ELE.L Regulatory News (ELE)

22 Feb 2008 08:34

Electric Word PLC22 February 2008 22 February 2008 Electric Word plc ELECTRIC WORD EXERCISES OPTION TO ACQUIRE SEP Electric Word plc ("Electric Word"), the specialist information publisher,announced today the acquisition of Special Education Publishing Limited ("SEP")from Sussex Research Limited ("Sussex Research"). SEP is a publisher of three educational magazines aimed at teachers in primaryschools, namely "Special Children", "Teaching and Learning" and "PE and SportsToday". The titles strongly complement Electric Word's existing portfolio andwill strengthen the Group's position, enabling cross-selling opportunities inits niche educational markets. Electric Word has managed the titles under theterms of a management agreement since 12 September 2007 and has seen a positivereaction to their approach. This acquisition, which will complete on 29 February 2008, follows the exerciseof an option agreement with Sussex Research, as previously announced on 12September 2007. The consideration for the acquisition of SEP is £875,000, whichwill be financed by preference shares bearing a 0% coupon and which convert at13.25p. The 875,000 Convertible Preference Shares will be allotted following and subjectto shareholders passing resolutions ("the Resolutions") to create and approvethe allotment of the Convertible Preference Shares, which will be put toshareholders at this year's AGM. In the event that shareholders do not approvethe Resolutions prior to 31 August 2008, then the consideration of £875,000 ispayable in cash. Sussex Research has agreed to vote in favour of theResolutions. The 875,000 convertible preference shares (i) are redeemable in cash at the option of Electric Word for £875,000 at a 0% coupon at any time prior to 21 February 2011; or (ii) If not previously redeemed are convertible into 6,603,773 ordinary shares of Electric Word ('Ordinary Shares') (being a conversion factor of 7.547 ordinary shares for each convertible preference share) which equates to a price of 13.25 pence per share at the option of Sussex Research at any time prior to 21 February 2011 and if not redeemed or converted prior to 21 February 2011 automatically convert into Ordinary Shares. The SEP management accounts show a loss before tax of £42,230 for the periodfrom 12 September 2007 to 31 December 2007. Net assets at 31 December 2007 were£824,906. SEP did not trade before 12 September 2007 and hence no additionalhistorical financial information is available. Sussex Research Ltd, through its subsidiary Sussex Trading Ltd, holds 23,036,364ordinary shares in Electric Word, representing 16.18% of the total shares inissue. In addition, Stuart Newton, who ultimately controls Sussex ResearchLimited, also personally holds 1,020,000 shares in Electric Word, representing0.72% of the total shares in issue. As such, under the AIM Rules for Companies, Sussex Research Limited, SussexTrading Ltd and Stuart Newton are treated as a related party of Electric Word.The Directors of Electric Word consider, having consulted with Panmure Gordon(UK) Limited, its nominated adviser, that the terms of the transaction are fairand reasonable insofar as its shareholders are concerned. Julian Turner, Electric Word's Chief Executive, commented: "Exercising our option to acquire SEP further strengthens the Group's offeringin three key areas of the education market, including special needs, already ourmost important sector, in which 'Special Children' is a well established brand.With the SEP titles already under our management, the brands have beenresponding well to our initiatives over the last four months and we believe thisacquisition could generate strong integration benefits for the Group." - ends - Enquiries: Julian Turner, Chief ExecutiveElectric Word 020 7954 3470 Helen Thomas / Tim SprattFinancial Dynamics 020 7831 3113 Andrew PottsPanmure Gordon 020 7459 3600 Notes to Editors Electric Word Electric Word plc delivers specialist information in a wide range of formats tocommunities in two market sectors, targeting growing niche areas with strongdefensive qualities: • Education: serves professional communities in schools and otherinstitutions, including school leaders and managers, special needs and speechtherapy professionals, teachers and parents, accounting for 65% of grouprevenue. • Sport: covers the communities of amateur and elite sports competitors,governing bodies, media bidding for sports content, venues, sponsoring brandsand the online gaming industry, accounting for 35% of group revenue. The range of products and services offered to these communities includesubscription newsletters, magazines, websites, events, books, special reportsand bespoke research and publishing. In 2007 60% of revenue came from sellingcontent, including 33% from subscription revenue, and 40% came from sellingaccess to these communities. SEP SEP was incorporated on 21 August 2007, as a subsidiary of Sussex Research, toacquire these three magazine titles from the administrators of QuestionsPublishing Company Ltd ("Questions"). Sussex Research was a significant securedcreditor of Questions and acquired these three titles from the administrators ofQuestions, in settlement of the outstanding liabilities owed by Questions toSussex Research and an additional cash consideration of up to £90,000. Sussex Research In addition to the shares in Electric Word held by Sussex Trading Company Ltdand Stuart Newton as described above, Sussex Trading Company Limited holds£987,500 in convertible preference shares issued as part consideration for theCompany's acquisition of SportBusiness Group Ltd in January 2006. In addition,Sussex Research advanced Electric Word a loan of up to £600,000 to fund theacquisition of a 40.1 per cent. stake in MyChild Limited in November 2007. Theloan, which is unsecured, is due to be repaid by 31st May 2008 with interestpayable at a rate of 2.5% above the Bank of England base rate. This information is provided by RNS The company news service from the London Stock Exchange