HOL Hollywood Media

RNS Number:4935N
Hollywood Media Services plc
07 February 2008



                          Hollywood Media Services Plc

                      Acquisition of new Catering Contract

                           Related Party Transaction

Introduction

The Board of Hollywood Media Services Plc (the "Company" or "Hollywood"), which
provides managed facilities and related services to the film and television
location markets, is pleased to announce that it has agreed to acquire the
benefit of a contract for the provision of catering services in respect of the
Bill television programme (the "Bill Contract"). This contract is being acquired
from Wood Hall Catering and Events Limited ("Wood Hall"), a subsidiary of The
C4E Group plc ("C4E"), together with certain assets to enable the contract to be
serviced including stock, support vehicles and a number of employees. The
maximum consideration payable under the agreement is �575,200, of which �94,500
is payable in cash on completion and the balance as deferred consideration to be
satisfied by the issue to Wood Hall of non voting convertible preference shares
as described below.


Reasons for acquiring the Bill Contract


The Bill Contract, which has been in existence for 17 years, was last renewed in
December 2005 for three years, until December 2008, with an option by the
customer to extend for a further two years. The annual turnover and
profitability attributable to the Bill Contract in Wood Hall's accounts is �1.07
million and �182,000 respectively.


The Board believes that the revenue from the Bill Contract, which does not
suffer from seasonal fluctuations, will assist in countering the seasonality of
Hollywood's existing revenues. In addition, it will provide the Company with a
reference site in the south of England which can be used to sell its existing
facility capabilities.


Terms of the Acquisition


The initial consideration payable totals �300,200, to be satisfied as to �94,500
in cash and the balance by the issue of 6,856,666 non voting convertible
preference shares (Preference Shares) issued at 3p per share. The Preference
Shares will be issued in equal instalments on 30 April 2008; 31 July 2008 and 30
October 2008 provided that the Bill Contract has not been terminated on or
before the due date for payment of the relevant instalment.


If the Bill Contract is renewed in accordance with its terms for up to a further
2 years from December 2008, further consideration totalling up to �275,000 will
be immediately payable to Wood Hall, satisfied by the issue of up to an
additional 9,166,667 Preference Shares at 3p per share.


The Preference Shares, which are convertible into ordinary shares on a one for
one basis, will rank pari passu in all respects with the existing issued 20
million non-voting convertible preference shares, which are all held by C4E,
details of which were set out in the Admission Document issued by the Company
dated 6 August 2007. No application will be made for the Preference Shares to be
admitted to trading on AIM or any other regulated market.


If all the Preference Shares issued under the agreement (but not the existing
issued preference shares) were converted into new ordinary shares in Hollywood
then C4E's interest would increase from 41.60 per cent of the issued ordinary
share capital to 55.95 per cent. of the issued ordinary share capital. However,
under the terms of the Preference Shares, C4E cannot convert any Preference
Shares if such conversion would increase its interest, together with that of any
connected persons, in Hollywood's ordinary share capital to above 49.9 per cent.
In addition, under the City Code on Takeovers and Mergers, any increase in the
voting rights held by C4E would result in a requirement to make an offer for the
outstanding ordinary shares in Hollywood not already owned.


Wood Hall has agreed not to dispose of any of the Preference Shares, other than
in certain limited circumstances, without the prior written consent of the
Company, City Financial Associates Limited ("CFA"), and IAF Securities Limited
for 6 months from the date of allotment.


Related Party Transactions


C4E is a substantial shareholder of the Company, as defined by the AIM Rules.
Additionally, Martin Eberhardt, a director of Hollywood, is also a director of
C4E and James Holmes and Carl Lindsay, directors of Hollywood, were directors of
companies within The C4E Group within the last 12 months. The acquisition
agreement and the orderly marketing agreement are therefore Related Party
Transactions as defined in AIM Rule 13.

Michael Johnson (being the independent director) considers, having consulted
with CFA, the Company's Nominated Adviser, that the terms of the transactions
are fair and reasonable insofar as the Company's shareholders are concerned. CFA
has taken into account the Directors' commercial assessments in providing advice
to Michael Johnson.

Martin Eberhardt, chief executive, commented: "The addition of the Bill
Contract, which is in line with Hollywood's stated acquisition strategy, is a
valuable cash generative contract which will underpin the performance of
Hollywood's existing business."

Contacts


Hollywood Media Services PLC

Martin Eberhardt

Chief Executive

Tel:  020 7332 2200


Nominated Adviser to Hollywood

City Financial Associates Limited

Ross Andrews

Tel:  020 7492 4777


Broker

IAF Securities Limited

David Coffman

Tel:  020 7747 7400


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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