Monchhichi PLC Regulatory News (MCC)

21 December 2016

Mercom Capital Plc

("Mercom" or "the Company")

Update on indicative proposal from Calvet International Limited

Proposed board changes and PDMR transactions

The Company confirms that discussions with Calvet International Limited ("Calvet") regarding the proposals set out in the announcement of 1 December 2016 are ongoing. These proposals now involve the imminent appointments of Simon Fry as Executive Chairman, Jean-Pascal Tranié as Senior Non-Executive Director and Felipe Simonsen as Finance Director (together the "New Board").

Subject to final agreement being reached, concurrent with the proposed appointment of the New Board, John Zorbas, Patrick Cross and Kyle Appleby intend to stand down as Directors of Mercom and sell or grant an option over their respective entire existing holdings of shares in the Company amounting to 7,395,633 shares (together with a further 1,500,000 new shares upon exercise of their existing warrants at an exercise price of 5p per share) in each case at 20p per share, with 2p per share to be returned to the Company (the "Directors' Share Transaction").

Proposed board and company secretary appointments

Simon Fry, proposed Executive Chairman

Simon, 57, spent over 20 years in the investment banking industry at Yamaichi, Credit Suisse First Boston and Nomura International in London. At Nomura, he was responsible for all European Debt and Equity Capital Markets and was a European Board member and a member of both the Credit and the Risk committees.

In 2000, he established his own business in the health and leisure sector in London and subsequently bought into a Hong Kong-listed technology incubator, TechPacific Capital Ltd, as a senior partner. Among several other deals, Techpacific Capital Ltd acquired Crosby Ltd, an established colonial brokerage business based in Hong Kong which Simon and his partners transformed into a buy-out business focused predominantly on quoted companies in Asia whose value was largely intrinsic and represented by hard assets or commodities. Whilst remaining an investor and senior board member of Techpacific Capital Ltd, he was also the CEO of the Crosby Group which was listed in London.

In 2009, together with an ex Nomura colleague, he set up a family office based in London to continue to manage his own investments before becoming an adviser on investment opportunities to certain family offices based in Switzerland. Over the last seven years he has advised on a variety of investments across oil and gas exploration and development, commercial real estate, technology and internet with a particular focus on proven disruptive businesses. Simon is currently based in California.

Simon is, through 5161,LLC, the principal investment adviser to the E2 Trust which is the 100 per cent. owner of Calvet. Calvet is interested in 5,000,000 shares, representing 14.36 per cent. of the Company's issued share capital.

Jean-Pascal Tranié, proposed Senior Non-Executive Director

Jean-Pascal Tranié, 57, is an experienced top executive in the media and technology sectors and a seasoned venture capitalist with a technology and environment management background. In 2003 he co-founded Aloe Private Equity SAS, a European-based private equity group with a focus on China and India, where he is President and Chairman of the Management Board. He started his career in 1985 at the Ministry of Finance in France after graduating from École Polytechnique and obtaining a Masters degree in Public Administration from ENA.

He was associated with Vivendi from 1989 when he joined Compagnie Générale des Eaux, as Vivendi was then known. He has held senior management roles at Vivendi Universal where he served as General Manager of Vivendi's Media and Multimedia Division for three years from 1995 to 1997. Between 1995 and 1997 he was CEO of Générale d'Images and served as General Manager of Vivendi's cable networks division, overseeing its digitization. In 1997 he joined Cegetel SA as Director of Multimedia.

His venture capital experience has included Founding and General Partner of Viventures Partners from 1997 to 2003, Senior Advisor to Terra Firma Capital Partners Limited in 2005-2006 and acting as Chairman of the Management Board at Aloe Private Equity and Aloe Energy. He is also a director of CS Communication & Systèmes SA and has served on the boards of Havas, UGC S.A. Babelsberg Studios and Assystem S.A.

Felipe Simonsen, proposed Finance Director

Felipe Simonsen is an economist and business graduate from PUC Sao Paolo with over 25 years of experience in the financial markets.

Felipe began working on the trading and fixed income desk at the former Banco Itamaraty in 1991. In 1997, following the acquisition of Banco Itamaraty by BCN Bank, he became the manager of the trading desk at BCN. In 1997 Felipe moved firms to take up the role of Head of Fixed Income at Banco Paulista, specifically working with bonds and debt instruments in both the local and external markets.

Since 2005, Felipe developed a partnership with Banco Paulista in the structured financial market that to date has executed more than US$ 1 billion in transactions. The partnership has focused primarily on Eurobonds, domestic bonds, pre export credit notes and securitised M&A and Real Estate offerings.

Since mid-2015, Felipe has also been working on the development and launch of a new global online to offline social media platform and is a substantial minority investor in a private Brazilian fintech business.

Stuart Davies, proposed Company Secretary

It is proposed to appoint Stuart Davies, 44, as Company Secretary. Stuart is a UK qualified solicitor with extensive international experience in corporate finance, M&A and funds and has worked at Norton Rose, Hammonds and McDermott Will & Emery. During the past eight years, he was in house legal counsel and focused on the rapid digital business expansion of Ooredoo Group (Qatar Telecom) with a focus on Europe, the Middle East and South-East Asia.

The majority of the proposed senior management team's remuneration will comprise out of the money equity incentives. As such the collective interests of senior management will be entirely aligned with that of shareholders.

The appointment of the New Board and the resignations of the existing Directors will take effect following the completion of the Directors' Share Transaction, the announcement of which will include further information on the New Board pursuant to the AIM Rules for Companies.

Indicative fundraising proposals

An immediate priority of the New Board will be to progress the cash fundraising and associated issues of warrants as described below, subject to shareholder approval of resolutions 5 and 6 at the Company's Annual General Meeting convened for 5 January 2017.

It is envisaged that the proposed cash fundraising would involve:

· the issue of 10 million new shares at 30p per share to new investors ("New Investors") to raise £3.0m before expenses, combined with the issue of Warrants to the New Investors on a 1:1 basis exercisable at 80p per share and expiring 180 days after issue; and

· the issue to Mercom shareholders (on the register at 5pm on the date of the Annual General Meeting) of bonus warrants on a 1:4 basis exercisable at 80p per share and expiring 180 days after issue.

The New Board proposes to convene a General Meeting, to take place as soon as possible after the Annual General Meeting, to approve the following proposals:

· the adoption of a new investing policy to invest in established industry proven technology, media and internet businesses; and

· the change of the Company's name to Monchhichi PLC.

There can be no certainty that the fundraising proposals, as revised, will be finalised and supported by proposed new investors. In addition, the fundraising proposals are subject to shareholder approval of resolutions 5 and 6 at the Company's Annual General Meeting convened for 5 January 2017 and so there can be no assurance that these resolutions will be approved. Further announcements will be made in due course.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

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