Live Company Regulatory News (LVCG)

3 Oct 2006 16:17

Parallel Media Group plc ("PMG" or the "Company")UpdateCompletion of changes to business arrangements in Asia and further onrestructuring of financing and ‚£3.57 million fund raisingOn 11 September 2006, the Company announced a delay in the date for completionof the binding heads of agreement (the "Heads") for a rearrangement of itsAsian golf interests previously announced on 16 August 2006. PMG also announcedthat it had entered into commitments to raise ‚£3.0 million by the issue of newshares, convertible loans and loans to enable the repayment of certain loansand to provide the Company with further working capital.PMG announces that it has now completed the agreements for the rearrangement ofits Asian business arrangements and redeemed certain loans as previouslyannounced. It has also entered into agreements to settle further outstandingconvertible loans and certain other creditors by the issue of new ordinaryshares and new convertible loans. as set out below.As previously announced, PMG has continued to seek further equity funding andhas now entered into an agreement for cash subscriptions of further newordinary shares to raise ‚£1 million over the period to January 2007. Thisagreement will satisfy the conditions attached to the drawdown of the secondtranches of the two convertible loans detailed in the 11 September 2006announcement. Further details of these arrangements are set out below.Following these further agreements, the Company has now received subscriptionsor commitments to subscribe in cash for an aggregate of over ‚£3.57 million(excluding the ‚£0.40 million of loans from Mr Ciclitira described below), ofwhich ‚£1.57 million is being subscribed for new ordinary shares, ‚£1.88 millionis being subscribed for convertible loan stock and ‚£0.12 million is beingraised via loans. It is the board's intention that further sums may be raisedby the issue of equity if opportunities arise over the coming months.PlacingThe Company has placed 6,000,000 new ordinary shares of 0.5p at a price of 1.25pence each raising gross proceeds of ‚£75,000 for the Company.Existing Convertible LoansExcluding the convertible loans which were redeemed as part of therearrangement of the Company's Asian business, the Company currently has atotal of ‚£2.36 million Exiting Convertible Loans outstanding (including accruedinterest of ‚£0.14 million).The Company has reached agreement with the holders of ‚£2.21 million of theExisting Convertible Loans (including ‚£0.14 million of accrued interest)currently outstanding for the settlement of the outstanding balance by:- * the issue of new shares at 1.25 pence * the issue of a new Unsecured Convertible Loan Stock at 1.25 pence Details of the Existing Convertible Loans are set out below:-Description of Amount Interests held Conversion Latest redemptionExisting by David Cicliti price dateConvertible Loan ‚£ million ra, director of the Company (‚£ (pence) million) Tranche 1 ‚£1.11 ‚£1.11 6.75 31 October 2008 Tranche 2 ‚£1.11 ‚£0.41 1.5 31 October 2008 Accrued interest ‚£0.14 ‚£0.08 Total ‚£2.36 ‚£1.60 The Existing Convertible Loans are secured against assets of the Company. Thelatest redemption dates are 31 October 2006, although the holders could haverequested immediate repayment in full.Settlement of Certain CreditorsThe Company has reached agreement for the settlement of certain creditors ofthe PMG group totalling ‚£1.38 million, ‚£0.47 million of this balance has beenwaived, ‚£0.08 million has been settled in cash and the remaining ‚£0.83 millionbeing settled by the issue of new shares at a price of 1.25 pence each.Conversion of Existing Convertible Loans and Certain Creditors into newordinary shares and New Unsecured Convertible Loan StockThe following conversions are taking place:-Conversion of Amount Number of new New Unsecured ordinary shares Convertible Loan ‚£ million being issued Stock Existing Convertible Loans* ‚£2.21 82,838,877 ‚£1.17m Certain Creditors** ‚£1.38 66,733,492 ‚£Nil Total 149,572,369 ‚£1.17m*including accrued but unpaid interest of ‚£0.14 million** ‚£224,506 of this balance relates to amounts owed to David Ciclitira.New Unsecured Convertible Loan StockDetails of the New Unsecured Convertible Loans are set out below:-Redemption period 3 months after the publication of the 31 December 2007accountsInterest rate Interest freeConversion price 1.25 pence per shareDavid Ciclitira and interests associated with him will hold the entire NewUnsecured Convertible Loan Stock. Mr Ciclitira has confirmed to PMG that it ishis intention to exercise his conversion rights whenever it is reasonablypossible to do so, and to substantially the maximum extent possible, so long asit will not require the interests of Mr Ciclitira (and any persons deemed to beacting in concert with him) to make an offer for the balance of the ordinaryshare capital then in issue under Rule 9 of the City Code on Takeovers andMergers.Further share issueThe Company has entered into a contract with Pacific Continental Securities(UK) Ltd ("Pac Con") which contains four put and call options (exercisable byPMG and Pac Con respectively) each for the cash subscription of ‚£250,000 fornew ordinary shares. One put and call option may be exercised in the month ofOctober 2006, one in the month of November 2006, one in the month of December2006 and the fourth in the month of January 2007. Each option is exercisable atsixty five per cent. of the average middle market price of PMG's shares for thethree business days prior to exercise (subject to a minimum price of the parvalue of the shares).Allotment of shares and application for admission to AIMThe Company has today allotted 155,572,369 new ordinary shares of 0.5p each inconnection with the Placing and the conversion of loan notes set out above.Application has been made for 155,572,369 new Ordinary Shares of 0.5p each tobe admitted to trading on AIM and it is anticipated that such admission willbecome effective and that dealings in the new ordinary shares will start on 4October 2006.Following the above issue of shares the newly enlarged share capital of theCompany is 219,175,874 ordinary shares of 0.5 pence.Grant of optionsThe Board indicated last year that it intended to establish a new ExecutiveShare Scheme and intended to grant options over 10 per cent of the enlargedfully diluted share capital as it then was. This did not happen. The Board has,however, today agreed to adopt such a scheme with a cap of 10 per cent of theordinary shares in issue from time to time. The Board has also today agreed tooffer options to members of the board and to senior management of the PMG Groupover 17,465,000 ordinary shares.The terms of the warrants are set out below:-Exercise Price:- 1.25 penceExercise period:- 7 years from date of grantThe options will be subject to the Company meeting certain profit targets inrespect of the years ended 31 December 2007 and 31 December 2008.Included in the option grants are the following directors of the Company:- Number of shares under warrant David Ciclitira 9,605,750 Edward Adams 2,619,750 Total 12,225,500Related party statement‚£1,603,509 of the Existing Convertible Loans (including accrued interest) areheld by David Ciclitira and his associated interests. As part of thearrangements described above, such loans are being satisfied by the issue ofnew ordinary shares and New Unsecured Convertible Loan Stock based on a priceof 1.25p per share. Such terms for the issue of new ordinary shares areidentical to those offered to all other holders of existing convertible loans.Included in the settlement of other creditors of ‚£1.38 million outlined above,‚£122,506 of this balance is owed historically to interests associated withDavid Ciclitira which is to be settled by the issue of new ordinary sharesbased on a price of 1.25 pence.David Ciclitira has advanced ‚£400,000 of unsecured loans to the Company, on aninterest free basis, over recent months. The Company has agreed to repay theseloans as soon as it is able to up to 30 June 2007, if these loans are notrepaid by 30 June 2007, they may become at the election of Mr. Ciclitira aninterest free convertible loan, convertible at any time until repaid on thebasis of a share price of 1.25p.In consideration for David Ciclitira providing the unsecured loans to theCompany up to the point of the fund raising he is being paid a fee of ‚£60,000,this fee being satisfied by the issue of new ordinary shares at 1.25 pence(included in the ‚£1.38 million outlined above).David Cicilitira has agreed to provide a personal guarantee as security for abridging loan facility which the Company has negotiated of up to ‚£300,000 ifneeded to enable completion of the Malaysian Agreements to take place. TheCompany has agreed to pay Mr Ciclitira a fee equivalent to 14 per cent. of thefunds drawn down in reliance on this guarantee, such fee to be settled by theissue of new ordinary shares based on a price of 1.25p (included in the ‚£1.38million outlined above).Interests associated with Edward Adams have made a facility of ‚£100,000available to PMG to enable completion of the agreements on a timely basis. Suchfacility, if drawn, will bear interest at 6% per annum and will have thebenefit of security over certain of the assets being acquired by the Group. Afacility fee of 5% is also being paid in relation to this loan.As indicated above, certain of the options granted under the share optionscheme described above are being granted to directors, including non-executivedirectors. These options are on the same basis as the options granted to seniormanagement of PMG.In the case of each of the above transactions, the Board (other than thedirector or directors involved in the relevant transaction), having consultedwith City Financial Associates Limited, the Company's Nominated Advisor,consider the terms to be fair and reasonable insofar as shareholders areconcerned.Subsequent to the above transactions David Ciclitira has a holding of64,673,719 ordinary shares in the Company representing approximately 29.5 percent. of the issued share capital of the Company.3 October 2006For further information, contact:David Ciclitira, Chairman, Parallel Media Group plc 020 7225 2000ENDPARALLEL MEDIA GROUP PLC