2 Jun 2008 07:00
2 June 2008
Electric Word plc
("Electric Word" or the "Company")
STRATEGIC PARTNERSHIP AND RELATED PARTY TRANSACTION
Electric Word plc today announced a strategic partnership between Mobilis Healthcare Group Limited ("Mobilis") and P2P Publishing Limited ("P2P"), Electric Word's sports performance subsidiary, which provides specialist fitness and training information for amateur and elite athletes from all sports, as well as coaches, physiotherapists and other professionals.
The partnership will ultimately enable P2P's website visitors to access Mobilis's extensive range of sports and healthcare products, allowing Electric Word to build further e-commerce revenues to support its subscription and other publishing activities.
The partnership will also involve Sussex Research Limited ("Sussex Research"), a related party of both Mobilis and Electric Word, buying an option for £50,000 to acquire P2P for £1.4m in cash. The option to acquire P2P lasts for at least thirteen months, after which Electric Word may give notice of the cancellation of the option.
In the year to 30 November 2007 P2P made profits before tax of £129,650 on turnover of £1,294,197 and the option agreement effectively values P2P Limited at £1.45 million.
Sussex Research and Electric Word have also agreed that Sussex Research will replace an existing £600,000 loan to Electric Word with a new loan of £1.45m. The new loan carries an interest rate of 2.5% over LIBOR, with £250,000 due to be repaid on 30 November 2008, £600,000 on 30 April 2009 and £600,000 on 30 April 2010.
Stewart Newton is the beneficial owner of Mobilis and Sussex Research and, as previously disclosed, is a related party of Electric Word (see further information below). The Directors of Electric Word, having consulted with Panmure Gordon (UK) Limited, the Company's nominated adviser, consider that the terms of both the loan and the option agreements with Sussex Research are fair and reasonable insofar as shareholders are concerned.
Julian Turner, Chief Executive of Electric Word, commented: "This partnership is an excellent development for Electric Word and fits with our strategy of building commerce revenues around content as we have done in our education business. It will enable us to experiment with e-commerce in the sports performance market at very low risk with a leading partner, bringing a very wide range of potential product choices for our customers. If successful it could add further value to an already strong business."
Colin Webb, Group Chief Executive of Mobilis Healthcare, added "This is an exciting opportunity for us to collaborate with an established online publisher to deepen our relationship with current and potential customers in highly relevant markets. We look forward to a successful partnership with Electric Word."
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Enquiries:
| Julian Turner, Chief Executive, Electric Word | 020 7954 3470 |
| Tim Spratt/Helen Thomas, Financial Dynamics | 020 7831 3113 |
| Andrew Potts/Callum Stewart, Panmure Gordon | 020 7459 3600 |
Further information:
Stewart Newton holds 1,020,000 ordinary shares in Electric Word (representing 0.72% of the total shares in issue) and is the beneficial owner of through Sussex Trading Company Limited, which holds 23,036,364 ordinary shares in Electric Word (representing 16.18% of the total). Sussex Trading Company Limited also holds £987,500 of convertible preference shares in Electric Word relating to the Company's acquisition of SportBusiness Group Ltd in December 2005 and £875,000 in convertible preference shares relating to the Company's acquisition of Special Education Publishing Limited in February 2008.