Placing / Issue of Loan Note
27 Noviembre 2006 - 12:06PM
UK Regulatory
RNS Number:7936M
Screen FX PLC
27 November 2006
Press Release 27 November 2006
ScreenFX plc
("ScreenFX" or "the Company")
Proposed Placing
Issue of Loan Note
Notice of EGM
ScreenFX plc (AIM: SFX), the digital advertising and communications specialist,
announces today that the Company proposes to raise #1.5 million, before
expenses, by means of the issue of a Loan Note to be subscribed for by one of
the Company's shareholders. In addition, the Company is proposing to raise a
further #3.8 million by the issue of further shares by way of a placing at 0.35
pence per share (the "Placing").
In order to effect the Placing, a Capital Reorganisation needs to be undertaken
and completed. The Loan Note, Placing and the Capital Reorganisation is
conditional on, inter alia, Shareholder approval at an Extraordinary General
Meeting convened for 11.00 a.m. on 22 December 2006 at the offices of Halliwells
LLP, St. James Court, Brown Street, Manchester M2 2JF.
The funds raised in the Placing and from the Loan Note will be used to:
* Satisfy the general working capital requirements of the Group
* Provide capex to expand and develop the screen network
* Repay the existing Loan Note
Commenting on the Placing, Dave Clark, Chief Executive of ScreenFX plc, said:
"During 2006 ScreenFX has continued to make strong progress towards its initial
objective of establishing the leading digital screen network in the UK shopping
mall environment. Monies raised from the Placing and Loan Note will enable the
Group to further rollout its network into shopping centres and allow ScreenFX to
exploit opportunities in TrainFX, a channel which represents a considerable
growth opportunity for the Company."
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For further information:
ScreenFX plc
David Clark, Chief Executive Tel: +44 (0) 161 428 5544
info@screenfx.com www.screenfxplc.com
Seymour Pierce Limited
Stuart Lane / John Depasquale, Corporate Finance Tel: +44 (0) 20 7107 8000
jdp@seymourpierce.com www.seymourpierce.com
Media enquiries:
Abchurch
Henry Harrison-Topham Tel: +44 (0) 20 7398 7702
henry.ht@abchurch-group.com www.abchurch-group.com
Seymour Pierce which is regulated by the Financial Services Authority is acting
as nominated and financial adviser to the Company in connection with the matters
described in this document. Persons receiving this document should note that
Seymour Pierce will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Seymour Pierce or for advising
any other person on the arrangements described in this document. Seymour Pierce
has not authorised the contents of, or any part of, this document and no
liability whatsoever is accepted by Seymour Pierce for the accuracy of any
information or opinions contained in this document or for the omission of any
information.
The New Ordinary Shares will not be registered under the United States
Securities Act of 1933 (as amended) or under the securities laws of any state of
the United States or qualify for distribution under any of the relevant
securities laws of Canada, Australia or Japan, nor has any prospectus in
relation to the New Ordinary Shares been lodged with or registered as applicable
under the security laws of Canada, Australia or Japan. Accordingly, subject to
certain exceptions, the New Ordinary Shares may not be, directly or indirectly,
offered, sold, taken up, delivered or transferred in or into the United States,
Canada, Australia or Japan. Overseas Shareholders and any person (including,
without limitation, nominees and trustees) who have a contractual or other legal
obligation to forward this document to a jurisdiction outside the UK should seek
appropriate advice before taking any action.
The following information is an excerpt from the circular to Shareholders (the "
Circular") posted today. Copies of the Circular are available at the offices of
Seymour Pierce Limited (Bucklersbury House, 3 Queen Victoria Street, London,
EC4N 8EL) upon request. Definitions used in the Circular apply in this
announcement unless the context otherwise requires.
Introduction
The Board announced today that ScreenFX proposes to raise #1.5 million, before
expenses, by means of the issue of a Loan Note to be subscribed for by one of
the Company's shareholders Michael Cottman, details of which are set out below.
In addition, the Company is proposing to raise a further #3.8 million by the
issue of further shares by way of a placing at 0.35 pence per share (the "
Placing").
In order to effect the Placing, the Capital Reorganisation needs to be
undertaken and completed. The Capital Reorganisation and the issue and allotment
of New Ordinary Shares pursuant to the Placing require certain approvals of the
Shareholders in general meeting.
The purpose of this announcement is to provide Shareholders with full details of
and reasons for the creation and issue of the Loan Note, the Placing and the
Capital Reorganisation and to seek Shareholder approval at the Extraordinary
General Meeting to be held on 22 December 2006 to the Resolutions necessary to
issue shares pursuant to the Placing as described in the Circular.
Background
ScreenFX installs digital flat screen advertising display networks into high
footfall destinations, such as shopping centres nationwide, to deliver brand
advertising. The Company also installs screen networks onboard commuter trains
branded as TrainFX and is also involved in the health sector.
Through its MallFX division, the Company has signed deals with 25 shopping
centres across the UK which yield a footfall of over 450 million consumers per
annum, achieving a leadership position in this important retail environment.
The Company expects to significantly increase the rollout into further leading
shopping centres during 2007.
TrainFX, the Company's division established for transport sector media, provides
state of the art technology for premium marketing opportunities on commuter
trains. TrainFX secured the Central Trains contract covering the Birmingham
commuter train network and subsequently announced a major new agreement which
will enable the roll-out of the TrainFX on-board service during 2007 in other
regions.
Reasons for the Issue
During 2006 ScreenFX has continued to make strong progress towards its initial
objective of establishing the leading digital screen network in the UK shopping
mall environment. Following the acquisition of PopTV in August, the Company now
has the ability to reach over 450 million shoppers per annum across its network.
Having invested in the build phase of the mall network, in order to deliver
critical mass, the Company has continued to build its sales operation with the
opening of regional sales offices, and the strengthening of the National sales
operation in London. Whilst this has increased costs in the short term, media
sales revenues are now building and we anticipate the growth to accelerate
through 2007.
The first phase of the TrainFX service on Central Trains in Birmingham has been
very well received by both the operating company management and passengers.
This has enabled the Company to secure a valuable contract for a significant
roll-out of this service during 2007.
This channel represents a considerable growth opportunity for the Company.
Results of the initial testing of the potential for media and advertising
revenues is very promising and revenues are expected to build over the medium
term following further investment in expanding into other regions.
Issue of Loan Note and Placing
One of the Company's existing shareholders, Michael Cottman, has agreed to
subscribe in full for a Loan Note in cash at par. The Loan Note is required to
meet the Company's immediate short term funding requirements pending completion
of the Placing.
The Loan Note carries a coupon of 3 per cent. above the base rate of Barclays
Bank plc. The Loan Note is intended to be convertible following approval of the
proposals by Shareholders and the Panel on Takeover and Mergers agreeing that
the provisions of rule 9 of the City Code on Takeovers and Mergers ("the Code")
shall not apply. A circular to Shareholder seeking dispensation from the
provision of rule 9 of the Code will be sent to Shareholders on 4 December 2006.
The rate at which the Loan Note will be converted is calculated by dividing
the principal amount of the Loan Note being redeemed together with a redemption
premium equivalent to an additional 20 per cent on the principle amount of such
notes and all accrued but unpaid interest thereon (after deducting tax) at the
time of the conversion by the Placing Price of 0.35 pence per share. The Loan
Note if not converted is redeemable after 31 December 2006 and will be secured
against the Company's assets by way of a fixed and floating charge. Further
details are set out below.
The New Ordinary Shares which may be issued pursuant to such conversion(s) will
be issued fully paid and when issued will rank pari passu in all respects
(including the right to dividends) with the Ordinary Shares then in issue.
Application will be made for the New Ordinary Shares to be admitted to trading
on AIM.
In addition to the issue of the Loan Note the Board is seeking to raise
additional funding of up to #3.8 million by the issue of New Ordinary Shares at
0.35 pence per share. As at the date of this announcement, Seymour Pierce, on
behalf of the Company, has received commitments from certain shareholders for
#3.8 million.
Use of Proceeds
The net proceeds of this fundraising of approximately #5.0 million (after
repayment of the existing Loan Note interest and costs of the Placing) will be
used to satisfy the general working capital requirements of the Group, together
with around a further #2 million of capex required to expand and develop the
screen network.
Working Capital
The Directors are of the opinion that, after taking into account the net
proceeds of this fundraising, the Company will have sufficient working capital
for its present requirements, that is for at least 12 months from the date of
the EGM.
Current trading and prospects
The Directors believe that the strong potential for out of home digital screen
networks is now being widely acknowledged by the media industry.
Whilst adoption of digital screen networks has generally been slow to date, we
have made significant investments in the build phase of our digital networks,
and we are now starting to see development of media sales revenue.
Many national brand advertisers have used our media and we are confident that
sales will continue to grow. Having completed a successful test of the regional
media sales marketplace we expect a rollout of this initiative to make a growing
revenue contribution in the second half of 2006 and a significant contribution
in 2007.
The Group's strategy for longer term growth is focused on those sectors which
the Directors believe offer the greatest revenue and profit potential for media
owners in the long term.
Details of the Capital Reorganisation
The nominal value of each Ordinary Share is 1 pence, which is higher than the
proposed Placing Price of 0.35p per Placing Share. Under company law the
Company is prohibited from issuing shares for consideration less than nominal
value.
In order to remedy this problem it is proposed to implement the Capital
Reorganisation pursuant to which it is proposed that each Ordinary Share will be
divided into one New Ordinary Share with a nominal value of 0.1p and nine
Deferred Shares with a nominal value of 0.1 pence each. The New Ordinary Shares
created will have the same rights (including voting and dividend rights and
rights on a return of capital) as the Ordinary Shares. The Deferred Shares
created by the Capital Reorganisation will be non-voting, carry no right to
participate in any future dividend, have a minimal entitlement to share in
Screen FX's capital and will not be listed or quoted on any recognised
investment exchange. They will be effectively valueless.
Shareholders should note that the Capital Reorganisation will not result in any
dilutions of their interests in the Ordinary Shares.
The necessary amendments to the articles of association of the Company to effect
the Capital Reorganisation are set out in full in the Resolutions.
Subject to Resolution 1 being passed, the Capital Reorganisation will be
effected by reference to Shareholders and their holdings of Ordinary Shares on
the Register as at the close of business on the date of the EGM.
The Capital Re-organisation will take effect on 27 December 2006.
Board Changes
Following completion of the Placing it is intended that Sir Geoffrey Pattie will
step down as Chairman and that Mike Cottman will become the new executive
chairman of the Company. Richard Schultz and David Neale will also step down
from the Board and David Moore has agreed to be appointed as the chief operating
officer of the Company.
Extraordinary General Meeting
In order to issue the Placing Shares and the New Ordinary Shares it is proposed
that the Directors be given authority to allot shares in the capital of the
Company and that statutory pre-emption rights are disapplied. Accordingly,
there is set out at the end of this announcement a notice convening an EGM to be
held at 11.00 a.m. on 22 December 2006 at the offices of Halliwells LLP, St
James's Court, Brown Street, Manchester M2 2JF. At this meeting, the following
resolutions will be proposed:
* to amend the articles of association of the Company in accordance with
the Capital Reorganisation;
* to sub-divide each Ordinary Share into one New Ordinary Share and nine
Deferred Shares;
* to increase the authorised share capital of the Company to #8,600,000
by the creation of 2,090,000,000 New Ordinary Shares;
* to authorise the Directors to allot relevant securities (for the
purposes of and pursuant to section 80 (1) of the Act) up to an
aggregate nominal amount of #2,080,000; and
* to authorise the Directors to allot equity securities otherwise than on
a pre-emptive basis in the circumstances as set out in the notice of
the EGM.
Action to be taken
A Form of Proxy for use in connection with the EGM accompanies the Circular.
The Form of Proxy should be completed in accordance with the instructions
thereon and returned to the Company's registrars, Park Circus Registrars of
James Sellars House, 144 West George Street, Glasgow as soon as possible, but in
any event so as to be received by 11.00 a.m. on 20 December 2006. The
completion and return of a Form of Proxy will not preclude Shareholders from
attending the EGM and voting in person should they so wish.
Recommendation
In the absence of the Fundraising set out in this document the Company would be
in serious financial difficulty and if the Resolutions are not approved then the
Directors will have to consider the feasibility of continuing the Company as a
going concern. Therefore the completion of this fundraising is important for
the future growth of the Company and accordingly, the Directors unanimously
recommend that Shareholders vote in favour of all the Resolutions, to be
proposed at the EGM, as they intend to do in respect of their own beneficial
holdings amounting in aggregate to 35,620,000 Ordinary Shares representing
approximately 7.11 per cent. of the existing issued ordinary share capital of
the Company.
Definitions
The following definitions apply throughout this announcement unless the context
requires otherwise:
"Act" the Companies Act 1985 (as amended)
"AIM" a market operated by London Stock Exchange
"Capital Reorganisation" the proposed sub-division of each of the issued and unissued
Ordinary Shares into one New Ordinary Share and one Deferred
Share
"Company" or "SFX" Screen FX plc
"Deferred Shares" deferred shares of 0.1 pence each in the capital of the
Company created pursuant to the Capital Reorganisation
"Directors" or "Board" the directors of the Company whose names are set out in the
Circular, or any authorised committee thereof
"EGM" the extraordinary general meeting of the Company convened by
the EGM Notice
"EGM Notice" the notice convening the EGM which is set out in the Circular
"Form of Proxy" the form of proxy for use in relation to the EGM which
accompanies the Circular
"Group" the Company and its subsidiary undertakings
"Loan Note" the variable rate unsecured loan note 2007 (series 2)
constituted by the Loan Note Instrument
"Loan Note Instrument" the deed poll constituting the Loan Note
"London Stock Exchange" London Stock Exchange plc
"New Ordinary Shares" the fully paid ordinary shares of 0.1p each in the capital of
the Company created pursuant to the Capital Reorganisation and
which will be issued on conversion of the Loan Note or
pursuant to the Placing
"Ordinary Shares" ordinary shares of 1 pence each in the capital of the Company
"Resolutions" the resolutions set out in the EGM Notice
"Shareholders" holders of Ordinary Shares in the Company
The term "subsidiary undertakings" as used in these definitions shall have the
meaning given in the Act.
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This information is provided by RNS
The company news service from the London Stock Exchange
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