26 Aug 2009 07:00
26 August 2009 iPoint-media plc ("iPoint-media" or the "Company") Open Offer and Subscription Offer to raise up to 1.73 million
iPoint-media announces that it is proposing to raise up to approximately 1.73 million (before expenses) by way of an Open Offer, thus allowing the Company's existing Shareholders the opportunity to participate in the fundraising being undertaken by way of the Subscription Offer. Furthermore, Qualifying Shareholders will able to apply for excess applications of Offer Units under the Open Offer. The Board also announced that to the extent that Shareholders do not take up their entitlements under the Open Offer, CSS, as agent for the Company, will be seeking new investors under the Subscription Offer to raise up to 1.73 million, less the amount subscribed under the Open Offer. Nisko, the Company's largest shareholder, has irrevocably undertaken to subscribe 255,125 under the Open Offer, representing 41.6 per cent. of its pro rata Open Offer Entitlement and equivalent to 14.8 per cent. of the Offer Units available under the Open Offer.
The terms of the Open Offer, including the Excess Application Facility, are described below and in the Circular and Application Form being sent to shareholders later today. Qualifying Shareholders may also subscribe for Offer Units above their basic pro rata Open Offer Entitlements if they so wish under the Excess Application Facility.
The Board is proposing to use the funds raised from the Open Offer to finance the working and development capital of the Company's product and service offering globally, expand its sales and marketing resources, meet the expenses of the Offers and for working capital generally.
The Company is able to undertake the Open Offer within the authorities that were approved by shareholders at the annual general meeting of the Company held on 2 July 2009.
Details of the Open Offer
Qualifying Shareholders will be invited to apply for Offer Units under the Open Offer, payable in full on application and free of all expenses, pro rata to their shareholdings held at the close of business on 19 August 2009 on the basis of:
For every 1,000 Existing Shares One Offer Unit at a cost of 14.20
comprising: GBP11.57 nominal of Loan Notes; and 58 Offer Shares at 4p per share; and 124 Bonus Shares at 0.25p per share
The mid-market price for an Ordinary Share, as derived from the London Stock Exchange website, at the close of business on 25 August 2009 (being the last practicable date prior to this announcement) was 4.5p.
In order to ensure orderly market trading in the Bonus Shares, it is a term of the Open Offer and the Subscription Offer that the Bonus Shares will not be capable of being sold, transferred or pledged to any third party for a period of one year from issue in respect of all the Bonus Shares subscribed under the Offers and for a period of a further year in respect of 50 per cent. of the Bonus Shares subscribed under the Offers.
Entitlements of Qualifying Shareholders for any lesser or greater number of Offer Units will be rounded down to the nearest 1 of Loan Notes or whole number of Offer Shares or Bonus Shares, as appropriate. Fractional entitlements of Loan Notes, Offer Shares or Bonus Shares, which would have otherwise arisen, will not be issued to Qualifying Shareholders but will be issued under the Excess Application Facility and in the event they are not so taken up will be made available for subscription under the Subscription Offer.
Applications under the Open Offer by Qualifying Shareholders will have priority over subscribers under the Subscription Offer.
The Open Offer is subject to, Admission becoming effective by 6 October 2009 (or such later date being not later than 27 October 2009, as the Company and JEP may decide) and a minimum subscription under the Offers of 1,000,000 within 40 days of the date of the Document.
The Offer Shares and the Bonus Shares will (notwithstanding the restrictions on dealing described above), when issued and fully paid, rank pari passu in all respects with the Existing Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.
The Open Offer has been structured so as to allow Qualifying Shareholders to subscribe for Offer Units pro rata to their existing holdings. Qualifying Shareholders may, in addition, make applications for additional Offer Units in excess of their basic pro rata Open Offer Entitlements. Once subscriptions under the basic pro rata Open Offer Entitlements have been satisfied, the Company shall scale back any excess applications on a pro rata basis in proportion to the total number of additional Offer Units applied for under the Excess Application Facility. To the extent that Offer Units are not subscribed by Qualifying Shareholders, Open Offer entitlements will be capable of subscription under the Subscription Offer.
Qualifying Shareholders can apply for as few or as many Offer Units as they wish but will only be guaranteed to receive their basic pro rata Open Offer Entitlement. Excess applications may be fulfilled entirely or may be scaled back depending on Qualifying Shareholder demand.
Holders of Existing Shares should be aware that the Open Offer is not a "rights issue" and that entitlements to Offer Units will not be tradable or sold in the market for the benefit of those who do not apply under the Open Offer. Qualifying Shareholders should be aware that under the Open Offer, unlike a rights issue, the Offer Units not applied for will not be sold in the market or placed for the benefit of the Qualifying Shareholders who do not apply under the Open Offer.
Summary of the terms of the Loan Notes
The principal terms of the Loan Notes are as follows:
Interest Rate: 8 per cent. per annum payable quarterly in arrears on 31 March, 30 June, 30 September and 31 December in each year until the last repayment date. Default Interest: 12 per cent. per annum on any amounts payable to Loan Note holders and not paid on the due date. Security: Unsecured but subject to certain negative pledges. Transferability: Non-transferable except in certain circumstances. Repayment terms: Repayable in 12 equal quarterly installments commencing on 31 December 2010 with last repayment date on 30 September 2013. Settlement and dealings
Application will be made to the London Stock Exchange for the Offer Shares and the Bonus Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence on 6 October 2009.
No application will be made to the London Stock Exchange for the Loan Notes to be admitted to trading on AIM or any other exchange.
Details of the Subscription Offer
The Company has appointed CSS to seek investors to subscribe for Subscription Units under the Subscription Offer to raise up to 1,727,000. New investors may only apply for whole number of Subscription Units at a cost of 6,280 per unit.
Each Subscription Unit will comprise:
5,120 nominal of Loan Notes; 25,600 Offer Shares at 4p per share; and 54,400 Bonus Shares at par.
The proportion of Loan Notes to Offer Shares to Bonus Shares under the Subscription Offer is almost identical to those being offered to Qualifying Shareholders under the Open Offer.
Applications for Subscription Units must be made for a whole number of Subscription Units. The Company reserves the right to issue fractions of Subscriptions Units in the event that applications for Subscriptions Units have to be scaled back due to the number of Subscription Units being applied for exceeding the number available under the terms of the Subscription Offer.
Applications under the Subscription Offer will be satisfied to the extent that Qualifying Shareholders do not subscribe for Offer Units under the Open Offer. Accordingly, the maximum that can be raised by the Company under the Offers is approximately 1.73 million, before expenses.
The Subscription Offer is conditional upon the Minimum Subscription being achieved within 40 days of the date of the Document and Admission becoming effective.
Irrevocable Undertakings
Nisko, a Qualifying Shareholder owning 34.89 per cent. of the voting share capital of the Company, has irrevocably undertaken to subscribe for Offer Units to the value of 255,125, amounting to 14.8 per cent. of the Offer Units available under the Open Offer. The irrevocable undertaking given by Nisko does not prevent it from applying for additional Offer Units under the Excess Application Facility independently of its commitment to subscribe for Offer Units. Following the Open Offer, Nisko will have a resultant shareholding of 45,741,894 Ordinary Shares (assuming the Offers are subscribed in full), representing 30.9 per cent. of the Enlarged Issued Share Capital .
The Company's business
iPoint provides an interactive video calling application platform for telecom operators, content aggregators and media and broadcast companies looking to enhance their value chains with interactive video calling services for 3G/UMTS mobile subscribers and IP broadband users.
iPoint's platforms enables the deployment of rich, innovative video calling services that increase video traffic, offer new revenue streams and provide users with a new multimedia experience.
The Company markets its software platform, named "Vitrage" to:
* Fixed line and mobile telecom operators; * 3G service providers, known as "aggregators"; * Content providers and media companies.
The Company's markets are relatively new where substantial growth is anticipated as telecom operators seek to drive 3G usage through new applications.
Strategic partners
The Company sells both directly and through channel partners, the latter being the preferred business model for approaching large telecom operators. Its main partner is Ericsson - a leading telecom vendors and system integrator. Ericsson provides a video gateway which is a network appliance required for connecting the 3G network to an IP network. There is a clear synergy between Ericsson's and iPoint's offering where the video application platform provided by iPoint allows the creation of revenue generating services which use the Ericsson video gateway. The combined offering - Ericsson video gateway and iPoint application platform represents a complete business solution for telecom operators wishing to deploy interactive video services. The video application platform developed by iPoint has recently been added to the formal solution portfolio of Ericsson.
iPoint has been working closing with IBM with their video application platform as a building block in the Company's new media strategy. iPoint will provide a content ingestion layer (receiving content from different sources like 3G video call handsets, web video call applications and similar) to the IBM media hub - a product designed to streamline and manage the lifecycle and flow of new media and user generated content in enterprise.
Customers by market vertical
The five largest customers of the Company are:
Telecom
Turksih mobile operator (2009) - sale through Ericsson which is the system integrator for this project. The customer purchased a complete video application platform with multiple application templates, professional services and integration to key network nodes.
Mobile operator in Bosnia (2009) - an internal video contact centre for its own customer service operations. Sale through Ericsson.
German carrier and service provider - infrastructure to provided hosted services for content providers to run consumer type applications (video chat etc).
Content/Content Aggregation
Spanish content provider (video chat services), revenue sharing model with monthly payment.
Media
Media Corp, Singapore 2007 - leading TV station which developed an interactive TV format where selected callers to the TV station are interviewed and then sent live on air. The solution includes a full implementation of participation TV based on the video application server.
Sales and marketing plan
The Company markets its products in the telecom vertical through Ericsson, a world leading telecom vendor. In the Media vertical through cooperation with IBM's Media HUB and in the content vertical direct to service providers. This process is supported by a sales and sales engineering team.
The main marketing thrust will continue to take place through OEM strategic partners (such as Ericsson and IBM), at least in the short to medium term, because of the reach, access and support infrastructure they provide.
The Company is devoting considerable management resources to examining how best to enter the Chinese market. Strategies involving Ericsson and others are under consideration.
Use of proceeds
The net proceeds of the Offers, which are expected to amount to 1,316,000, assuming no Qualifying Shareholders other than Nisko subscribe for Offer Units and the Subscription Offer is subscribed to the maximum extent possible, will be used by the Company to permit the roll-out of the Company's business in the US, Europe and the far East and to provide working capital generally.
Current trading and prospects
The Company generated unaudited revenue of 619,571 for the six month period ended 30 June 2009 compared to 446,037 for the period ended 30 June 2008 and gross profit for the period of 543,839 compared to 358,434 in 2008. The results represented an increase of 39 per cent. in revenue and 52 per cent. in gross profit. The delivery of several projects to mobile operators through Ericsson's market units during the period was a key factor in the improvement of the results.
The six month period ended 30 June 2009 produced a net loss of 307,214, compared to 798,418 for the period ended 30 June 2008. The reduction in net loss in the six month period ended 30 June 2009 compared to the previous period was achieved principally due to the increase in revenue and a 30 per cent. reduction in operating expenses.
Although revenues were still relatively modest, the Company has commenced certain projects already which are due to complete in the second half of the year and the Directors believe that there are good growth prospects in iPoint's key markets and that the Company's products and capabilities are well-matched to market requirements.
The Company is projecting revenue growth from 2009 to 2011, principally as a result of the expected rollout of project opportunities generated by the Ericsson relationship. This relationship was initiated in 2006 and accounted for 30 per cent. of the Company's sales in the six months ended 30 June 2009 and the directors anticipate an increase to over 50 per cent. over the next three years as other sales channels develop.
The Ericsson channel comprises approximately 15 distinct underlying potential projects in various phases of quotation/implementation with potential revenues to the Company from each contracted project in the range of $250,000 to $600,000.
With the introduction of a new facility for content services provisioning, the Company expects that its contents vertical will grow to approximately 30 per cent. of its total revenues in the next two to three years. This projected growth is supported by the forecasts of industry analysts for the consumption of content services in all media, but especially through mobile networks.
The outlook of the media vertical is more difficult to assess. With the collaboration with IBM, the Company expects new opportunities to be presented.
Expected timetable of principal events Open Offer Record Date Close of business on 19 August 2009 Despatch of the Document 26 August 2009
Latest time for splitting Application Forms (to 3.00 p.m. on 30 September satisfy bona fide market claims)
2009
Latest time and date for receipt of completed 3.00 p.m. on 2 October 2009 Application Forms and payment in full under the
Open Offer Minimum Subscription Date 5 October 2009 Admission effective and dealings commence on AIM 6 October 2009 CREST accounts credited with Offer Shares 6 October 2009 Share and Loan Note certificates despatched 13 October 2009 Closing Date of the Subscription Offer 26 October 2009 Open Offer Statistics Offer Unit Price GBP14.20 Number of Ordinary Shares in issue at the date of this 121,726,184document Loan Notes to be issued by the Company Up to 1,408,371 Offer Shares to be issued by the Company Up to 7,060,118 Bonus Shares to be issued by the Company Up to 15,094,046 Estimated net proceeds of the Offers* GBP1,316,000 Percentage of the Enlarged Issued Share Capital 14.9 per cent. represented by the Offer Shares and the Bonus Shares* Number of Ordinary Shares in issue at Admission* 147,976,184 Market capitalisation of the Company on Admission GBP5.9 million at the Offer Price* * assuming full subscription of the Offers
Further enquiries:
iPoint-media plc +(0) 972 544 450 667Muki Geller (Chief Executive) John East & Partners Limited, a subsidiary of Merchant +44 (0) 207 628Securities Plc 2200 David Worlidge/Bidhi Bhoma Definitions"Admission" admission of the Offer Shares and the Bonus Shares to trading on AIM becoming effective in accordance with the AIM Rules "Application Form" the application form to be used by Qualifying Shareholders in connection with the Open Offer "Bonus Shares" up to 15,094,046 new Ordinary Shares issuable in connection with the Offers "CSS" Charles Street Securities, Europe LLP "Directors" or "the Board" the directors of the Company "Document" the circular to be sent to Shareholders on 26 August 2009, detailing the Open Offer
"Enlarged Issued Share Capital" the 147,976,184 Ordinary Shares in issue on
Admission, assuming full subscription under the Offers "Excess Application Facility" the facility to enable Qualifying Shareholders to apply for Offer Units in excess of their basic pro rata Open Offer Entitlements "Existing Shares" the 121,726,184 Ordinary Shares in issue at the date of the Document "JEP" John East & Partners Limited "Loan Notes" up to 1,408,371 8 per cent. unsecured loan notes 2013 issuable in connection with the Offers "Minimum Subscription Date" 5 October 2009, the date by which the Minimum Subscription must be reached "Minimum Subscription" GBP1,000,000, being the minimum amount that must be subscribed under the Offers "Nisko" Nisko Investments Ltd "Offer Price" 4 pence per Offer Share "Offer Units" up to 121,726 units which are to be made available for subscription at 14.20 per unit under the Open Offer, each unit comprising 11.57 nominal of Loan Notes, 58 Offer Shares at 4p per share and 124 Bonus Shares at 0.25p per share "Offer Shares" up to 7,060,118 Ordinary Shares which are to be made available for subscription at the Offer Price under the Open Offer "Open Offer Entitlements" entitlements to subscribe for Offer Units, allocated to a Qualifying Shareholder pursuant to the Open Offer "Open Offer Record Date" the close of business on 19 August 2009 "Open Offer" the conditional offer to Qualifying Shareholders to subscribe for the Offer Units "Ordinary Shares" ordinary shares of 0.25 pence each in the capital of the Company "Shareholders" holders of Ordinary Shares "Subscription Offer" the conditional offer for subscription by CSS, as agent for the Company, of Subscription Units "Subscription Units" up to 275 units which are to be made available for subscription at 6,280 per unit under the Subscription Offer, each unit comprising 5,120 nominal of Loan Notes, 25,600 Offer Shares and 54,400 Bonus Shares Notes:
The Vitrage 3G video calling service platform offers a very flexible platform for service providers, telecom operators and content aggregators looking to generate premium rate traffic and increase video calling revenues. As a result, iPoint-media's customers include a variety of top tier content aggregators, telecom operators and leading solution integration partners.
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