22 Mar 2011 07:00
22 March 2011
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE
UNITED STATES, CANADA, JAPAN OR AUSTRALIA
Phorm, Inc.
('Phorm' or the 'Company')
Placing of £16.075m convertible secured loan notes and operating update
Phorm (AIM: PHRM and PHRX), the internet personalisation technology company, is pleased to announce that it has raised funds through a placing (the "Placing") of convertible secured loan notes (the "Loan Notes") with new and existing investors. This financing has involved the existing £6.075m of loan notes being cancelled and new notes issued on the terms set out below. As a result it brings in a further £10.0m of new financing to the Company.
The key terms of the Loan Notes are:
·; Placing of £16.075 million (before expenses).
·; Annualisedcoupon rate of 15%, payable upon redemption.
·; Repayable 31 October 2013.
·; The Company may elect to repay the Loan Notes at any time after issue prior to the redemption date, in which case the holders of the Loan Notes shall be entitled to a redemption premium (in the form of the issue of new shares of Common Stock of no par value in the Company ("Common Stock")) as follows:
o 235,000 new shares of Common Stock for every £1.0m (or pro-rata to the actual amount repaid).
·; In addition, upon redemption or conversion of all or part of the Loan Notes, the Company shall allot and issue a number of additional shares of Common Stock (the "Additional Shares") to the holder equivalent to (P*A)/B - C (if positive) where:
o P = the amount of principal sum in £ to be redeemed or converted;
o A = a multiple based on the time between the date of the Loan Notes and the date of the call notice or conversion notice giving rise to the redemption as follows:
§ Less than 1 year, a multiple of 1.1,
§ Greater than 1 year and less than 2 years, a multiple of 2.4,
§ Greater than 2 years, a multiple of 3.1;
o B = the average of the lowest 5 closing share prices of the Common Stock on AIM determined over the last 20 trading days on which the Common Stock was freely traded on AIM prior to, and including, the date of the respective call notice or conversion notice (expressed in £); and
o C = the number of shares issued pursuant to the redemption premium in respect of the redemption or conversion concerned.
·; No Additional Shares shall be issuable if the lowest 5 closing share prices of the Common Stock on AIM determined over the last 20 trading days on which the Common Stock was freely traded on AIM prior to, and including, the date of the respective call notice or conversion notice (expressed in £) is:
o Greater than or equal to £4.68 if the Loan Notes are redeemed in less than 1 year;
o Greater than or equal to £10.21 if the Loan Notes are redeemed after the first anniversary but on or before the second anniversary of issue; and
o Greater than or equal to £13.19 if the Loan Notes are redeemed after the second anniversary of issue.
·; At the option of the Company, the Company may, in lieu of issuing Additional Shares to the Loan Note holder, pay an additional cash amount equivalent to the number of such Additional Shares multiplied by D, where:
o D = the average of the highest 5 closing share prices of the Common Stock on AIM determined over the last 20 trading days on which the Common Stock was freely traded on AIM prior to and including the date of the respective call notice or conversion notice (expressed in £).
·; The holders of the Loan Notes may elect to convert all or part of Loan Notes (both the principal sum and any accrued interest) into Common Stock of the Company, after April 2013 at a rate of £0.75 per share.
·; Under the terms of the £6.075m of existing loan notes announced on 17 December 2010, the previous holders elected to match the terms described above. In addition to these terms one of the holders, with £2.0m of loan notes, has the option to convert at a rate or £0.75 per share 18 months after the issuance of the new notes. If the company has not redeemed the £2.0m of loan notes within 15 months of the issuance of the new notes, all of the investors have the right to convert after 18 months at £0.75 per share.
·; The Loan Notes are secured against the non-cash assets and intellectual property of the Company.
The funds raised include a significant portion from investors based in some of Phorm's key strategic target markets in Asia. Blackrock Investment Management (UK) Limited ("Blackrock") is investing £1.2m in cash in the Placing on a fully independent basis and on the same terms and conditions as the other investors. Solely by virtue of its existing shareholding in the Company of 13.2%, Blackrock's Loan Note investmentconstitutes a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. In light of the above, the directors of Phorm consider, having consulted with Canaccord Genuity Limited (the Company's nominated advisor), that the terms of Blackrock's participation in the Placing are fair and reasonable insofar as the Company's shareholders are concerned.
Operating update
In December 2011 the Company announced that the user base was at sufficient scale to allow advertising to be shown on a commercial basis. It has now successfully delivered a number of advertising campaigns and the results are extremely encouraging.
The central premise of the Company's business model is that by understanding the behaviour of participants, highly targeted ads can be shown on generic pages - the Company has now done this successfully.
Furthermore, these early campaigns, while relatively small in size, have been for multiple advertisers (including a number of global brands) and they have allowed the Company to validate key assumptions in the business model. As a result the Company is able to substantiate its model in respect of:
·; opt-in rates;
·; the price charged for behavioural campaigns;
·; the access to inventory;
·; the margins that can be achieved; and
·; the ability to deliver both text and display advertising formats
In all cases the business is very pleased with the results.
The Company also announces that it has now received payment for the first of its campaigns. While the initial campaigns have been worth only a few thousand Reais, the advertisers are now re-booking and the Company expects revenues to grow substantially over the coming months.
Kent Ertugrul, Chairman and CEO of Phorm said: "While the business in Brazil is still at an early stage, the initial results have exceeded our expectations and we are very optimistic about the future. These results will have a significant positive impact on our business development efforts globally, particularly in Asia where we have seen substantial progress over the last few months in response to the progress we have achieved in Brazil."
Enquiries:
Phorm, Inc.
Andy Croxson (analysts & investors) +44 20 7297 2326
Alex Laity (media) +44 20 7297 2710
Mirabaud Securities LLP +44 20 7321 2508
(Broker)
Jason Woollard
Peter Krens
Canaccord Genuity Limited +44 20 7050 6500
(Nominated Advisor)
Mark Williams
Andrew Chubb
About Phorm
Phorm is a global personalisation technology company that makes content and advertising more relevant to the consumer. Phorm's innovative platform preserves user privacy and delivers a more interesting online experience. Phorm's partners include leading ISPs, Publishers, Ad Networks and Advertisers.
Phorm is a Delaware, US incorporated company, with offices in Seoul, Moscow, Sao Paulo and London. The Company was admitted to the AIM market of the London Stock Exchange in 2004. For more information, please visit: www.phorm.com