INC.L Regulatory News (INC)

9 Nov 2005 07:00

Avanti Screenmedia Group PLC09 November 2005 Avanti Screenmedia Group plc ("Avanti" or "the Company") £25m placing; £23.1m Contract Gain from the European Space Agency; Development of new Satellite Operator business Avanti, the market leading provider of screenmedia services to businesses, todayannounces the placing of 10,000,000 new ordinary shares in the Company ("thePlacing Shares") at £2.50 per share ("Placing Price") to complete the financingof the launch of a satellite which exploits the license awarded in August. The placing, undertaken on behalf of the Company by Seymour Pierce with new andexisting institutional investors, raised £25m (before expenses). The placingcomplements the award by the European Space Agency ("ESA") of a contract forbetween €34m (£23.1m) and €36m (£24.5m) and, in aggregate, these funds willfully finance the construction of a satellite. ESA has given Avanti aPreliminary Authority to Proceed on this contract and documentation will becompleted subject to the placing. The new ESA contract provides approximately half of the cost of building ahighly advanced small satellite in-line with ESA policy on R&D in the spacesector. Avanti will take full ownership of the satellite once in orbit. Theestimated cost of the launch in 2008 (including insurance) is £20m which Avantiexpects to be debt project financed. The satellite will have a lifetime of atleast 12 years. The satellite will be used to turn Avanti into a vertically integratedinternational satellite broadcaster and broadband supplier, with each aspect ofthe value chain from core infrastructure to customer relationships under itscontrol and ownership. The Avanti satellite will be used to provide servicessuch as broadband and High Definition Television ("HDTV") services forbroadcasters, consumers and businesses in 22 countries in Europe, as well asserving its own screenmedia customers. This satellite will occupy the orbitalposition at 33.5 degrees west, which Avanti was awarded under license by OFCOM, thecommunications watchdog, who allocated it part of the radio spectrum andauthorized it to occupy a broadcast satellite orbit position. The Board of Avanti believe that the satellite project will address the digitaldivide problem identified by the European Commission, which predicts that largeparts of the population in Europe will not be adequately served by terrestrialbroadband communications. Ownership of the satellite by Avanti also reduces thecost of providing services such as broadband and screenmedia by removingsuppliers from the value chain. The Board also believe that there is a shortage of suitable satellite capacity,given the pending upgrade of digital television services to the HDTV format,which consumes four times as much bandwidth as ordinary digital TV. Avanti expects to finalise the satellite procurement contract within a fewweeks. Commenting, David Williams, Chief Executive of Avanti, said: "We have beenadvising investors to expect new value from the activities of our R&D team and Iam delighted to reveal the scale of our achievements. New satellite businessesare very rare and tend to be large scale. The support received from the DTI,OFCOM and ESA in the form of the R&D contract, and license awards, inconjunction with the fantastic support from our institutional investors, nowgives us the opportunity to create a substantial international satelliteoperator business. There are strong synergies with our core business ofsatellite television broadcasting to businesses, since we will be able to offertriple play services from space - media, data and VoIP. This also makes iteasier to extend our screenmedia services around Europe. The first satellite weare launching can service up to 170,000 broadband customers in Europe, or couldbroadcast up to 1,000 digital TV channels. However, the capacity of our orbitalposition enables us to service as many as 15,000,000 broadband customers andthousands of regional TV channels and so it is our hope that we will build uponthe first project to create a very large international customer base over time." To meet institutional demand in the placing, certain of the Directors andexisting shareholders of Avanti have sold 970,054 existing Ordinary Shares atthe Placing Price. David Williams and David Bestwick, both directors of the Company, have sold, inaggregate, 400,000 Ordinary Shares at the Placing Price. David Williams andDavid Bestwick have each entered into voluntary lock-in agreements in which theyhave undertaken to the Company and to Seymour Pierce not to dispose of anyinterest in Ordinary Shares (except in certain limited circumstances) for aperiod of 12 months from Admission. Commenting, John Brackenbury, CBE, Chairman,said "I am grateful to David Williams and David Bestwick who personally financedthe creation and growth of the business in the tough years when no externalcapital was available. They have taken this opportunity, endorsed by the Board,to sell just enough shares to pay off their debts which were built up to surviveduring that period. They both volunteered to sign new lock-in agreements towhich the Board agreed. In my opinion this supports their public statements thatthey are here as managers and shareholders for the long term " In addition, Gary Truman, Finance Director, has exercised options over 24,800new Ordinary Shares ("New Ordinary Shares") and, as part of the Placing, willsell 24,800 Ordinary Shares. No. of shares sold No. of shares held % of enlarged share capital in Placing on Admission of the CompanyDavidWilliams* 200,000 857,353 3.84% DavidBestwick** 200,000 506,061 2.23% Gary 24,800 Nil -Truman * As part of his beneficial interest, David Williams is interested in 278,757Ordinary Shares through his shareholding in Active Media Capital Limited (andwhich he is also a director of) ** As part of his beneficial interest, David Bestwick is interested in 17,861Ordinary Shares through his shareholding in Active Media Capital Limited *** David Williams has 281,706 share options and David Bestwick has 220,959share options. Application for admission to trading on AIM for the Placing Shares and the NewOrdinary Shares has been made and trading in the Placing Shares and the NewOrdinary Shares is expected to occur on 14 November 2005. The Placing Shares andthe New Ordinary Shares will, on admission to AIM, rank pari passu in allrespects with the existing ordinary shares of the Company. - Ends - For further information please contact: David Williams, Chief Executive Avanti Screenmedia Group plc 020 7749 1600Peter Binns Binns & Co PR Ltd 020 7786 9600Mark Percy Seymour Pierce 020 7107 8000 NOTES TO EDITORS ABOUT AVANTI Avanti uses IPTV satellite technology to deliver bespoke television channels(which it calls "screenmedia") used by retailers, pubs and malls at or close tothe point of sale for the purposes of brand promotion and advertising. Avanti isunique in its ability to provide all elements of a screenmedia service -network, creative, media sales - using skilled and dedicated in-house resources,which reduces risk and cost and improves quality for clients. Avanti is theclear market leader in this niche but fast growing area by turnover, profits,client base and sites installed. The Company was admitted to AIM on 9 July 2004. Avanti also operates an emerging business supplying broadband by satellite. Thefirst major contract for this product was the INSPIRE project which provides forthe installation of a new mode of satellite and wireless broadband Internetaccess technology around the United Kingdom and Europe. This system currentlyuses rented satellite capacity which will be replaced by the launch of Avanti'sown satellite. The satellite will also be used to serve Avanti's IPTV clientbase as it grows around Europe. This information is provided by RNS The company news service from the London Stock Exchange