise the value and importance of high standards of corporate governance. It is hoped that the Enlarged Group will grow in size in the future and therefore it intends to comply with the main provisions of the Combined Code so far as is practicable and appropriate for a company of its size and nature. The Company also intends to follow the recommendations on corporate governance of the Quoted Companies Alliance ("QCA") for companies with shares traded on AIM.
Immediately following Re-Admission however, the Enlarged Group will only have one independent non executive director. The Directors and Proposed Directors intend to appoint a suitably qualified senior independent non-executive as soon as reasonably practicable following Re-Admission in order to further comply with the Combined Code and the QCA guidelines and establish audit and remuneration committees each with formally delegated responsibilities and formal terms of reference.
As the board of directors following Re-Admission will be small, there will not be a separate nominations committee and recommendations for appointments to the board of directors will be considered by the board of directors as a whole.
The Directors intend to comply, and procure compliance with, Rule 21 of the AIM Rules for Companies relating to dealings by directors and other applicable employees in the Company's securities and, to this end, the Company has adopted an appropriate share dealing code.
11. Share Option Schemes
The Directors and Proposed Directors believe that the success of the Enlarged Group will depend to a significant degree on the future performance of the management team. The Directors and Proposed Directors also recognise the importance of ensuring that all employees are well motivated and identify closely with the success of the Enlarged Group.
Accordingly it is proposed that at the earliest possible opportunity a new share option scheme will be put to Shareholders for their approval.
Details of the Existing Share Option Schemes are set out in Part VI of the Re-Admission Document. Completion will trigger a right to exercise the options. To the extent unexercised, options will lapse three months after Completion. The Existing Share Option Schemes will be terminated as soon as practicable at the end of the three month period following Completion.
A letter will be sent to all holders of options under the Existing Share Option Schemes with information in relation to their options.
12. Re-Admission, Settlement and CREST
Application will be made to the London Stock Exchange for the Enlarged Share Capital to be re-admitted to trading on AIM. It is expected that Re-Admission will become effective and dealings in the Enlarged Share Capital will commence on AIM on 25 June 2009.
The Articles permit the Company to issue shares in uncertificated form in accordance with the Uncertificated Securities Regulations 2001. Application will be made and agreed with CREST by the Registrar for the Consideration Shares to be admitted to CREST with effect from Re-Admission. Accordingly, settlement of transactions in Ordinary Shares following Re-Admission may take place within CREST if the individual Shareholders so wish. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so.
It is expected that share certificates for Consideration Shares will be despatched by the Registrar by 2 July 2009 and Consideration Shares will be delivered in CREST immediately following Re-Admission.
13. Dividend Policy
The declaration and payment by the Enlarged Group of any future dividends on the Ordinary Shares and the amount will depend on the results of the Enlarged Group's operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to be relevant at the time. However, the Directors and Proposed Directors, subject to Re-Admission, intend to pursue a policy to increase dividends broadly in line with earnings growth being cognisant of the Enlarged Group's cash generation, working capital cycle and investment requirements beginning in the next financial year ended 31 December 2010. No dividend will be paid in the current financial year.
14. Extraordinary General Meeting
Set out in the Re-Admission Document is a notice convening the Extraordinary General Meeting to be held on 24 June 2009 at the offices of Investec, 2 Gresham Street, London EC2V 7QP at 10 a.m., at which the Resolutions will be proposed for the purposes of implementing the Acquisition:
Resolution 1
Approval of the Independent Shareholders is required to approve the Whitewash Resolution as the Concert Party will hold the majority of the Enlarged Share Capital post-Acquisition. Resolution 1, which is an ordinary resolution, seeks the Independent Shareholders' approval accordingly. This Resolution will be taken on a poll of Independent Shareholders voting in person and by proxy at the Extraordinary General Meeting. A summary of the principal terms of the Acquisition Agreement can be found in Part VI of the Re-Admission Document.
Resolution 2
As the Acquisition will constitute a "reverse takeover" for the Company, in accordance with the AIM Rules for Companies, the Acquisition cannot be completed until the Company's Existing Shareholders have approved it. Accordingly, Resolution 2, which is an ordinary resolution, seeks Existing Shareholders' approval of the Acquisition for such purposes conditional on the passing of Resolution 1.
Resolution 3
As the Acquisition involves a substantial property transaction with Michael Danson, one of the Directors, the Acquisition cannot be completed until the Company's Existing Shareholders have approved it. Accordingly, Resolution 3, which is an ordinary resolution, seeks the approval of the Existing Shareholders for the Acquisition for such purposes conditional on the passing of Resolution 1 and Resolution 2.
Resolution 4
Resolution 4, which is an ordinary resolution, seeks the approval of the Existing Shareholders to change the name of the Company to "Progressive Digital Media Group plc" conditional on the passing of Resolution 1 and Resolution 2.
Resolution 5
Resolution 5, which is an ordinary resolution, authorises the Directors to increase the authorised share capital of the Company.
Resolution 6
Resolution 6, which is an ordinary resolution, authorises the Directors to allot the Consideration Shares and otherwise to allot relevant securities (as defined in Section 80 of the 1985 Act) up to an aggregate nominal amount of £12,318 conditional on the passing of Resolutions 1 and 5.
Resolution 7
Resolution 7, which is a special resolution, empowers the Directors, pursuant to section 95 of the 1985 Act, to disapply the statutory pre-emption rights of the Shareholders in respect of the allotments referred to in Resolution 6 and pre-emptive offerings to Shareholders and to otherwise allot equity securities (as defined in the 1985 Act) for cash on a non pre-emptive basis up to an aggregate nominal amount of £1,847 conditional on the passing of Resolutions 1 and 5.
15. Irrevocable undertakings
The Independent Directors who hold Ordinary Shares have entered into irrevocable undertakings to vote in favour, or procure the vote in favour of, the Whitewash Resolution in respect of their beneficial interests in Ordinary Shares amounting, in aggregate, to 654,341 Ordinary Shares, representing 0.8 per cent. of the Existing Ordinary Shares and 1.2 per cent. of the Existing Ordinary Shares not held by the Concert Party.
The Directors who hold Ordinary Shares have entered into irrevocable undertakings to vote in favour, or procure the vote in favour of, the Acquisition in respect of their beneficial interests in Ordinary Shares amounting, in aggregate, to 22,351,850 Ordinary Shares, representing 28.8 per cent. of the Existing Ordinary Shares.
In addition, TMN Group has received irrevocable undertakings or letters of intent from certain other Shareholders to vote in favour, or procure the vote in favour of, the Resolutions in respect of their beneficial interests in Ordinary Shares amounting, in aggregate, to 14,252,976 Ordinary Shares, representing 18.4 per cent. of the Existing Ordinary Shares and 25.5 per cent. of the Existing Ordinary Shares not held by the Concert Party.
Accordingly TMN Group has received irrevocable undertakings or letters of intent from Shareholders to vote in favour of the Acquisition in respect of, in aggregate, 36,604,826 Ordinary Shares, representing 47.2 per cent. of the Existing Ordinary Shares and has received irrevocable undertakings or letters of intent from Shareholders to vote in favour, or procure the vote in favour, of the Whitewash Resolution in respect of in aggregate 14,907,317 Existing Ordinary Shares representing 26.7 per cent. of the Existing Ordinary Shares not held by the Concert Party.
Further details of these irrevocable undertakings and letters of intent are set out in the Re-Admission Document.
16. Further information
The Re-Admission Document is being made available to Shareholders electronically in "read only" format on the TMN Group website at http://www.tmnplc.com/tmn/investors/reports/ where it can be printed.
All Shareholders have the right to receive the Re-Admission Document and copies of any documents incorporated by reference in the Re-Admission Document solely upon a written or verbal request as detailed below. Such request must state the address to which the documentation must be sent and confirm whether or not they wish for future correspondence in relation to the Acquisition to be sent in printed form. Requests for copies of any such document should be directed to: Capita Registrars Limited, Proxies Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU or by telephoning the shareholder helpline on 0871 664 0321 (or +44 (0)20 8639 3399, if telephoning from outside the UK) or by emailing: ssd@capitaregistrars.com. Calls to the 0871 664 0321 number cost 10 pence per minute (including VAT) plus your service provider's network extras. Following such request, copies of the Re-Admission Document and copies of any documents incorporated by reference in the Re-Admission Document will be provided within two business days, without charge.
Copies of the Re-Admission Document and copies of any documents incorporated by reference in the Re-Admission Document will not be provided unless such a request is made.
17. Action to be taken
A Form of Proxy for use at the Extraordinary General Meeting has today been sent to Shareholders. The Form of Proxy should be completed and signed in accordance with the instructions thereon and returned to the Company's registrars, Capita Registrars Limited, Proxies Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon as possible, but in any event so as to be received by no later than 10 a.m. on 22 June 2009. The completion and return of a Form of Proxy will not preclude Shareholders from attending the Extraordinary General Meeting and voting in person should they so wish.
18. Recommendation
The Independent Directors, having been so advised by Investec, consider the terms of the Acquisition and waiver of Rule 9 of the City Code to be fair and reasonable and in the best interests of the Company and the Independent Shareholders. In providing advice to the Independent Directors, Investec has taken into account the Independent Directors' commercial assessments. Accordingly the Independent Directors unanimously recommend Shareholders to vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting as, in each case, they have irrevocably undertaken to do so in respect of their beneficial holdings amounting, in aggregate, to 654,341 Ordinary Shares, representing approximately 0.8 per cent. of the Existing Ordinary Shares.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context otherwise requires:
| "1985 Act" | the Companies Act 1985 (as amended) |
| "2006 Act" | the Companies Act 2006 (as amended) |
| "Acquisition" | the proposed acquisition by the Company of Progressive pursuant to the Acquisition Agreement |
| "Acquisition Agreement" | the conditional agreement dated 5 June 2009 and made between (1) the Company and (2) Michael Danson relating to the Acquisition, details of which are set out in Part VI of the Re-Admission Document |
| "the Acts" | the 1985 Act and the 2006 Act |
| "AIM" | AIM, a market operated by the London Stock Exchange |
| "AIM Rules for Companies" | the AIM rules for Companies published by the London Stock Exchange from time to time |
| "Articles" | the articles of association of the Company |
| "Board" or "Directors" | the directors of the Company, whose names are set out in the Re-Admission Document |
| "City Code" | the City Code on Takeovers and Mergers |
| "Combined Code" | the combined code on corporate governance published by the Financial Reporting Council from time to time |
| "Company" or "TMN Group" | TMN Group plc |
| "Completion" | completion of the Acquisition in accordance with the terms of the Acquisition Agreement |
| "Concert Party" | together Michael Danson and Simon Pyper (each a "Concert Party Member") |
| "Consideration Shares" | the 291,942,672 new Ordinary Shares to be allotted and issued by the Company pursuant to the Acquisition Agreement |
| "CREST" | the relevant system (as defined in the CREST Regulations) for paperless settlement of share transfers and holding shares in uncertificated form which is administered by Euroclear |
| "CREST Regulations" | the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) (as amended) |
| "Disclosure and Transparency Rules" | the Disclosure and Transparency Rules made by the Financial Services Authority pursuant to section 73A of the FSMA |
| "EMI" | enterprise management incentives, under the terms of the EMI code as defined in section 527 of the Income Tax (Earnings and Pensions) Act 2003 |
| "EMI Options" | Enterprise Management Incentive options granted in accordance with Schedule 5 to Income Tax (Earnings and Pensions) Act 2003, subject to the rules of the TMN Group plc Unapproved Scheme further details of which are set out in paragraph 11 of Part VI of the Re-Admission Document |
| "Enlarged Group" | the Group, as enlarged following Completion |
| "Enlarged Share Capital" | the 369,547,686 issued Ordinary Shares upon Re-Admission, comprising the Existing Ordinary Shares and the Consideration Shares |
| "Escrow Completion" | completion of the Acquisition Agreement subject, inter alia, to Re-Admission |
| "Euroclear" | Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales |
| "Existing Ordinary Shares" | the 77,605,014 Ordinary Shares in issue immediately prior to Re-Admission being the entire issued ordinary share capital of the Company prior to the issue of the Consideration Shares |
| "Existing Shareholders" | holders of Existing Ordinary Shares |
| "Existing Share Option Schemes" | together, the Unapproved Scheme and the EMI Options |
| "Extraordinary General Meeting" | the extraordinary general meeting of the Company to be held at the offices of Investec, 2 Gresham Street, London EC2V 7QP at 10 a.m. on 24 June 2009 |
| "FSMA" | the Financial Services and Markets Act 2000 (as amended) |
| "Form of Proxy" | the form of proxy to be used by Existing Shareholders in connection with the Extraordinary General Meeting |
| "Group" | the Company and its subsidiary undertakings at the date of this announcement and "Group Company" should be interpreted accordingly |
| "HMRC" | Her Majesty's Revenue and Customs |
| "IFRS" | International Financial Reporting Standards |
| "ITEPA" | the Income Tax (Earnings and Pensions) Act 2003 |
| "Independent Directors" | the Directors other than Michael Danson |
| "Independent Shareholders" | the Shareholders other than the Concert Party Members at the date of this announcement |
| "Investec" | Investec Bank plc, the Company's nominated adviser (as defined in the AIM rules for Nominated Advisers published by the London Stock Exchange from time to time) |
| "London Stock Exchange" | London Stock Exchange plc |
| "Non-executive Directors" | each of Vince Smith, Bruce Fair, Michael Danson and Peter Harkness |
| "Notice of Extraordinary General Meeting" | the notice convening the Extraordinary General Meeting, which is set out in the Re-admission Document |
| "Ordinary Shares" | ordinary shares of 0.01p each in the capital of the Company |
| "Panel" | the Panel on Takeovers and Mergers |
| "Progressive" | Progressive Digital Media Group Limited |
| "Progressive Group" | Progressive and its subsidiaries and subsidiary undertakings |
| "Proposed Directors" | Kenneth Appiah and Simon Pyper |
| "Prospectus Rules" | the prospectus rules made by the Financial Services Authority pursuant to section 73A of the FSMA |
| "Re-Admission" | the re-admission of the Enlarged Share Capital to trading on AIM becoming effective in accordance with the AIM Rules for Companies |
| "Registrar" | Capita Registrars Limited, Northern House, Woodsome Park, Fenay Bridge, Huddersfield, West Yorkshire HD8 0GA |
| "Resolutions" | the resolutions set out in the Notice of Extraordinary General Meeting |
| "Shareholder" | a holder of Ordinary Shares |
| "UK" | the United Kingdom of Great Britain and Northern Ireland |
| "UKLA" or "United Kingdom Listing Authority" | the Financial Services Authority, acting in its capacity as the competent authority for the purposes of Part VI of the FSMA |
| "uncertificated" or "in uncertificated form" | recorded on the register of Ordinary Shares as being held in uncertificated form in CREST, entitlement to which, by virtue of the CREST Regulations, may be transferred by means of CREST |
| "Unapproved Scheme" | the TMN Group plc Share Option Plan adopted on 23 May 2000, further details of which are set out in paragraph 11 of Part VI of the Re-Admission Document |
| "US", "USA" or "United States" | the United States of America, each state thereof, its territories and possessions and the District of Columbia and all other areas subject to its jurisdiction |
| "VAT" | UK value added tax |
| "Whitewash Resolution" | the ordinary resolution of the Independent Shareholders concerning the waiver of obligations under Rule 9 of the City Code to be proposed on a poll at the Extraordinary General Meeting and set out in the Notice of Extraordinary General Meeting |