1 Sep 2011 17:08
DCD Media plc ("DCD" or the "Company")Subscription and Issue of Convertible Loan Notes
The Company today announces that it proposes to raise up to £1 million (before expenses) by way of a subscription at a price of 1 pence per Ordinary Share. The Subscription is conditional, inter alia, upon the Company obtaining approval from its Shareholders to grant the Board authority to allot the new Ordinary Shares and Admission.
The Company also announces that it has agreed the terms of a new tranche of Convertible Loan Notes from one of its existing shareholders amounting to approximately £0.98 million. The terms of the new tranche of Convertible Loan Notes have been amended by reducing the conversion price to 1p. The new tranche of Convertible Loan Notes will earn interest at 8 per cent. per annum, which will be rolled up and payable in cash or Ordinary Shares at the Company's option. The terms of the existing Convertible Loan Notes remain as before, converting at 18 pence, and will earn interest at 8 per cent. per annum, which will be rolled up and payable in cash or Ordinary Shares at the Company's option.
Capitalised terms used in this announcement have the same meaning given to them in the Circular dated 1 September 2011. The Circular will be available shortly on the Company's website at www.dcdmedia.co.uk.
Background to and reasons for the Subscription and Issue of Convertible Loan Notes
In its announcements of 3 May 2011 and 28 July 2011, the Company stated that it was exploring options to secure additional funding, either in the form of debt or equity, and had identified a requirement for short-term working capital in the order of £1 million. This announcement is the result of those efforts. Through the Subscription and the issue of further Convertible Loan Notes, the Company proposes to raise up to approximately £1.98 million before expenses to enable the Company to settle certain immediate liabilities that fall due and provide additional working capital.
The Company has been addressing the issue of succession planning within certain of its business areas, not least that of its Board. To address the production area, DCD Factual has been created to house the existing brands of West Park Pictures and Prospect Pictures, and to ensure new management talent can be attracted and incentivised. The foundations for this are now in place. To ensure its successful development, the Board considers that additional working capital is required to support this division.
Similar initiatives are being considered in certain other areas of the Company and steps to address succession are taking place at an early stage to improve DCD's performance during the next period. As part of this process, the Company intends to appoint new non-executive directors to the Board, and appoint a new Chairman from one of those appointees.
A further resolution is proposed to authorise the Company to allot share options, to establish approximately ten per cent, of fully diluted shares, as management and staff share options.
The Subscription
The Company proposes to raise up to £1 million (before expenses) through the issue of the Subscription Shares at the Issue Price, which represents a discount of 65 per cent. to the closing middle market price of 2.87 penceper Existing Share on 31 August 2011, being the last practicable date prior to this announcement. The Subscription will be structured through a Jersey vehicle which means that Subscription Shares will not be issued for cash and so it will not be necessary to issue the Subscription Shares on a pre-emptive basis. The Subscription Shares will represent up to 61.9 per cent. of the Company's issued share capital immediately following Admission.
Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM. It is expected that Admission will occur on 3 October 2011.
The Subscription Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares following Admission including the right to receive dividends and other distributions declared following Admission.
Director participation
It is anticipated that David Green, Chief Executive Officer of the Company, will subscribe for Subscription Shares at the Issue Price in the Subscription following the end of the Close Period upon the publication of the Company's interim results during September.
Substantial Shareholder participation
The following existing substantial Shareholder has agreed to subscribe for Subscription Shares in the Subscription up to the following amounts:
Shareholder | Number of Subscription Shares subscribed for in the Subscription | Total number of Ordinary Shares held following the Subscription and Admission | Percentage of the Enlarged Share Capital |
Henderson | 27,500,000 | 39,885, 996 | 24.68% |
Henderson holds approximately £2.0 million of Convertible Loan Notes issued by the Company. The Company will shortly be issuing Convertible Loan Notes under the existing Loan Note Instrument for an additional aggregate principal amount of £975,000 to Henderson. The revised terms of the amended and restated Convertible Loan Notes will result in the conversion price of this tranche being reduced from 18 pence to the Issue Price. The Company is seeking to hold sufficient authorised shares to enable full conversion of the Convertible Loan Notes consequently Resolution 1 has been proposed for this purpose.
Related party transactions
The subscription of Subscription Shares by Henderson and the issue of the new tranche of Convertible Loan Notes to Henderson are considered related party transactions under the AIM Rules as Henderson is a substantial Shareholder.
The Independent Director considers, having consulted with Evolution, the Company's nominated adviser, that the terms of the related party transactions are fair and reasonable insofar as Shareholders are concerned.
Current trading and prospects
The trading conditions of the Group and its divisions remain as described in the final results for the eighteen months ended 31 December 2010, published on 30 April 2011. Whilst the trading environment as a whole has been and continues to be tough, with continued pressure on its margins in production and distribution, the Directors believe that the proceeds of the Subscription and the issue of Convertible Loan Notes, coupled with an improved operating structure and resultant lower fixed cost base, will provide a more stable platform from which the Company can improve its performance.
As announced in its final results, the Group also continues to address the issue of succession planning within certain of its business areas, in particular in its Events Management business, Done & Dusted. As part of the ongoing reorganisation of the Group, there is a risk that the Company may not be able to retain or find adequate replacements for the key revenue earning staff, however the Company continues to take steps to mitigate these risks.
Expected Timetable of Principal Events
Latest time and date for receipt of Forms of Proxy | 3 p.m. on 28 September 2011 |
General Meeting | 3 p.m. on 30 September 2011 |
Record date for the Sub-division of Existing Shares | 30 September 2011 |
Admission and dealings in the Subscription Shares expected to commence on AIM | 8:00 a.m. on 3 October 2011 |
Expected date for CREST stock accounts to be credited for Subscription Shares in un-certificated form | 3 October 2011 |
Expected date for dispatch of definitive share certificates for Subscription Shares in certificated form | by 10 October 2011 |
1 September 2011
For further information please contact:
David Green, Chief Executive
DCD Media plc
Tel. 020 8563 6976
Jeremy Ellis or Chris Clarke
Evolution Securities
Tel. 020 7071 4300