INC.L Regulatory News (INC)

26 Sep 2007 07:01

Avanti Screenmedia Group PLC26 September 2007 26 September 2006 Avanti Screenmedia Group plc ("Avanti" or the "Company") Placing of new Ordinary Shares and issue of Convertible Unsecured Loans to raise approximately £885,000 Dealings by Directors The Company announced on 21 September 2007 that it had raised a minimum of£680,000 by way of convertible loans and a conditional placing of new OrdinaryShares. The Board of Avanti is pleased to announce that this total has beenincreased to £785,485. Charles Stanley Securities and Seymour Pierce have, onbehalf of the Company, completed a conditional placing (the "Placing") of6,578,366 new Ordinary Shares of 1p each (the "Placing Shares") at a price of 7pence per Placing Share with institutional and other investors to raiseapproximately £460,485. The Board is also pleased to announce that it hassecured a further £325,000 through CUL, in addition to the £100,000 announced on4 September 2007. The Placing is conditional, inter alia, upon the Companyobtaining shareholder approval of certain resolutions at an extraordinarygeneral meeting to be held on 18 October 2007 (the "EGM"). Admission of thePlacing Shares to trading on AIM is expected on 19 October 2007. Commenting on the fund raising, Chairman Mick Desmond said: "I am delighted thatwe have secured additional funding from both existing and new investors. TheCompany has achieved a strong sales performance in the current financial year todate and the executive team is making good progress in delivery of the newstrategy." Enquiries: Avanti Screenmedia Group plc 0207 902 2345Simon Rees, Chief ExecutiveGary Truman, Finance Director Charles Stanley Securities 020 7149 6000Nominated AdviserRussell Cook / Freddy Crossley Bishopsgate Communications Limited 020 7562 3355Maxine Barnes/Jenni Herbert Placing of new Ordinary Shares and issue of Convertible Unsecured Loans to raise approximately £885,000 Dealings by Directors The Company announced on 21 September 2007 that it had raised a minimum of£680,000 by way of a convertible loan and a conditional placing of new OrdinaryShares. The Board of Avanti is pleased to announce that it has raised a totalof £785,485. Charles Stanley Securities and Seymour Pierce have, on behalf ofthe Company, completed a conditional placing of 6,578,366 new Ordinary Shares of1p each at a price of 7 pence per Placing Share with institutional and otherinvestors to raise approximately £460,485. The Board is also pleased toannounce that it has secured a further £325,000 through CULs, in addition to the£100,000 announced on 4 September 2007. The Placing is conditional, inter alia,upon the Company obtaining shareholder approval of certain resolutions at anextraordinary general meeting to be held on 18 October 2007. The EGM to approve the terms of the Placing and to authorise the issue of newOrdinary Shares to satisfy conversion of the CULs will be held on 18 October2007. Admission of the Placing Shares to trading on AIM is expected on 19October 2007. The announcement of 21 September 2007 followed a trading update issued by theCompany on 6 August 2007 stating that, following a difficult trading periodimmediately following the demerger, management had refocused the business andwas implementing a revised business strategy and as a result that trading wasshowing signs of improvement. However, the Board also announced that theprevious poor trading and the costs associated with the implementation of thenew business strategy had an adverse effect on the Company's cash resourceswhich required the Company to urgently seek additional funding for the business. On 4 September 2007 the Company announced that it had entered into a 10%Convertible Loan Agreement to raise £100,000 which is to be repaid or convertedon or before 3 March 2008. The conversion of the CUL is subject to obtainingshareholder approval at an EGM, details of which are set out below. The Company also announced that the Company's cash position had improved,although the Board is continuing to seek further funding to meet the Company'sworking capital requirement and for continuing development of the business. Current Trading and Prospects Simon Rees was appointed to the Board as Chief Executive on 18 June 2007 sincewhen he has overseen the implementation of a new strategy for Avanti. This hasinvolved; the reduction of costs across the Company; a shift in resource tofrontline sales and marketing; the establishment of a local advertising salesteam and the favourable renegotiation and extension of existing clientcontracts. While the Board is confident that the successful implementation ofthis strategy will deliver long-term growth for Avanti and its Shareholders, theshort term prospects are dependent upon a number of factors, prevailing generaleconomic conditions and securing sufficient working capital for the Company'spresent requirements, and for the on-going development and expansion of thebusiness. Earlier this month the Company announced that it has signed a deal withElectronic Health Media ("EHM") Limited to offer patient information andadvertising on screens in walk-in health centres, hospitals and GP surgeriesthroughout England. The network provides health service professionals with acommunications platform for patient information, together with local andnational advertising. The contract initially extends to 130 sites, which EHMexpect to expand to over 200 by December 2007. Avanti anticipates that thiscontract will generate gross local advertising revenues of between £500,000 and£1.0 million in the next 12 months. Avanti has also announced that it has extended its current three year contractwith its largest client, The Mall Corporation, for a further 3 years through to2011. The Mall Corporation currently owns and operates 23 shopping mallsnationwide. The Board has also announced that advertising sales across the Company areperforming strongly. Booked (gross) advertising sales in the first two monthsof the current financial year exceeded those achieved for the entire 12 monthsto 30 June 2007. Funding The Board has been seeking to secure short term-funding since the tradingstatement of 6 August, and continues to explore potential sources of additionalfinance to take advantage of certain new opportunities to support thedevelopment of the business. This includes potential acquisitions whichcomplement the Company's strategy for growth and consolidation of thescreenmedia sector. Convertible Unsecured Loan Agreements The Board announced on 4 September 2007 that the Company had entered into aConvertible Unsecured Loan Agreement to raise £100,000 before expenses. The CULcarries an interest rate of 10% percent per annum and is due to be repaid orconverted at a conversion price of 2.0p per share on or before 3 March 2008. Iffully converted, the CUL will require the issue of 5.0 million new OrdinaryShares, equivalent to 10.7% of the Enlarged Share Capital. The announcement on 21 September 2007 stated that that the Company had enteredinto further Convertible Unsecured Loan Agreements to raise £325,000 whichinclude £25,000 from Mick Desmond, £75,000 from Gary Truman and £25,000 fromSimon Rees, the Chairman, Finance Director and Chief Executive of the Companyrespectively. The CULs carry an interest rate of 10% percent per annum and aredue to be repaid or converted at a conversion price of 8.375p per Ordinary Shareon or before 21 March 2008. If fully converted, these CULs will require theissue of 3.88 million new Ordinary Shares, equivalent to 8.3% of the EnlargedShare Capital. The resolutions proposed at the EGM provide the Board with authority to issuethe new Ordinary Shares pursuant to such conversion of the CULs. Placing of new Ordinary Shares The Company requires to raise a minimum of a further £400,000 to providesufficient cash resources to meet the Company's immediate working capitalrequirements. In the opinion of the Directors the optimum level of furtherfunding to meet all working capital requirements of the business for the nexttwelve months is £1.25 million. The Company is proposing to raise £460,486 byway of a Placing at 7.0 pence per Placing Share. The Placing Price represents adiscount of approximately 33.3 per cent. to the closing mid market price of theOrdinary Shares on 20 September 2007 (the date prior to the announcement of thePlacing). Charles Stanley and Seymour Pierce have placed 6,578,366 Placing Shares at aprice of 7.0 pence per Placing Share with certain institutional and otherinvestors to raise £460,486. The Company is also seeking authority to place upto a further 5.4 million new Ordinary Shares which will raise up to a further£376,000 at the Placing Price. The Placing and the Proposed Placing are conditional on the passing of theResolutions and the Placing is conditional on Admission. The Placing and theProposed Placing are not being underwritten. The Placing Shares and the new Ordinary Shares to be issued pursuant to theProposed Placing are not being offered generally to Shareholders, whether on apre-emptive basis or otherwise. The Directors believe that the additional costand delay which a rights issue or open offer would entail would not be in thebest interests of the Company in the circumstances. The Placing Shares and the new Ordinary Shares to be issued pursuant to theProposed Placing will rank equally in all respects with the existing OrdinaryShares. Application will be made to the London Stock Exchange for the Placing Shares tobe admitted to trading on AIM. Subject to Admission becoming effective, it isexpected that dealing in such Placing Shares will commence on 19 October 2007. In order to issue the new Ordinary Shares in accordance with the terms of theCULs, to undertake the Placing and the Proposed Placing, the Board of theCompany is now seeking Shareholders' approval at an EGM to increase theCompany's authorised share capital and to authorise the Directors to allot anumber of Ordinary Shares on a non-pre-emptive basis pursuant to sections 80 and95 of the Companies Act 1985. In the event that the CULs are converted in full and the Company issues all ofthe new Ordinary Shares for which it is seeking authority at the EGM in relationto the Placing and the Proposed Placing, the Company will be required to issue atotal of 20,842,293, new Ordinary Shares which will represent approximately44.7% of the Enlarged Share Capital. In the event that all of the new OrdinaryShares for which Shareholders' authority is being sought the Enlarged ShareCapital will be 46,650,000 Ordinary Shares. Share Options Gary Truman has today exercised options over 73,602 ordinary shares representing0.2 per cent of the current issued share capital at an option price of 1 penceper share. Details of Mr Truman's shareholding, including potential conversionof his CUL to the Company, are set out in paragraph 2 of Additional Informationbelow. Application will be made for these new Ordinary Shares to be admitted totrading on AIM, which is expected to be on 19 October 2007. Directors and other interests Following the Placing and upon conversion of the CULS the interest of theDirectors in the share capital of the Company (as at 24 September 2007 being thelatest practicable date prior to this announcement) will be: Director Number of Percentage of Number of Ordinary Percentage of Ordinary Shares existing issued share Shares following enlarged issued capital completion of the ordinary share Placing and capital following conversion of the completion of the CULs Placing and conversion of the CULsMichael Desmond - - 298,507 0.7%Simon Rees 2,500 0.0% 301,007 0.7%Gary Truman 240,505 0.9% 1,209,629* 2.9%John Brackenbury 402,659 1.6% 402,659 1.0%Richard Vos 1,900 0.0% 1,900 0.0% * includes exercise of 73,602 share options The Directors are aware of the following interests, other than those of theDirectors', held directly or indirectly in 3 per cent. or more of the issuedshare capital of the Company (as at 24 September 2007 being the latestpracticable date prior to this announcement): Shareholder Number of Percentage of Number of Ordinary Percentage of Ordinary Shares existing issued Shares following enlarged issued share capital completion of the ordinary share Placing and capital following conversion of the completion of the CULs Placing and conversion of the CULsCaledonia Investments plc 6,163,301 24.0% 6,163,301 14.9%Barclays Stockbrokers 1,808,279 7.0% 1,808,279 4.4%Hermes Pensions Management 1,804,067 7.0% 1,804,067 4.4%Kaupthing Bank Limited 1,775,000 6.9% 1,775,000 4.4%D J Williams 1,432,021 5.6% 1,432,021 3.5%D Bestwick 1,000,840 3.9% 1,000,840 2.4% Extraordinary General Meeting By way of further background and explanation, before the Placing and theProposed Placing can proceed and the CULs can be converted a number of newOrdinary Shares need to be created. After taking into consideration theanticipated terms of the Placing and the Proposed Placing, the Company'sobligations in accordance with the CULs and certain share options granted to itsemployees and officers, the Company's likely future requirements and theCompany's current share price, the Board of the Company have recommended that10,000,000 new Ordinary Shares be created. This would increase the Company'sauthorised share capital by £100,000 to £500,000. The first Resolution approvesthis increase. Following the creation of the new Ordinary Shares, the second and thirdResolutions empower the Directors to allot equity shares for cash (other than inaccordance with the statutory pre-emption rights which require a company tooffer all allotments of equity shares for cash first to existing shareholders inproportion to their holdings), in connection with the CULs, the Placing, theProposed Placing, any rights issue and otherwise in respect of a further2,332,500 Ordinary Shares. Unless renewed, revoked, varied or extended, thisauthority will expire at the end of 15 months from the date of passing of theResolutions or at the conclusion of the AGM to be held in 2008 of the Company,whichever is the earlier. Directors' Recommendation As set out above, Michel Desmond, Simon Rees and Gary Truman have entered intoCULs and as such are considered to be related parties for the purpose ofconsidering and providing a recommendation to Shareholders. The IndependentDirectors, comprising Stuart Chambers, John Brackenbury CBE and Richard Vosconsider, having consulted with Charles Stanley, that the terms of the CULsentered into by the Company with certain of the Directors are fair andreasonable insofar as Shareholders are concerned. The Independent Directors are of the opinion that the issue of new OrdinaryShares on conversion of the CULs, the Placing and the Proposed Placing which aresubject to the passing the Resolutions at the EGM are in the best interests ofthe Company and its Shareholders as a whole. Accordingly, the IndependentDirectors unanimously recommend that Shareholders vote in favour of theResolutions at the EGM as they intend to do in respect of their own OrdinaryShares representing approximately 1.56 per cent of the current issued sharecapital. PLACING STATISTICS Placing Price 7pNumber of existing Ordinary Shares in issue 25,734,105Number of Placing Shares 6,578,366Number of Ordinary Shares in issue immediately following Admission 32,312,471Number of Proposed Placing Shares Up to 5,383,332Number of Ordinary Shares to be issued upon conversion of the CULs Up to 8,880,595Conversion price of CULs £100,000 at 2.0p £325,000 at 8. 375pMaximum number of Ordinary Shares in issue following Admission and upon conversion of 46,650,000the CULs and the issue of the Proposed Placing SharesMarket capitalisation of the Company at the Placing Price £2.3 millionGross proceeds of the Placing and from the CULs receivable by the Company £885,486Estimated net proceeds of the Placing and from the CULs receivable by the Company £850,000 DEFINITIONS The following definitions apply throughout the announcement, unless the contextrequires otherwise: "Admission" the admission of the Placing Shares to trading on AIM in accordance with the AIM Rules "AIM" AIM, a market operated by the London Stock Exchange plc "Avanti" or the "Company" Avanti Screenmedia Group plc "Board" or "Directors" the directors of the Company "Charles Stanley" Charles Stanley Securities, a trading division of Charles Stanley & Co. Limited, regulated by the FSA, Nominated Adviser and Broker to Avanti "CUL(s)" 10% Convertible Unsecured Loan(s) "EGM" the extraordinary general meeting of the convened by the Company and any adjournment thereof "Enlarged Share Capital" the entire issued ordinary share capital of the Company immediately following completion of the Placing, the Proposed Placing and conversions of the CULs "Independent Directors" Stuart Chambers, John Brackenbury CBE and Richard Vos, none of whom are participating in the Placing or entering into the CULs "Ordinary Shares" ordinary shares of 1p each in the capital of the Company "Placing" the proposed conditional placing of the Placing Shares at the Placing Price "Placing Price" 7 pence per Placing Share "Placing Shares" the 6,578,366 new Ordinary Shares to the issued pursuant to the Placing, assuming maximum subscription under the Placing "Proposed Placing" the proposed Placing of up to 5,383,332 new Ordinary Shares at a minimum price of 7.0 pence per share, subject to Shareholder approval at the EGM "Proposed Placing Shares" the new Ordinary Shares that may be issued pursuant to the Proposed Placing "Proxy Form" the proxy form for use at the EGM "Resolutions" the resolutions contained in the notice of extraordinary general meeting to be proposed at the EGM and "Resolution" shall mean any one of them "Shareholders" holders of Ordinary Shares This information is provided by RNS The company news service from the London Stock Exchange