MIRA.L Regulatory News (MIRA)

29 Mar 2006 07:02

Yoomedia PLC29 March 2006 YooMedia plc / Ticker: YOO / Index: AIM / Sector: Media 29 March 2006 YooMedia plc ("YooMedia" or "the Company") Proposal to Raise £7,500,000 Through Conditional Convertible Term Loan Agreements Overview • Agreements with two international institutional investors to raise £7,500,000 via a Conditional Convertible Term Loan • Financing is part of YooMedia's strategy to continue the re-positioning of its product offering to capitalise on growing opportunities within the interactive media market • Proposed convertible loan structure will replace bank debt with equity-based convertible term loan agreements of a more flexible nature with, potentially, a lower cost of capital • Extraordinary General Meeting to be held at 10am on 24th April 2006 Chairman Michael Sinclair said: "A number of initiatives have been undertakento focus the business on the markets the Directors believe have the greatestgrowth potential. We have expanded our offering, secured a number of contractswith blue chip clients and are positioning the Company to be the provider ofchoice in the interactive content market. As part of this restructuring process,the Board believes that the convertible term loan is the most effectivefinancial instrument to enable it to achieve its goals. Not only will itreplace bank debt and strengthen its financial fundamentals, it will alsoenhance the Company's investor base." Contacts Neil MacDonald YooMedia plc Tel: 020 7462 0870 Mark Percy Seymour Pierce Limited Tel: 020 7107 8000 Isabel Crossley St Brides Media & Finance Ltd Tel: 020 7242 4477 Introduction YooMedia, the AIM-traded interactive media and games group, announces that aspart of the strategy to re-position its product offering and financialstructure, it has entered into the Convertible Loan Agreements with twointernational institutional investors (the "Lenders") pursuant to which, subjectto the passing of certain of the Resolutions at the EGM, the Lenders will lendto the Company the aggregate sum of £7,500,000. The two Lenders are Cornell Capital Partners LLP ("Cornell") and PlatinumPartners LLP ("Platinum"). Both Lenders have considerable experience instructured equity financing for listed small and mid-cap companies in both theUS and UK. The Company's working capital is currently funded predominantly via bank debt.This proposed convertible loan structure will allow the Company to replace thisbank debt with an equity-based convertible term loan agreement of a moreflexible nature with potentially a lower cost of capital. Under the ConvertibleLoan Agreements, the loaned amount can either be converted into equity in theCompany or, at the Company's option, repaid. The Directors believe that thebenefit to the Company from this proposed new convertible loan structure will bematerial, in that it provides the potential to lower the cost of capital andfurther reduce this cost through conversion of the outstanding debt into equity. The Directors have examined a range of suitable fundraising options available tothe Company given its current stage of development. After careful considerationof all fundraising options, the Directors have entered into the Convertible LoanAgreements as they believe these to be in the best interests of Shareholders asa whole. Under the terms of the Convertible Loan Agreements, the Company will receivegross funds of £7,500,000. The Directors estimate that the net proceeds of theTransaction will be £6,775,000 and the Directors intend for such net amount tobe utilised to repay the Group's indebtedness to Lloyds TSB Bank Plc with thebalance being used for the Group's working capital purposes. In undertaking the fundraising pursuant to the Convertible Loan Agreements, theDirectors have engaged the services of Tower Gate Capital, a company authorisedby the Financial Services Authority. Under the terms of an engagement letterbetween the Company and Tower Gate Capital the Company agreed to pay Tower GateCapital a fee equal to 6 per cent. of the gross amount of funds procured by it(plus any applicable VAT) under the terms of any loan agreements together withthe grant of 11 million warrants to subscribe for new Ordinary Shares.Accordingly the Directors are seeking the authority of Shareholders toconstitute the Warrant Instrument and to grant the Tower Gate Capital Warrants. The Convertible Loan Agreements The Company entered into the Convertible Loan Agreements on 28th March 2006,pursuant to which it has conditionally agreed to borrow the aggregate amount of£7,500,000. The Convertible Loan Agreements are repayable on the secondanniversary of the date upon which the Resolutions are passed and interestaccrues at 5% per annum, compounded monthly. The Lenders have the right toconvert any of the principal and interest due under the terms of the ConvertibleLoan Agreements into new Ordinary Shares at a conversion price per new OrdinaryShare equivalent to the lower of 12 pence and ninety per cent. of the average ofthe volume weighted average price ("VWAP") for the previous ten consecutiveTrading Days, subject to certain limitations during the first 30 days followingcompletion of the Convertible Loan Agreements. Further, in any one week, eachLender cannot convert more than 4 per cent of their respective loaned amounts.The Company has the right to repay any amount of principal or interest due underthe terms of the Convertible Loan Agreements at any time although the amount bywhich the principal sum is then reduced under the Convertible Loan Agreementsfollowing such repayments is based on a formula. The Convertible Loan Agreements are conditional upon: (i) the execution of the Security Documents; and (ii) the passing of the Resolutions. In addition, under the terms of the Convertible Loan Agreements, the Company hasgranted the Lender Subscription Rights, granting Cornell and Platinum the right,exercisable at any time prior to the second anniversary of completion of theConvertible Loan Agreements, to subscribe to up to 15,000,000 and 7,500,000 newOrdinary Shares respectively at a price equivalent to the lower of the VWAP onthe date the Convertible Loan Agreements cease to be conditional as set out inthe above paragraph, or 90% of the VWAP on the date the Subscription Right isexercised. The Convertible Loan Agreements can be terminated by the Lenders incertain circumstances and the Company has given certain covenants to each of theLenders. The Extraordinary General Meeting A notice convening the Extraordinary General Meeting of the Company to be heldat Northumberland House, 155-157 Great Portland Street, London W1W 6QP on 24thApril 2006 at 10am has been sent to Shareholders today. At this Meetingresolutions will be proposed to: • increase the authorised share capital of the Company; • approve the entering into of the Warrant Instrument; • authorise the Directors to allot up to 225,000,000 new Ordinary Shares pursuant to the Convertible Loan Agreements and to issue the Warrants and Subscription Rights in accordance with Section 80 of the Act; and • grant to the Directors authority to allot up to 225,000,000 new Ordinary Shares pursuant to the Convertible Loan Agreements and to issue the Warrants and Subscription Rights pursuant to Section 95 of the Act as if Section 89 (1) of the Act did not apply to such issue or allotments. A copy of the circular has been sent to shareholders today and is available fromthe Company's registered office, Northumberland House, 155-157 Great PortlandStreet, London W1W 6QP. * * ENDS * * This information is provided by RNS The company news service from the London Stock Exchange