Cadence Mineral Regulatory News (KDNC)

7 Mar 2006 07:04

Zest Group PLC07 March 2006 7 March 2006 Zest Group Plc Proposed Acquisition of Greensleeves Records Limited Placing of 83,333,334 Ordinary Shares at 3p per share Application for re-Admission to AIM The Board of Zest announces today that the Company has conditionally agreed toacquire the entire share capital of an established, independent record label andmusic publisher which specialises in reggae music, Greensleeves Records Limited("Greensleeves") for a consideration of £3.25 million comprising a cash paymentof £3,000,000 and the issue of 8,333,334 Ordinary Shares (valued at 3p pershare) conditional, inter alia, upon Admission. In addition, Greensleeves hasagreed to acquire the property currently occupied by Greensleeves in the UK fora consideration of £662,500. Acquisition of the Property is conditional uponthe acquisition of Greensleeves. Greensleeves is based in Isleworth, Middlesex, and has a promotions office inNew York. The company has an established presence in a number of the specialistreggae markets throughout the world and, in particular, the UK, the USA, Japan,France, Germany, Benelux, Canada and Scandinavia. The Acquisition will make Zest one of the largest independent reggae publishersand record labels in Europe and the Directors believe that the Acquisitionshould provide critical mass and enable the Company to achieve immediateprofitability. The Zest management team intends to maximise Greensleeves' growth potentialthrough the development of a number of business areas as follows: • Greensleeves owns a significant number of album masters, of whichapproximately 10 per cent. have not been released in CD format. The Companyintends to release the majority of these album masters in CD format as well asmaking them available for electronic distribution. • Greensleeves has a significant number of album and single masterswhich have not been released as compilation albums and the Directors intend toexpand that area of the business. • The Directors believe that there is a market for further mid-pricedalbums, based on Greensleeves' existing catalogue, which it intends to address. • Currently Greensleeves produces a number of compilations on vinyl, alucrative area of the reggae and dance markets, and the Directors intend toincrease production of vinyl compilations. • The Directors believe that Greensleeves' CDs can be manufactured atlower cost than currently being achieved. • During 2005, Greensleeves concluded a ring tones deal in Japan and theDirectors intend to pursue similar deals in other territories. • Greensleeves has concluded agreements with iTunes and Napster todistribute catalogues electronically. The Acquisition and the additional working capital requirement are being fundedby a placing of 83,333,334 Ordinary Shares at 3p and bank financing. Commenting, Steve Weltman, Chief Executive of Zest Group plc, said: "Greensleeves is a very well respected player in the reggae market, with astrong back catalogue of albums and singles. It is currently releasing over 15albums a year and we believe that it will provide a profitable addition to ourexisting operation and an excellent operational base on which we can build withfurther acquisitions." Enquiries: Richard Griffiths, Chairman Zest Group plc tel: 020 7451 9800 (on 7 March 2006) Steve Weltman, Chief Executive Zest Group plc 0870 389 6999 (after 7 March) John Bick tel: 07917 649362 Acquisition and Placing Statistics Number of existing Ordinary Shares prior to the Placing and Acquisition 81,952,382 Number of Placing Shares being issued under the Placing 83,333,334 Placing Price 3p Number of Consideration Shares being issued under the Acquisition 8,333,334 Percentage of Enlarged Share Capital represented by the Consideration Shares 4.8% Number of Ordinary Shares in issue immediately following Admission 173,619,050 Percentage of the Enlarged Share Capital of the Companyrepresented by the Placing Shares upon Admission 48% Gross proceeds of the Placing £2,500,000 Estimated net proceeds of the Placing £1,850,000 Expected Timetable Admission Document publication date 7 March Last time and date for receipt of Forms of Proxy 9.00am on 28 March Extraordinary General Meeting 9.00am on 30 March Completion date of the Acquisition 31 March Admission effective and dealing in Ordinary Shares(including New Ordinary Shares) expected to commence on AIM 31 March Expected date for CREST accounts to be credited (in respect of the Placing Shares) 31 March Expected date for posting of the share certificatesfor the Placing Shares (where applicable) 7 April Information on Greensleeves Records Limited Greensleeves is an independent record company and music publisher specialisingin reggae music. The company is based in Isleworth, Middlesex, and has apromotions office in New York. The company has an established presence in anumber of the specialist reggae markets throughout the world and, in particular,the UK, the USA, Japan, France, Germany, Benelux, Canada and Scandinavia. Greensleeves was founded in 1975 and the Greensleeves record label was launchedin 1977. For over 27 years Greensleeves has been one of the companies at theforefront of the constantly evolving reggae genre of music. Initially "roots"reggae was its main focus, with artists such as Dr Alimantado and Augustus Pablobeing closely associated with the label. In the early 1980s the label helped topioneer the release of "dancehall" reggae and has many of the albums from thisera in its catalogue. Later in the 1980s, Greensleeves launched the first recordof "digital" reggae emanating from Jamaica, Wayne Smith's "Under Me Sleng Teng",and released many digital recordings over the following years including GregoryIsaacs' "Rumours". During the 1990s Greensleeves was one of the companies at theforefront of the new "ragga" style (called "dancehall" in the USA) which iscurrently the dominant style of reggae. Other labels have been launched byGreensleeves including the UK Bubblers label in the mid-1980s to cater for DJsin the UK. In the 1980s and 1990s the company had commercial relationships withseveral US reggae labels, particularly Ras, Shanachie and Heartbeat, andlicensed and/or imported releases from these labels. However, the company nowconcentrates on its own label. Greensleeves has a comprehensive reggae back catalogue from the 1980s onwards.With a back catalogue of approximately 400 albums and 900 singles on its label,Greensleeves is currently releasing between 15 and 20 new albums per year andintends to continue its re-issue programme. Greensleeves has established apromotions office in New York to handle the growing reggae market in the USA.The Directors believe the company is now positioned to exploit potential futuregrowth. Greensleeves Business Activities Recording Record Label The primary focus for the label is to remain in close contact with the latesttrends and sounds of the Jamaican dancehalls, which are reflected closely in thebase reggae markets in Kingston, London and New York. As a result, Greensleeveshas well established links with many of the key producers on the reggae scene inJamaica. Most of the music is initiated by independent producers who thenlicense the music to Greensleeves. From time to time Greensleeves signs artistsand producers exclusively. It currently has six artists and one producer undercontract, being: • Vybz Kartel • Macka Diamond • Fanton Mojah • Ward 21 • Kid Kurrupt • Predator • Donovan "Vendetta" Bennett (producer) The CDs are manufactured in the UK by various companies, including Sonopress. Inthe year to 30 September 2005, 69 per cent. of Greensleeves' turnover wasattributable to the record label. Artists Greensleeves has been able to identify artists and producers early in theircareers. Shaggy, Beenie Man and Mr Vegas all had their first hits on theGreensleeves label, and artists as varied as Barrington Levy, Yellowman, BlackUhuru, Eek-A-Mouse, Scientist, Shabba Ranks, Sizzla and Bounty Killer each hadearly albums on the label. Greensleeves has succeeded in achieving commercial success on a number ofoccasions including a number one in the UK Top Forty Chart with Shaggy's "OhCarolina" in 1993. The company has had two further top twenty hits in the UK TopForty Charts in the last six years with Beenie Man's "Who Am I? (Zim Zimma)"which went into the top ten in March 1998 and Mr Vegas' "Heads High" which wentto number 16 in November 1999.Greensleeves owns the master rights for WayneWonder's "No Letting Go" which was a hit on the VP/Atlantic Label, which reachednumber 11 in the USA Billboard Chart and number three in the UK Top Forty Chartin 2003. Greensleeves receives royalties earned by Lumidee's "Never Leave You(Uh Oh Uh Oh)", the Universal Label recording, which embodied a sample of amaster owned by it. This was an international success in 2003, reaching numberone in Germany, number two in the UK Top Forty Chart and number five in the USA. Greensleeves also owns the dance rhythm on which Nina Sky had a top ten UK hitwith "Move Ya Body" in the USA and UK in 2004. Album Series The company has five compilation series: • the annual "Biggest Ragga Dancehall Anthems" • the "Greensleeves Sampler" • "Ragga Ragga Ragga" • "Greensleeves Rhythm Album" series • "Biggest Reggae One Drop Anthems Distribution Greensleeves has distributors in the UK, the USA, Germany, France, Benelux,Scandinavia, Canada, Japan, Italy, Australia, South Africa and the Caribbean.In many territories, particularly the UK, the USA, France and Germany,Greensleeves sells direct to specialist reggae outlets where these are notcovered by its main distributors. Sales are also made to the various UK basedexport houses and to various digital downloading companies. Publishing Greensleeves currently has 29 writers under contract and owns or administersover 18,000 reggae titles. Greensleeves owns musical copyrights throughpublishing deals with songwriters and administers other publishers' cataloguesvia sub-publishing deals. It also owns all or part of the copyrightS inapproximately 4,500 out of the 18,000 songs in its catalogue. In 2004 one of Greensleeves' former writers, Stephen Marsden, won the covetedASCAP (American Society of Composers and Performers) Award for most performedsong of the year with the song "Get Busy" as well as two further most performedsong awards for "Never Leave You (Uh Oh Uh Oh)" and "No Letting Go" which wereall written whilst under contract with Greensleeves. In 2005 Greensleeves again won ASCAP awards with two more most performed songawards for "Hey Mama" written by Anthony Henry and for "Get Busy". With a network of sub-publishers throughout the world, Greensleeves collectspublishing income worldwide. Due to the increased interest in reggae in theUSA, its sub-publishing income has been growing steadily in recent years. Popular Music Charts Greensleeves has had a series of chart successes over the years with recordswhich entered the base reggae market, then achieved success in the broaderpopular music market. Such chart successes achieved by Greensleeves (unlessotherwise stated) are as follows: Date Position Title and Artist Record label and publishing hitsMarch 1986 22 "Hello Darling" - Tippa IrieMay 1986 62 "Great Train Robbery" - Black Uhuru (Ras label)July 1986 59 "Heartbeat" - Tippa IrieFebruary 1993 1 "Oh Carolina" - ShaggyJuly 1993 46 "Soon Be Done" - ShaggyAugust 1995 71 "Wrong or Right" - Sabre & Prezident BrownMarch 1998 10 "Who Am I? (Zim Zimma)" - Beenie ManNovember 1999 16 "Heads High" - Mr Vegas Publishing hitsMay 2003 4 "Get Busy" - Sean Paul (VP/Atlantic label)August 2003 2 "Never Leave You (Uh Oh Uh Oh)" - Lumidee (Universal label)July 2004 6 "Move Ya Body" - Nina Sky (Universal label) Greensleeves Management The Board is pleased to confirm that both Chris Sedgwick and Chris Cracknellhave agreed to remain involved with Greensleeves' business following Admission. Christopher John Sedgwick Chris formed Greensleeves in 1975. He and Chris Cracknell have been primarilyresponsible for developing Greensleeves as a specialist independent recordcompany. He has entered into an agreement with Greensleeves whereby he willcontinue as an employee of Greensleeves for six months from Admission, and willthen provide consultancy services for a further two year period. Christopher Hugh Cracknell Chris carries out negotiations and interaction with producers and artists on amusic level. Finding new artists and producers with potential is a major part ofhis responsibility within Greensleeves. He has entered into an employmentcontract with Greensleeves for one year following Admission. Greensleeves Corporate Structure Greensleeves Records Limited has two wholly owned subsidiaries, GreensleevesPublishing Limited (dormant), incorporated in England and Wales under companynumber 00887475, and Greensleeves Records (USA) Limited, incorporated in theUSA. Lock In Agreements Each of the Vendors and Chris Sedgwick has entered into an agreement not todispose of any interests in the securities of the Company within the two yearperiod following Admission without the Company's prior written consent, save incertain circumstances, including in connection with a general or partialtakeover offer. Collectively, upon Admission, these Shareholders will control orbe interested in 4.8 per cent. of the Enlarged Share Capital. The Directors and certain other shareholders entered into agreements at the timeof the Company's admission to AIM on 24 March 2005 not to dispose of anyinterests in the securities of the Company within a period of 12 monthsfollowing 24 March 2005, or of any interests in the securities of the Companyacquired pursuant to the Second Fundraising within a period of 12 months from 5September 2005, save in both cases subject to certain specific circumstancespermitted by the AIM Rules. The Directors have also entered into agreements not to dispose of any interestsin the securities of the Company within a period of 12 months from Admissionwithout W.H. Ireland's prior written consent and save in certain specificcircumstances, including in connection with a general or partial takeover offer.Collectively, upon Admission, the Directors will control or be interested in8.04 per cent. of the Enlarged Share Capital. Principal terms of the Agreement Under the terms of the Acquisition Agreement, the Company has conditionallyagreed to acquire the entire issued share capital of Greensleeves andGreensleeves has agreed to acquire the Property for an aggregate considerationof £3,912,500 comprising £3,662,500 in cash and 8,333,334 Ordinary Shares,valued at 3p per share. The Acquisition Agreement is conditional, inter alia, on (i) the passing of theResolutions; (ii) the Facility and Property Loans becoming unconditionallyavailable for drawdown (save for any conditions relating, inter alia, tocompletion of the Acquisition Agreement or Placing Agreement); (iii) allotmentof the Placing Shares; and (iv) Admission. The Consideration Shares will, onAdmission, rank in full for all dividends or other distributions hereafterundeclared, made or paid on the ordinary share capital of the Company aftertheir date of issue and will rank pari passu in all other respects with allother Ordinary Shares which will be in issue on Admission. Funding Funds will be provided by the Placing and by facilities from Coutts & Company.The facility of £1.6 million (the "Facility") and loan of £455,000 toGreensleeves for the acquisition of the property (the "Property Loan") areprovided at an interest rate of 3 per cent. per annum above LIBOR. The Facility,which is conditional, inter alia, on Admission, is repayable over seven years,is subject to customary events of default, and is to be secured on the assets ofthe Enlarged Group. The Property Loan, which is also conditional, inter alia, onAdmission, is repayable over ten years, is also subject to customary events ofdefault and is to be secured on the Property. Dividend Policy The Directors anticipate that any earnings will, for the foreseeable future, beretained by the Company for the development of the business of the EnlargedGroup and will not be distributed to shareholders as cash or other dividends.The declaration and payment by the Company of dividends will, once the EnlargedGroup has achieved its development objectives, be dependent upon the Company'sresults from operations and other factors deemed to be relevant at that time. Details of the Placing At the time of the Company's admission to AIM in March 2005, the Companycompleted the placing of 19,333,333 Ordinary Shares at a price of 3p per share("Original Placing"). It was a term of the Original Placing that each placee wasobliged to subscribe for additional Ordinary Shares in the Company, at 7p pershare, at anytime before 28 February 2006, but following notification by theCompany ("Second Fundraising"). On 5 September 2005 the Second Fundraisingshares were subscribed and fully paid, and raised £580,000 (before expenses) toprovide additional working capital for the Company. The Company is issuing 83,333,334 New Ordinary Shares pursuant to the Placing at3p per share (the "Placing Price") to raise approximately £1,850,000 (net ofexpenses). The Placing Shares will represent approximately 48 per cent. of theEnlarged Share Capital of the Company and will be fully paid upon issue and willrank pari passu in all respects with the existing Ordinary Shares and theConsideration Shares. The funds raised in the Placing will be used to financethe costs of the Proposals and to provide working capital for the EnlargedGroup. The Company and the Directors have entered into the Placing Agreementwith W.H. Ireland. The Placing is not being underwritten. The Placing Shareshave been conditionally placed with institutions and other investors. ThePlacing is conditional, inter alia, upon Admission taking place on 31 March2006 (or other such later time and date as the Company and W.H. Ireland mayagree). Extraordinary General Meeting An Extraordinary General Meeting of the Company will be held at the offices ofCharles Russell LLP, 8-10 New Fetter Lane, London EC4A 1RS at 9.00 a.m. on 30March 2006 for the purpose of considering and, if thought fit, passing thefollowing resolutions: To approve the Acquisition As the Acquisition constitutes a reverse takeover, Shareholder approval, as setout in Resolution 1, is required under the AIM Rules. The Acquisition Agreement is conditional, inter alia, upon the passing of theResolutions and therefore if they are not approved by the Shareholders, theAcquisition will not be completed. To authorise the Directors to allot shares It is proposed to give the Directors authority to allot relevant securities upto an aggregate nominal amount of £446,536. The authority will expire five yearsafter the date of the passing of this resolution. After the allotment of theConsideration Shares and the Placing Shares, the Directors will have authorityto allot up to 86,947,620 Ordinary Shares representing approximately 50 percent. of the Enlarged Share Capital. To disapply pre-emption rights The provisions of section 89(1) of the Act, to the extent that they have notbeen disapplied, confer on shareholders rights of pre-emption in respect of theallotment of equity securities which are, or are to be, paid up in cash. It isproposed that the provisions of section 89(1) of the Act will be disapplied inrespect of the issue of the Placing Shares and will be generally disapplied inconnection with a rights or other pre-emptive issue and any other issue ofequity securities for cash up to an aggregate nominal amount of £86,947.62(representing approximately 20 per cent. of the Enlarged Share Capital). Theauthority will expire on the date of the Annual General Meeting in 2007 or, ifearlier, the date 15 months after the date of the passing of this resolution. Copies of the circular, which has been posted to shareholders today, areavailable free of charge from the Company's registered office and at the officesof W.H. Ireland Limited, 24 Bennetts Hill, Birmingham B2 5QP, during normalbusiness hours on any weekday (Saturdays and public holidays excepted) and shallremain available for at least one month after Admission. end. This information is provided by RNS The company news service from the London Stock Exchange