Zinc Media Regulatory News (ZIN)

Ten Alps Plc

21 December 2010

Placing and Debt Refinancing

Reorganisation and Revised Strategy

Notice of Extraordinary General Meeting

Media group Ten Alps Plc ("Ten Alps" or the "Company") today announces a proposed refinancing (subject to shareholder approval) and reorganisation of the Company and its subsidiaries (together the "Group").

The proposed refinancing comprises a conditional equity placing to raise gross proceeds of £4.7million, the entering into of a new lending facility of £6.95million with its existing bankers to replace the Company's existing bank facility, and an issue of new secured loan notes of £1.5million ("Loan Notes").

Placing

Ten Alps has conditionally placed, in aggregate 58,750,000 new ordinary shares at a price of 8 pence per share ("Placing Shares") with institutional and other investors, for gross proceeds of £4.7 million (the "Placing").

The placing of the Placing Shares is subject to shareholder approval at a general meeting of the Company to be convened for 14 January 2011. The Placing is also conditional upon (i) Herald Investment Management Limited ("Herald") having subscribed for the Loan Notes and the issue of the Loan Notes being conditional only on completion of the Placing; (ii) the only remaining conditions to the drawdown of the new lending facility being completion of the Placing and the issue of the Loan Notes; and (iii) satisfaction (or waiver) of customary conditions, including admission to trading on AIM of the relevant shares.

A special resolution will be proposed at the extraordinary general meeting to disapply pre-emption rights in relation to the issue of the Placing Shares (the "Resolution"). The Placing Shares will represent 44.33% of the enlarged share capital of the Company.

The net proceeds of the Placing will, amongst other things, be used to repay part of the existing bank term loan and reduce the current Group overdraft, discharge a deferred consideration payment and implement further restructuring in the B2B Asset (up to £0.33 million) as well as to provide general working capital to the Group.

Subject to the passing of the Resolution, application will be made for the Placing Shares to be admitted to trading on AIM, which is expected to occur on or around 17 January 2011. The Placing Shares will, if they are admitted, rank pari passu with existing ordinary shares in the Company.

Following admission to trading of the Placing Shares, the Company will have an issued share capital of 132,541,012 ordinary shares of 2 pence each (excluding any shares issued pursuant to the exercise of options before admission).

Debt Refinancing

Bank Facility

The Company has agreed to enter into a new lending facility with Bank of Scotland Plc, the key terms of which have been agreed pursuant to an executed conditional letter of intent. The new facility will replace the existing facility and will comprise a term loan of £6.95 million (the "Bank Facility") for a period ending on 31 March 2014 and will be subject to an interest rate (based on a ratchet) of between 3 and 4 per cent. above LIBOR. The loan repayment schedule provides for loan repayments to be made on 31 March 2012, 31 March 2013 and 31 March 2014 of the amount of £1million, £1million and £4.95million respectively. The Bank Facility will be secured on all the assets of the Company and various group companies by way of fixed and floating charges. The Bank Facility is conditional upon the Placing being completed.

Issue of Loan Notes

The Company has conditionally secured an injection of £1.5million from Herald, a substantial shareholder in the Company. Herald has, conditional upon the Placing being completed, subscribed for the Loan Notes. The Loan Notes provide for repayment by 31 March 2016 and carry an interest charge of 2 per cent. above Bank of Scotland Plc's margin prevailing at the commencement of each six month interest period. The interest will be compounded every six months and paid when the loan notes are repaid. The Loan Notes are not convertible into Ordinary Shares or any other class of share in the Company. The Loan Notes will be secured on all the assets of the Company by way of fixed and floating charges. Herald has also entered into a deed of priorities with Bank of Scotland plc as to the ranking and repayment of their relative securities and debts.

Reorganisation and Revised Strategy

The Company aims to increase operational performance by creating two distinct and focused operating assets, in TV & Education content and in B2B.

TV & Education Content Asset

The TV & Education content production asset will continue to be called Ten Alps and will comprise six operating units: in TV - Brook Lapping, Blakeway, Films of Record, Below the Radar (in Belfast) and Ten Alps Asia (in Singapore); and in education output and online services - DBDA (a unit which was previously in the B2B Asset's Business Information Unit). Should the Teachers' TV project be continued commercially it will also be in this asset.

Ten Alps TV & Education will be run by Alex Connock (focussing on business development) and Nitil Patel (focussing on profits growth targets).

B2B Asset

The second asset, which will be renamed in early 2011, will comprise two units: Business Information and Media Services and will be run by Adrian Dunleavy and Derek Morren.

The Business Information unit now comprises three businesses in the UK and one in Asia concentrating on B2B sectors in print and online. Predominately producing sponsored or advertising-funded content, its strategy is to reduce its product range and concentrate on higher-margin growth sectors with high-quality content. This unit also aims to reduce its reliance on non core sectors and move to owned titles and online distribution models.

The Media Services unit now consists of a single UK reporting entity in B2B communication services. It derives revenues via fee-based creative services in print, online, video, events, branding and design, and commission-based creative services either through media buying or media sales. The consolidation into one unit creates a fully integrated communications service with reduced overheads, which will exit lower-profit media sales clients and construction/marine sectors, and drive new business activity.

Future Strategy

The Directors believe that, with management concentrating on organic growth the Company can rebuild profit on the revised revenue and cost levels.

The TV & Education Content asset will aim to continue producing high-quality TV and education content. It will develop new genres particularly in TV formats, whilst providing integrated online content and educational online games. It will also develop existing international client leads, specifically in Asia, US and the BRIC countries and continue cutting fixed costs by switching to a freelance cost model (approximately £0.3million annualised cost saving has already been achieved for the 2011-2012 financial year). The Directors plan to market its portfolio of rights-owned projects in both TV and online, such as Newton TV, an online science channel, and Children's Traffic Club, a multi-platform education service and potential TV animation with international potential. The Directors will also continue discussions to explore the commercialisation of the Teachers' TV service.

The Business Information unit of the B2B Asset has a stable revenue run rate and has sufficient product stock in place. This unit will now concentrate on expanding into high margin core growth sectors with a focus on owned and online rich-content products. It will also benefit from the restructuring and overhead savings of approximately £1.7million in the forthcoming financial year, which will have cost a total of approximately £0.57million to implement in the current financial year. The restructuring is scheduled to complete before the end of the current financial year.

The Media Services Unit of the B2B Asset will aim to shift its revenue profile to higher-margin contracts, using an integrated communications offer and to exploit the current business pipeline. As a result of the consolidation into one unit, the Media Services Unit has also benefited from the restructuring actions taken and has lowered its overhead base on an annualised basis by approximately £0.3million, at a total cost of approximately £0.1million, during the current financial year.

Related Party Transaction

Certain of the current Directors of the Company and AD Allen, a director of a Group company, are participating in the Placing and those directors constitute a related party under the AIM Rules. Peter Bertram, a proposed new non-executive Director of the Company subject to shareholder approval of the Placing, will be a related party upon his appointment as a Director. Together the participating current Directors and Peter Bertram, propose to subscribe for, in aggregate, 5,531,250 Placing Shares (together the "Director Transactions").

As noted above, subject to the Placing being completed, Peter Bertram is to be appointed as Chairman to the Company with Brian Walden remaining on the board as a Non-Executive Director.

A full announcement disclosing all the details as required by Schedule 2 paragraph (g) of the AIM Rules will be made once the appointment is confirmed.

Herald constitutes a related party under the AIM Rules by virtue of being a substantial shareholder in the Company as defined in the AIM Rules. Herald has conditionally agreed to subscribe for 21,875,000 Placing Shares and has conditionally subscribed for the Loan Notes (the "Herald Transactions").

Brian Walden, the Independent Director considers, having consulted with Grant Thornton Corporate Finance, that the terms of the Director Transactions and the Herald Transactions are fair and reasonable insofar as the Shareholders are concerned.

Directors' Shareholdings and Significant Shareholders

Should the Resolution be passed and the Placing Shares be issued and allotted, Herald will be interested in 34,703,028 ordinary shares, representing an interest of 26.18 per cent. of the total issued share capital of the Company (assuming that no additional ordinary shares are issued in the interim period whether under option or otherwise). In addition, the Directors, some of whom are participating in the Placing, will have the following interests in the Ordinary Shares following the Placing.

* to be appointed with effect from the close of the EGM

Extraordinary General Meeting and Posting of Circular

The Company will today post to shareholders a circular (the "Circular") and notice convening an Extraordinary General Meeting of the Company, to be held at the offices of Canaccord Genuity Limited, Cardinal Place, 7th Floor, 80 Victoria Street, London SW1E 5JL, at 10 a.m. on 14 January 2011. A Form of Proxy for use at the Extraordinary General Meeting will be included with the Circular.

The Extraordinary General Meeting will be held to consider and, if thought fit, pass the following resolution which will be proposed as a special resolution:

THAT

1. any provision of the Company's memorandum of association which is a provision described in paragraph 42(1) of Schedule 2 to the Companies Act 2006 (Commencement No.8, Transitional Provisions and Savings) Order 2008, and by which virtue of paragraph 42(2) of Schedule 2 to that Order has with effect from 1 October 2009 been treated as a provision to the Company's articles of association and any other provision of the Company's articles of association, which sets a maximum amount of shares that may be allotted by the Company, be deleted from the Company's articles of association with effect from the date of this resolution; and

2. the directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act 2006 ("Act") to allot relevant securities (as defined in the notes to the Notice of EGM) in the Company of up to maximum aggregate nominal value of £1,440,082 (equal to approximately 97.58 per cent of the issued ordinary share capital as at the date of this resolution) such authority to replace in its entirety the authority granted at the last annual general meeting and to expire at the conclusion of the next annual general meeting of the Company, save that the Company may make an offer or agreement before the expiry of this authority which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities pursuant thereto as if the authority conferred hereby had not expired; and

3. the directors be generally and unconditionally empowered pursuant to section 570 of the Act to make allotments of equity securities (within the meaning of section 560 of the Act) for cash pursuant to and up to the full extent of the authority conferred by paragraph 2 of this resolution as if section 561 of the Act did not apply to any allotment and this power shall replace in its entirety the power granted at the last annual general meeting and shall expire at the conclusion of the next annual general meeting of the Company, save that the Company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the directors may allot equity securities in pursuance of any such offer or agreement as if the power conferred hereby had not expired.

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