Funding Announcement

30 Jun 2010 07:31

30 June 2010 Parallel Media Group Plc ("PMG" or the "Group") Extension of Loan Agreements and Issue of Shares

Extension of Loan Agreements

The Group is pleased to announce that it has agreed with the holders of certain loan agreements (the "Loan Agreements") to extend the redemption date of 1 July 2010 by two and a half years to 31 December 2012. In consideration for extending the Loan Agreements, the holders will receive a payment equal to the aggregate of the interest to 31 December 2012 at 8 per cent. per annum and 10 per cent. of the principal (the "Extension Payment"). The Extension Payment is payable in cash at the end of the period or in shares, at 0.25p per share, at the Group's option at any time during the period, subject to receiving shareholder approval and the granting of a waiver of Rule 9 of the City Code on Takeovers and Mergers. The principal due under the Loan Agreements as at 1 July 2010 is £1.7m, in aggregate, and the value of the Extension Payment is £0.5m.

The Group is in discussions as to the extension or repayment of a further £0.61m of loans, including the interest due thereon, which are also due for repayment on 1 July 2010.

The Group is currently in advanced discussions with a potential major overseas investor with regard to a significant injection of capital. The proposals, which will require the approval of shareholders in a general meeting, include the conversion of the Loan Agreements into equity which, together with the cash injection, would transform the Group's balance sheet and leave it well funded to exploit a number of opportunities, particularly in the Far East. Whilst there is no guarantee that these discussions will be successful, the Group believes that it will be in a position to post the necessary circular to shareholders within in the next few weeks.

Issue of Shares

In accordance with the Loan Agreements and other similar facilities, the terms of which were agreed in October 2008 and set out in a circular to the Group's shareholders at that time, the Group has today issued 447,075,493 new ordinary shares of 0.01p each at 0.25p per share to the holders of the Loan Agreements and other lenders in respect of the redemption premium (the "Redemption Shares"). The Group has also issued a further 84,675,578 new ordinary shares of 0.01p each at 0.25p per share in respect of the interest due on those loans (the "Interest Shares").

The Redemption Shares and the Interest Shares will rank pari passu with the existing ordinary shares in issue and will represent 53.2 per cent., in aggregate, of the Enlarged Shares Capital.

Application has been made for admission to trading on AIM for the Redemption Shares and the Interest Shares and it is expected that trading in the Redemptions Shares will become effective and dealings will commence at 8.00am on 5 July 2010.

Following this issue of shares, the Group will have an issued share capital of 998,823,664 ordinary shares of 0.1p each (the "Enlarged Share Capital"). As the Group does not hold any ordinary shares in Treasury its total number of voting rights equals its capital. This figure may be used by shareholders 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 Company under the FSA's Disclosure and Transparency Rules.

Directors' Interests

Following the issue of the Redemption Shares and the Interest Shares, the interests of David Ciclitira, Chairman of the Group, will be as follows:

Name Number of New Total Percentage of Outstanding Redemption Interest in Enlarged Share Options Shares and Ordinary Shares Capital Interest Shares being issued David Ciclitira 295,413,844 360,077,844 33.8% 9,885,750

Of David Ciclitira interest, 39,088,000 shares are held directly and the remainder are held by Barclays Wealth Trustees Limited, Luna Trading Limited and Elysian Group Limited.

The granting of a waiver of Rule 9 of the City Code on Takeovers and Mergers in respect of the increase in David Ciclitira's holding was approved by the Company's shareholders at the general meeting on 24 October 2008.

Related Party Transaction

Barclays Wealth Trustees are a connected party to David Ciclitira and are party to the extension of the Loan Agreements and as such the agreement is deemed to be a related party transaction.

Where a company whose shares are quoted on AIM enters into a related party transaction, the directors independent to the transaction are required to consider, having consulted with the Company's nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned.

The Independent Directors, having consulted with Astaire, the Company's nominated adviser, consider that the terms of the related party transaction with Barclays Wealth Trustees are fair and reasonable insofar as Shareholders are concerned.

For more information please contact:

Stewart Mison / Martin Doherty Parallel Media Group Plc +44 (0) 20 7225 2000

Antony Legge / Stuart Lane Astaire Securities Plc +44 (0) 20 7492 4750 Alex Giacchetti Bishopsgate Communications +44 (0) 20 7562 3350 www.parallelmediagroup.com