12 Jul 2013 07:00
Subscription of 26,000,000 Ordinary Shares at a price of 3 pence per share and Trading Update
Paragon Entertainment Limited (AIM: PEL) ("Paragon" or the "Group") announces a Subscription of shares to raise £780,000.
Paragon Entertainment Limited (AIM:PEL), the visitor attractions business, today announces that it has raised approximately £780,000 (gross) by way of a Subscription of 26,666,667 new ordinary shares (the "Subscription Shares") at 3 pence per share (the "Subscription Price") with shareholders and management (the "Subscription"). The proceeds of the Subscription will be used to further Paragon's 'Design and Build' division by providing working capital as the business increases in scale.
Highlights
o Subscription to raise £780,000 before expenses
o Directors and management participation of approximately £350,000
o Proceeds to support significant growth in core Design and Build Division
o Group trading in line with market expectations supported by performance in Design and Build division
Use of proceeds
Paragon's Design and Build division has seen significant growth over the last three years. The business has £9.8m orders confirmed for delivery in 2013 which is 64% above the 2012 revenues. Paragon's Design and Build is also in the process of building the order book for 2014 where we are currently tendering for £18.1m of projects and further expect to bid for projects in excess of £59m in aggregate. The growth in Design and Build creates a short term working capital requirement against which these funds will predominantly be allocated.
Details of the Subscription
The Subscription is for 26,000,000 ordinary shares. The Subscription Shares will represent approximately 13.9 per cent of the issued ordinary share capital of Paragon immediately following admission. At the Subscription Price, the Subscription will raise approximately £800,000 for the Company.
Application will be made for the Subscription Shares to be admitted to trading on AIM, which is expected to occur on 18 July 2013 (the "Admission").
Following Admission, the Company's total issued share capital will comprise of 187,680,550 Ordinary Shares. The Company does not hold any ordinary shares in treasury. Therefore the total number of shares with voting rights in the Company will be 187,680,550. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company following Admission.
Directors Participation
Mark Pyrah, Peter Holdsworth, Mark Taylor and Robert Hersov, through his investment vehicle Vulcan International Investments Limited, will participate in the Subscription as set out below.
Name | Role | Existing shareholding | % of existing issued share capital | Subscription Shares subscribed for | Resulting Shareholding % of enlarged share capital |
Mark Pyrah | Chief Executive Officer | 18,956,889
| 11.7% | 2,166,667 | 11.3% |
Peter Holdsworth | Production Director | 15,274,325
| 9.5% | 666,667 | 8.5% |
Vulcan International Investments Limited | Chairman | 8,442,900
| 5.2% | 3,333,333 | 6.3% |
Mark Taylor | Commercial Director | 1,593,628 | 1.0% | 3,333,333 | 2.6% |
Change in Terms of Management Participation Shares and Marwyn Preference Option
The Company and Mark Pyrah, Peter Holdsworth and Vulcan International Investments Limited, a related party, have entered into an undertaking to review and modify the terms of the Management Participation Shares ("MPS"), a summary of which is outlined in both the Admission Document of December 2011 and the Annual Report and Accounts to December 2012, such that the future value of the MPS shall be modified to exclude any capital raised from this transaction and any subsequent fundraisings by the Company. This reflects a similar modification to the 'Marwyn Preference Option' outlined below.
The Company and Marwyn Management Partners LP have entered into an amended agreement which modifies the terms of the 'Marwyn Preference Option', a summary of which was outlined in both the Admission Document of 22 December 2011 and the Annual Report and Accounts to 31 December 2012. The terms of the option scheme shall be modified to exclude any capital raised from this transaction and any subsequent fundraisings by the Company.
Trading Update and Notification of Results
Group trading for the six month period ended 30 June was in line with expectations supported by strong performance in Design and Build while progress in the Attractions division has been slower than anticipated. Both confirmed and pipeline projects are strong and we expect to continue to trade in line with expectations. The Company is in the process of reviewing its strategy for the Attractions division. An update will be provided as part of the Company's interim results to be announced on or around 24 September 2013.
Group net cash balances at 30 June 2013 were £296,000.
Design and Build
The Design and Build business continues to perform exceptionally well and continues to exceed our expectations. We have undertaken a number of high profile projects during the first half and have successfully completed projects at the new Wallace and Gromit dark ride at Blackpool Pleasure Beach, Me and My Body at Eureka!, a new visitor experience at York Minster, Royal London Hospital, Made in Birmingham at Thinktank, IWM Duxford and The Knights Quest at Alnwick Castle, all completed on time and on budget. Over 15 other smaller projects have also been completed in this period.
As we enter into the second half of the year, we are pleased to report project wins including further new extensions to our Olympic Museum works, Kapsarc in Saudi Aramco, Al Jabah and Hamleys. In total, the value of confirmed orders amounts to £6.4m in H2 2013 and a further £3.2m in 2014. We are currently tendering for projects of £18.1m and a further pipeline of projects we are likely to bid for standing at £59m.
Over the past 6 months the Company has completed the development of a further 20,000sqft of workshop facilities to undertake larger projects to make more opportunity of our growing pipeline. As well as one of the UK's leading model making and prop making facilities, we have also developed new Corian and solid surface manufacturing facility thereby extending the Company's services. Our largest project, The Olympic Museum, is performing well and is on track for a November completion; this contract was initially secured at £4.3m and has now been extended to £6.3m.
Attractions
Further to the update at the time of our annual results, we completed our first attraction at Easter 2013. Quest remains in its early days commercially, as we build awareness and drive footfall through marketing activity coming into the prime holiday season. While performance to date is still weaker than anticipated Quest has created good opportunities for the business as a whole as it also acts as a showroom for our other works. Over £3m of project wins in Design and Build can be accountable to Quest. The Company now has systems in place to operate attractions.
Commercialisation
We are in the process of negotiating our first three Nerf licensing deals which we expect to complete shortly. This is an area of the business that we will be expanding within the second half of the year as we make use of the substantial intellectual property rights accumulated over the past 18 months. We now have Licences with Nerf and Hammer and distribution rights with HiLO and Yu Kids.
Chief Executive Comment
Paragon Entertainment Limited, Chief Executive Officer, Mark Pyrah said, "I am pleased to report this successful fundraise. The funds will support the working capital and the continued implementation and growth strategy of the business. To that end, we have been able to demonstrate the on-going commitment to the Group's strategy by the Board, our senior management and our institutional investors.
For the past 18 months the Design and Build segment has continued to deliver on existing projects and win substantial new contracts. Our expansion of services and facilities allow us to drive this potential as we continue convert our pipeline. We have a solid order book for the second half of the year and into 2014 with yet more world class clients. In the Attractions space, we continue to look for opportunities which are now more visible and realistic with our first attraction open and although Commercialisation of our licencing arrangements is in its early days, it offers strong opportunities for growth."
Ends
For further information please contact:
Paragon Entertainment Limited Mark Pyrah
Cenkos Securities plc | Tel: +44 (0)1904 608020
Tel: +44 (0)20 7397 8900 |
Ivonne Cantu (Nomad)
Alex Aylen / Russell Kerr