24 Nov 2008 07:00
Embargoed: 0700hrs, 24 November 2008
DCD Media plc
("DCD" or the "Company")
Statement Re. Convertible Loan Notes
DCD Media plc, the independent television production and distribution group, is pleased to announce that it has secured further variations to the terms of the convertible loan note instruments of December 2005 (the "2005 Notes") and August 2007 (the "2007 Notes") (together, the "Notes").
Purchase of Notes by substantial shareholder and variation to the terms of the Notes
Funds managed by Gartmore Investment Management ("Gartmore") have purchased existing Notes with an aggregate face value of approximately £2.6 million.
At the same time, the Company has agreed with the holders of the Notes (the "Note Holders") to extend the redemption dates for the outstanding Notes, amounting to approximately £9.9 million (including the £2.6 million purchased by Gartmore, a major shareholder) to 14 December 2009 for the 2005 Notes and 31 December 2009 for the 2007 Notes. In addition, the price at which the Notes are convertible into ordinary shares in the Company has been fixed at 28 pence, subject to standard anti-dilution adjustments. The interest rate payable on all outstanding Notes will remain at LIBOR plus 3.25 per cent. As part of the revised terms of the Notes, the Company has agreed to certain financial covenants to be tested against its financial results for the year ending 30 June 2009. Furthermore, the Note Holders have agreed not to pursue certain matters which had been raised with the Board, save in limited circumstances. The Note Holders have also agreed not to convert any further Notes prior to a General Meeting of the Company, further details of which are set out below.
As Gartmore is a substantial shareholder and therefore a related party, the variation to the terms of the Notes is a related party transaction for the purposes of the AIM Rules and accordingly the directors of the Company, having consulted with the Company's Nominated Adviser, Evolution Securities, consider that the transaction is fair and reasonable insofar as the shareholders are concerned.
It is anticipated that the Company will seek admission of the Notes to a stock exchange in due course.
General Meeting
The Company intends to send a circular to shareholders shortly convening a General Meeting of the Company, to be held in December 2008. The purposes of the General Meeting are to seek shareholder approval to ratify and affirm certain matters in connection with the conversion of the Notes and to ratify and affirm certain matters relating to previous amendments to the Notes and arrangements with Classical TV Limited ("Classical TV").
Board Changes
Chris Hunt has decided to step down from the Board of the Company with immediate effect to return to full time creative programme-making. David Green, founder of September Films Limited and a Director of the Company since June 2008, has agreed to become Acting CEO, whilst continuing his responsibilities as Chief Creative Officer. The Board is launching a recruitment process to find a new full time CEO.
As Michael Barton has also decided to step down as a Director of the Company with effect from today, the Board has decided to strengthen its non-executive representation and is seeking to appoint two new non-executive Directors, such appointments to follow consultation with major stakeholders, to be announced in due course.
Other Matters
Further to the announcement on 1 September 2008 regarding a £1.8 million licensing deal with Classical TV, the Company wishes to clarify that, in accordance with its accounting policies, the revenue arising from this transaction was accounted for in the year ended 30 June 2008, but that the cash due was received in September 2008. Subsequent to 1 September, Chris Hunt was issued a 50.1 per cent fully diluted interest in Classical TV. He is holding a proportion of this interest in a nominee capacity to be issued as future share awards to Classical TV executives.
Preliminary Results Announcement
The Company had previously intended to issue its preliminary results for the full year to 30 June 2008 on 18 November 2008 but due to these recent events will now publish results on 1 December 2008.
David Elstein, Chairman of the Board, commented:
"We have now resolved the issues surrounding the convertible loan note terms, as announced on 28 October, which led to a substantial decrease in the share price as a result of the mark to market conversion mechanism and the consequent sales of the ordinary shares issued upon several such conversions by one of the note holders. The support shown by Gartmore in buying the loan notes held by this one note holder, and the support shown by the other note holders, has allowed us to renegotiate the terms to a much more favourable and stable position for DCD shareholders. The Company now has a more robust financial footing and the employees and management are excited about the future prospects of the business which is flourishing in both production and distribution activities."
Enquires
John McIntosh, Chief Financial Officer
DCD Media plc
Tel. 020 7297 8000
Ben Simons
M:Communications
Tel. 020 7153 1540
Tom Price or Jeremy Ellis
Evolution Securities
Tel. 020 7071 4300