TIDMTMN
RNS Number : 4630T
TMN Group PLC
05 June 2009
5 June 2009
Proposed acquisition of Progressive Digital Media Group Limited
Approval of waiver of obligations under Rule 9 of The City Code
Re-Admission to trading on AIM
Proposed name change to Progressive Digital Media Group plc
and
Notice of Extraordinary General Meeting
The Board of TMN Group plc is pleased to announce that it has conditionally
agreed to acquire the entire issued share capital of Progressive Digital Media
Group Limited ("Progressive") through the issue of 291,942,672 new Ordinary
Shares to Michael Danson, Progressive's sole shareholder and non executive
director of TMN Group plc.
Transaction Highlights
-Progressive is a business to business publishing company and information
provider founded in 2007 by Michael Danson the former CEO and founder of
Datamonitor plc, which was sold to Informa in 2007 for approximately GBP502m.
-Progressive revenues are principally derived from business conferences and
events, controlled circulation magazines and web-based reference portals. A
significant level of investment has been made in Progressive to move the
acquired businesses from traditional business-to-business assets towards more
data rich online business models. The company has over 200 sales personnel, 400
product creators, 65 developers and over 100 websites through which it can
deliver content.
-The Enlarged Group will benefit from greater financial stability. The increased
profitability and cash generation of the Enlarged Group will allow increased
investment in product development, product delivery and customer service.
-The Enlarged Group will have interests across several markets including email
marketing, affiliate marketing, online market research, news conferences,
virtual conferences and controlled circulation magazines. This broader spectrum
of interests along with exposure to numerous industry verticals increases the
diversification of revenues and means that the company will be able to manage
more effectively a decline or downturn in any one of its verticals of product
sets.
-The Consideration Shares being issued to Michael Danson will represent 79 per
cent. of the Enlarged Group's share capital following the Re-Admission which
together with his existing holding in TMN will result in him holding 84.87 per
cent of the Enlarged Group's share capital.
-Under the AIM Rules for Companies, the Acquisition constitutes a reverse
takeover. Accordingly the Acquisition is conditional on the approval by
Shareholders at an Extraordinary General Meeting to be held at 10 a.m. on 24
June 2009.
-In accordance with the City Code, the Company will also seek the approval of
Independent Shareholders to the Whitewash Resolution as Michael Danson and his
Concert Party will hold the majority of the Enlarged Share Capital
post-Acquisition.
- TMN has received irrevocable undertakings or letters of intent to vote in
favour of the resolution to approve the Acquisition in respect of 36,604,826
Ordinary Shares, representing 47.2 per cent. of the Existing Ordinary Shares,
including irrevocable undertaking given by the Directors in respect of, in
aggregate, to 22,351,850 Ordinary Shares, representing 28.8 per cent. of the
Existing Ordinary Shares.
- In addition TMN has received irrevocable undertakings or letters of intent to
vote in favour of the Whitewash resolution in respect of 14,907,317 Ordinary
Shares, representing 26.7 per cent. of the Existing Ordinary Shares (excluding
those shares held by the Concert Party) which includes irrevocable undertaking
given by the Independent Directors in respect of, in aggregate, to 654,341
Ordinary Shares, representing 0.8 per cent. of the Existing Ordinary Shares.
- If the Resolutions are duly passed at the Extraordinary General Meeting then
it is expected that the Enlarged Share Capital will be re-admitted to trading on
AIM on 25 June 2009.
Mike Danson, founder of Progressive, commented:
"I am convinced that in these difficult economic times, an Enlarged Group will
be better placed to trade successfully in the challenging market, take advantage
of increased scale, greater financial stability and flexibility and ultimately
deliver strong levels of growth over the medium term by capitalising on exciting
opportunities in the B2B and B2C markets.
My team and I are excited by the opportunity to work within the Enlarged Group
and are confident we can make a positive contribution to delivering shareholder
value in what should be a very successful business."
Peter Harkness, Non-Executive Chairman of TMN Group, commented:
"We are very excited by the opportunity to acquire Progressive Digital Media.
Putting together the two businesses makes a far stronger and broader
organisation which is better placed to capitalise on some exciting growth
opportunities ahead. In the medium term, the Board is confident that this
acquisition will successfully generate significant shareholder value.
We understand the frustration expressed by some shareholders at the length of
time taken to announce this transaction but we assure those people that this
delay has been entirely due to the need to do everything in careful compliance
with market rules. We thank both shareholders and staff for their patience and
all those who have worked so hard behind the scenes in reaching today's
announcement."
For further information contact:
Hudson Sandler0207 796 4133
Nick Lyon / James White
Investec Investment Banking 0207 597 5970
Erik Anderson / Ben Poynter / Avital Lobel
This summary should be read in conjunction with the full text of the
Re-Admission Document which is expected to be made available to Shareholders
electronically in 'read-only' format on the TMN Group website
at http://www.tmnplc.com/tmn/investors/reports/ where it can be printed.
The Acquisition will be subject to certain conditions including approval of
Shareholders at an Extraordinary General Meeting which is expected to be
convened for this purpose at 10 a.m. on 24 June 2009. Notice of this meeting is
set out in the Re-Admission Document. Certain definitions and terms used in this
announcement are set out at the end of this announcement.
Investec, which is authorised and regulated by the Financial Services Authority
in the United Kingdom, is acting exclusively as Nominated Adviser and Broker to
TMN in connection with the Re-Admission and the Acquisition and is not acting
for any other person and will not be responsible to any other person for
providing the protections afforded to customers of Investec or for advising on
the transaction and arrangements proposed in the Re-Admission Document.
This announcement does not constitute, or form part of, an offer or invitation
to purchase or subscribe for any securities in any jurisdiction. The
Re-Admission Document is expected to be published by the Company on the date of
this announcement and any acquisition of new Ordinary Shares in the Company
should be made only by reference to such Re-Admission Document.
This announcement includes statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms "believes",
"estimates", "plans", "projects", "anticipates", "expects", "intends", "may",
"will", or "should" or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include matters that
are not historical facts. They appear in a number of places throughout this
announcement and include statements regarding the Directors' current intentions,
beliefs or expectations concerning, among other things, the Group's results of
operations, financial condition, liquidity, prospects, growth, strategies and
the Group's markets.
By their nature, forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances. Actual results and developments
could differ materially from those expressed or implied by the forward-looking
statements. Factors that might cause such a difference, include, but are not
limited to the risk factors set out in Part II of the Re-Admission Document.
Forward-looking statements may and often do differ materially from actual
results. Any forward-looking statements in this announcement are based on
certain factors and assumptions, including the Directors' current view with
respect to future events and are subject to risks relating to future events and
other risks, uncertainties and assumptions relating to the Group's operations,
results of operations, growth strategy and liquidity. Whilst the Directors
consider these assumptions to be reasonable based upon information currently
available, they may prove to be incorrect. Prospective investors should
therefore specifically consider the risk factors contained in Part II of the
Re-Admission Document that could cause actual results to differ before making an
investment decision. Save as required by law or by the AIM Rules for Companies,
the Company undertakes no obligation to publicly release the results of any
revisions to any forward-looking statements in this announcement that may occur
due to any change in the Directors' expectations or to reflect events or
circumstances after the date of this announcement.
Proposed acquisition of Progressive Digital Media Group Limited
Approval of waiver of obligations under Rule 9 of The City Code
Re-Admission to trading on AIM
Proposed name change to Progressive Digital Media Group plc
and
Notice of Extraordinary General Meeting
1. Introduction and Summary
The Board of TMN Group is pleased to announce that it has conditionally agreed
to acquire the entire issued share capital of Progressive Digital Media Group
Limited ("Progressive") through the issue of 291,942,672 new Ordinary Shares to
Michael Danson, Progressive's sole shareholder and non executive director of TMN
Group.
Under the AIM Rules for Companies, the Acquisition constitutes a reverse
takeover. Accordingly the Acquisition is conditional on the approval by the
Existing Shareholders at the Extraordinary General Meeting which is being
convened for this and other purposes on 24 June 2009 at 10 a.m. Approval of the
Independent Shareholders is also required to approve a Whitewash Resolution as
the Concert Party will hold the majority of the Enlarged Share Capital
post-Acquisition.
If the Resolutions are duly passed at the Extraordinary General Meeting then it
is expected that the Enlarged Share Capital will be re-admitted to trading on
AIM on 25 June 2009. At that point the Acquisition will complete and Mark Smith,
Craig Dixon, Vince Smith and Bruce Fair will stand down from the Board and
Kenneth Appiah and Simon Pyper will join the Board.
Further details of the Acquisition and the Acquisition Agreement are set out
below and in Re-Admission Document which is available to Shareholders
electronically in "read only" format on the TMN Group website at
http://www.tmnplc.com/tmn/investors/reports/ and in hard copy on written request
as set out in paragraph 16 below.
2. Information on TMN Group
TMN Group was established in 1999 under the name "themutual.net" as an internet
community in which members could obtain a stake and receive information free of
charge through a message board system. Themutual.net was listed on AIM in 2000
and gained expertise in the email marketing sector. TMN Group is now one of the
UK's leading online digital marketing organisations, operating through four key
channels: Affiliate Marketing, Email Marketing, Publishing and Online Research.
These channels are serviced by a number of different companies within the group
and include:
TMN Media - email marketing and website publishing
TMN Media specialises in email and website marketing, with access to highly
profiled, permission-based email addresses, millions of visitors to its websites
and distribution technology that ensures strong deliverability. TMN Media
manages a comprehensive portfolio of email databases in the UK and offers a full
online advertising solution. TMN Group also operates websites including
MutualPoints and Plum Prizes.
EDR - digital agency
TMN Group acquired EDR, an online interactive advertising agency, in November
2005. EDR was established in 2000 to offer full services in email broadcast,
sales and delivery. TMN Group's EDR division fulfils the full planning and
buying requirements for numerous blue chip clients' lead generation marketing
campaigns. In 2006, EDR divested its owned and managed lists to TMN Media and
now focuses on email strategy and investment, with access to over 30 million
opt-in email addresses from around 100 email lists. EDR is an important
email-buying agency and plans campaigns across a large number of third party
lists, including TMN Media.
AffiliateFuture - affiliate marketing
Launched in 2002, AffiliateFuture, the Company's affiliate marketing business,
is an important affiliate network specialising in travel, telecoms, retail and
finance delivering thousands of transactions per week to hundreds of clients who
range from small businesses to major international operators. AffiliateFuture
operates primarily on a CPA (Cost Per Acquisition) model, whereby clients pay an
agreed percentage of, or a fixed amount for, sales or leads that are generated
by the network, as such directly linking results to advertising costs.
AffiliateFuture was acquired in 2008 as part of the acquisition of Internet
Business Group plc.
iD Factor/ICD Research - online research
ICD Research carries out consultative research utilising online focus groups.
Specialist online market research agency, iD Factor, was formed in 2001 to offer
online survey management and fieldwork services to the market research industry
and was acquired by TMN Group in December 2005 for a consideration of GBP1.2
million. Core services of this division include sample provision, the design and
implementation of web based surveys as well as full data processing and
tabulation.
Tapps - email marketing and lead generation
Tapps is a prominent email marketing specialist in The Netherlands offering
advertisers access to branded email lists. In 2007 Tapps launched Premium Brand
Survey which allows advertisers to build prospect leads in a high quality
environment.
3. Information on Progressive
The Progressive Group was created to acquire, invest and manage assets that
operate in markets which demonstrate significant growth potential. Progressive
is wholly owned by Michael Danson who is also a non executive director of TMN
Group. Michael Danson has considerable experience of managing
business-to-business media companies. He was previously the CEO of Datamonitor
plc (a company he founded in 1988) until its sale to Informa Acquisitions
Limited, a wholly-owned indirect subsidiary of Informa plc, in July 2007 for
approximately GBP502 million.
At the request of the board of Informa plc, Michael Danson remained with
Datamonitor plc to support the smooth transition of responsibilities to the new
owners and, in May 2008, he left to pursue a number of business and charitable
interests. To date, Michael Danson has made a number of investments within the
business-to-business media sphere, which includes the acquisition of certain
business-to-business publishing titles from Wilmington Group plc and the
recommended takeover of SPG Media Group plc.
Progressive is a business-to-business media company providing a large range of
products and services across a number of industry sectors. Revenues are
principally derived from business conferences and events, controlled circulation
magazines and web-based reference portals. A significant level of investment has
been made in the group of companies since acquisition to move them from
traditional business-to-business print, conference and events assets towards
more data rich online models. The company has over 200 sales personnel, 400
product creators, 65 developers and over 100 websites through which it can
deliver content.
Having made this significant investment, Progressive is now well placed to
capitalise on the solid scalable platform that has been created and leverage its
data rich assets across multiple products and platforms, the financial benefits
of which will substantially come through in the financial year ending 31
December 2010.
The businesses comprising the Progressive Group at the time of the Acquisition
have not formed one legal group or sub-group throughout the three year period to
31 December 2008. Accordingly financial information for Progressive's main
trading businesses, SPG Media Group Limited, and Progressive Media Markets &
Dewberry Redpoint has been set out in Part III of the Re-Admission Document.
4. Current trading and prospects
Progressive
Performance in the current financial year to date has been encouraging with
sales, revenue and operating profit performing in line with expectations and
ahead of last year. Whilst there has been some softening in performance in the
more discretionary spend areas such as automotive and design, performance
elsewhere has compensated and supports management's view that Progressive's
broad industry base and wide product set provide a stable platform from which to
deliver long term profitable growth. Progressive has made significant investment
in the last financial year in broadening its product offering, delivery
capabilities and levels of service which it expects to leverage in the coming
financial year and beyond.
TMN Group
On 30 January 2009 the Company released its trading update in which the
Directors stated that, "profit will be approximately 50 per cent. below the
Board's expectations" for the financial year ended 30 April 2009.
The trading conditions experienced by the Group remain challenging and the
Directors continue to carefully manage the Group's profitability, cost base and
expenditures. Trading in the current financial year has stabilised in recent
months, albeit at lower levels, and although the benefits of the cost reduction
programme implemented last year will begin to appear in the current financial
year, visibility of earnings remains poor and the outlook for the markets in
which the Company operates remains uncertain. Should trading not improve, the
Directors believe the Company may need to renegotiate banking covenants in order
to meet its near term financial obligations. The Directors may seek to dispose
of certain assets within the business to generate additional near term cash or
pursue alternative sources of funding in case a renegotiation of its banking
covenants is not successful.
5. Background to and reasons for the Acquisition
The recent deterioration in the macro-economic environment has had a significant
impact on the trading performance of the Company. Whilst the Directors have
reacted swiftly to implement a programme of cost savings, the benefit of which
will be received predominantly in the current financial year to 30 April 2010,
this has been outweighed by the considerable decline in email display
advertising revenues and particularly in the financial services and automotive
sectors to which the Company has a large exposure. Trading in the current
financial year has stabilised, albeit at lower levels, and although the benefits
of the cost reduction programme implemented last year will begin to appear in
the current financial year, visibility of earnings remains poor and the outlook
for the markets in which it operates remains uncertain.
The Directors and Proposed Directors believe that the acquisition by TMN Group
of Progressive will provide a number of benefits to existing TMN Group
Shareholders, including:
* Broader Revenue Base: Progressive operates across a number of industry verticals
which include defence, energy, and pharmaceutical and offers a broad range of
product solutions for its extensive customer base. Consequently, Progressive is
well placed to exploit earnings opportunities in both growing and mature markets
whilst at the same time ameliorate and manage decline in any one or more of its
market sectors or product ranges.
* Greater Financial Stability: The increase in the Enlarged Group's profitability
and cash flow will allow for increased investment in product development,
product delivery and service execution. Furthermore given the recent decline in
TMN Group's profitability and cash flow in the context of its current banking
facilities, it has been necessary to reduce the level of capital expenditure
within the Group which in certain circumstances has restricted the ability to
grow revenues. The GBP9 million term loan within the Progressive business which
will be assumed by TMN Group has no covenants, bears no interest and is
repayable in full in ten years' time unless otherwise agreed by the Board. In
addition, there will be a short term loan provided to TMN Group of GBP2 million
which will have no covenants, bear no interest and will be repayable in full in
two years' time unless otherwise agreed by the Board.
* Enhanced Management Team: the Progressive team is led by Michael Danson who has
considerable experience in delivering shareholder value in publicly listed
companies in the UK. The wider team includes a number of senior managers who
have experience of working in and running either public companies or sizeable
divisions of public companies.
* Increased Opportunities for Growth: Progressive has enjoyed rapid growth since
its formation and is now well positioned to benefit from the significant
investment made in the business in the short to medium term. The business model
allows for a diversification of products across multiple verticals and at
multiple price points which will provide an opportunity for significant future
growth. This growth will be pursued both organically and by selected
acquisitions as appropriate.
* Enhanced Scale: The combination of the two businesses will create a company of
significantly greater scale providing scope for enhanced financial reporting
functions and internal controls and management, with cost savings available in
selected areas.
The Directors and Proposed Directors believe that the Enlarged Group will be
well positioned to deliver significant shareholder value in the medium and long
term which the Group otherwise would not be able to deliver as an independent
company.
The existing TMN Group businesses will continue to be run as an independent
entity within the Enlarged Group and focus on similar markets, benefiting from
the support of additional capital to maximise the existing TMN Group's revenue
potential.
6. Terms of the Acquisition
Pursuant to the terms of the Acquisition Agreement, the Company has
conditionally agreed to acquire from Michael Danson the entire issued share
capital of Progressive through the issue of 291,942,672 new Ordinary Shares at
Completion which will represent 79 per cent. of the Enlarged Share Capital. The
Acquisition Agreement is conditional upon, inter alia, the Resolutions being
duly passed at the Extraordinary General Meeting.
The Acquisition Agreement contains certain warranties from Michael Danson to the
Company which are in a customary form for such a transaction. The aggregate
liability of Michael Danson under the Acquisition Agreement shall not exceed the
value of the Consideration Shares he receives by reference to the closing price
of an Ordinary Share on 18 February 2009 (the business day on which trading in
the Ordinary Shares was suspended following the announcement that TMN Group was
in discussions which might or might not lead to a reverse takeover for TMN
Group).
In determining the number of Consideration Shares to be issued and therefore the
relative valuation of TMN Group and the Progressive Group, the Directors have
taken into consideration the current trading and prospects of both TMN Group and
the Progressive Group, the expected relative financial contributions of the two
companies and the benefits that Progressive and the Proposed Directors will
bring to the overall operations of the Enlarged Group.
Application will be made to the London Stock Exchange for the Consideration
Shares to be admitted to trading on AIM. It is expected that such admission will
occur on 25 June 2009.
The Consideration Shares will, when issued, rank pari passu in all respects with
the Existing Ordinary Shares including the right to receive dividends and other
distributions declared following Re-Admission.
7. Lock-in arrangement
Michael Danson who holds 28.0 per cent. of the Existing Ordinary Shares and will
hold 84.87 per cent. of the Enlarged Share Capital, has undertaken to the
Company (subject to certain limited exceptions including transfers to family
members or to trustees for their benefit and disposals by way of acceptance of a
recommended takeover offer of the entire issued share capital of the Company)
not to dispose of the Ordinary Shares held by him (and his connected persons
(within the meaning of section 252 of the 2006 Act) (the "Restricted Shares"))
following Re-Admission or any other securities issued in exchange for or
convertible into, or substantially similar to, Ordinary Shares (or any interest
in them or in respect of them) at any time prior to the second anniversary of
Re-Admission (the "Lock-in Period").
8. The City Code
General
The City Code governs, inter alia, transactions which may result in a change of
control of a public company to which the City Code applies. Under Rule 9 of the
City Code ("Rule 9"), any person or group of persons acting in concert (as such
term is defined in the City Code) who acquires shares which, taken together
with shares already held by him or shares held or acquired by persons acting in
concert with him, carry 30 per cent. or more of the voting rights of a company
which is subject to the City Code is normally required to make a general offer
to all the remaining shareholders to acquire their shares.
Similarly when any person or persons, acting in concert, already holds more than
30 per cent. but not more than 50 per cent. of the voting rights of a company, a
general offer will normally be required if any further shares are acquired by
any such person.
An offer under Rule 9 must be made in cash and at the highest price paid within
the preceding 12 months for any shares in the company by the person required to
make the offer or any person acting in concert with him.
Persons acting in concert comprise persons who, pursuant to an agreement or
understanding (whether formal or informal), actively co-operate to obtain or
consolidate control of a company.
The Concert Party Members are Michael Danson, the vendor of Progressive and
Simon Pyper who is an Existing Shareholder and who is also involved in the
business of Progressive as a director. The Concert Party Members have agreed
with the Company that they are acting in concert for the purposes of the
City Code.
Assuming that the Resolutions are duly passed and the Consideration Shares
issued under the terms of the Acquisition Agreement, the Concert Party will
hold, in aggregate 313,661,948 Ordinary Shares representing approximately 84.88
per cent. of the Enlarged Share Capital of which Michael Danson will hold in his
private capacity 313,640,181 Ordinary Shares representing approximately 84.87
per cent. of the Enlarged Share Capital. The relevant holdings of the Concert
Party Members assuming that the Resolutions are duly passed and the
Consideration Shares issued under the terms of the Acquisition Agreement are set
out in Part VI of the Re-Admission Document together with detail of the Concert
Party Members.
In the absence of a waiver granted by the Panel, Rule 9 of the City Code would
require the Concert Party to make a general offer for the balance of the
Ordinary Shares in issue immediately following the Acquisition. The Panel has
agreed, subject to the approval on a poll by the Independent Shareholders of the
Whitewash Resolution set out in the Notice of Extraordinary General Meeting and
summarised below, to waive the obligation that would otherwise arise under Rule
9, resulting from the issue of the Consideration Shares pursuant to
the Acquisition, for a general offer to be made by the Concert Party for the
balance of the issued Ordinary Shares not already held by the Concert Party.
Following implementation of the Acquisition and Re-Admission (including the
issue of the Consideration Shares) both Michael Danson in his own personal
capacity and the Concert Party Members between them will hold more than 50 per
cent. of the Company's voting share capital and (in the case of the Concert
Party Members, for so long as they continue to be treated as acting in concert)
any further increase in Michael Danson's personal shareholding or the Concert
Party's aggregate shareholding will not be subject to the provisions of Rule 9.
However, in the case of all Concert Party Members other than Michael Danson, the
Panel should be consulted before any such individual Concert Party Member
increases their holding through 30 per cent., or, if such holding is already
more than 30 per cent. (but not more than 50 per cent.), before any increase in
their holding.
9. Directors, Proposed Directors and employees
It is proposed that each of Mark Smith, Craig Dixon, Vince Smith and Bruce Fair
will resign and that the Proposed Directors will join the Company's board of
directors with effect from Re-Admission. Accordingly, the Enlarged Group's board
of directors will consist of Michael Danson, Simon Pyper, Kenneth Appiah and
Peter Harkness. Further details regarding the Directors and Proposed Directors
are set out in the Re-Admission Document.
Other TMN Group employees
Other than the board changes described above, there is currently no intention
following Re-Admission to make any material changes to TMN Group's staffing
levels, nor to any conditions of employment, including pension rights, as a
result of the proposed transaction. There is also no current intention to change
the places of business of the TMN Group or re-deploy fixed assets.
10. Corporate Governance
The Directors and Proposed Directors recognise the value and importance of high
standards of corporate governance. It is hoped that the Enlarged Group will grow
in size in the future and therefore it intends to comply with the main
provisions of the Combined Code so far as is practicable and appropriate for a
company of its size and nature. The Company also intends to follow the
recommendations on corporate governance of the Quoted Companies Alliance ("QCA")
for companies with shares traded on AIM.
Immediately following Re-Admission however, the Enlarged Group will only have
one independent non executive director. The Directors and Proposed Directors
intend to appoint a suitably qualified senior independent non-executive as soon
as reasonably practicable following Re-Admission in order to further comply with
the Combined Code and the QCA guidelines and establish audit and remuneration
committees each with formally delegated responsibilities and formal terms of
reference.
As the board of directors following Re-Admission will be small, there will not
be a separate nominations committee and recommendations for appointments to the
board of directors will be considered by the board of directors as a whole.
The Directors intend to comply, and procure compliance with, Rule 21 of the AIM
Rules for Companies relating to dealings by directors and other applicable
employees in the Company's securities and, to this end, the Company has adopted
an appropriate share dealing code.
11. Share Option Schemes
The Directors and Proposed Directors believe that the success of the Enlarged
Group will depend to a significant degree on the future performance of the
management team. The Directors and Proposed Directors also recognise the
importance of ensuring that all employees are well motivated and identify
closely with the success of the Enlarged Group.
Accordingly it is proposed that at the earliest possible opportunity a new share
option scheme will be put to Shareholders for their approval.
Details of the Existing Share Option Schemes are set out in Part VI of the
Re-Admission Document. Completion will trigger a right to exercise the options.
To the extent unexercised, options will lapse three months after Completion. The
Existing Share Option Schemes will be terminated as soon as practicable at the
end of the three month period following Completion.
A letter will be sent to all holders of options under the Existing Share Option
Schemes with information in relation to their options.
12. Re-Admission, Settlement and CREST
Application will be made to the London Stock Exchange for the Enlarged Share
Capital to be re-admitted to trading on AIM. It is expected that Re-Admission
will become effective and dealings in the Enlarged Share Capital will commence
on AIM on 25 June 2009.
The Articles permit the Company to issue shares in uncertificated form in
accordance with the Uncertificated Securities Regulations 2001. Application will
be made and agreed with CREST by the Registrar for the Consideration Shares to
be admitted to CREST with effect from Re-Admission. Accordingly, settlement of
transactions in Ordinary Shares following Re-Admission may take place within
CREST if the individual Shareholders so wish. CREST is a voluntary system and
Shareholders who wish to receive and retain share certificates will be able to
do so.
It is expected that share certificates for Consideration Shares will be
despatched by the Registrar by 2 July 2009 and Consideration Shares will be
delivered in CREST immediately following Re-Admission.
13. Dividend Policy
The declaration and payment by the Enlarged Group of any future dividends on the
Ordinary Shares and the amount will depend on the results of the Enlarged
Group's operations, its financial condition, cash requirements, future
prospects, profits available for distribution and other factors deemed to be
relevant at the time. However, the Directors and Proposed Directors, subject to
Re-Admission, intend to pursue a policy to increase dividends broadly in line
with earnings growth being cognisant of the Enlarged Group's cash generation,
working capital cycle and investment requirements beginning in the next
financial year ended 31 December 2010. No dividend will be paid in the current
financial year.
14. Extraordinary General Meeting
Set out in the Re-Admission Document is a notice convening the Extraordinary
General Meeting to be held on 24 June 2009 at the offices of Investec, 2 Gresham
Street, London EC2V 7QP at 10 a.m., at which the Resolutions will be proposed
for the purposes of implementing the Acquisition:
Resolution 1
Approval of the Independent Shareholders is required to approve the Whitewash
Resolution as the Concert Party will hold the majority of the Enlarged Share
Capital post-Acquisition. Resolution 1, which is an ordinary resolution, seeks
the Independent Shareholders' approval accordingly. This Resolution will be
taken on a poll of Independent Shareholders voting in person and by proxy at the
Extraordinary General Meeting. A summary of the principal terms of the
Acquisition Agreement can be found in Part VI of the Re-Admission Document.
Resolution 2
As the Acquisition will constitute a "reverse takeover" for the Company, in
accordance with the AIM Rules for Companies, the Acquisition cannot be completed
until the Company's Existing Shareholders have approved it. Accordingly,
Resolution 2, which is an ordinary resolution, seeks Existing Shareholders'
approval of the Acquisition for such purposes conditional on the passing of
Resolution 1.
Resolution 3
As the Acquisition involves a substantial property transaction with Michael
Danson, one of the Directors, the Acquisition cannot be completed until the
Company's Existing Shareholders have approved it. Accordingly, Resolution 3,
which is an ordinary resolution, seeks the approval of the Existing Shareholders
for the Acquisition for such purposes conditional on the passing of Resolution 1
and Resolution 2.
Resolution 4
Resolution 4, which is an ordinary resolution, seeks the approval of the
Existing Shareholders to change the name of the Company to "Progressive Digital
Media Group plc" conditional on the passing of Resolution 1 and Resolution 2.
Resolution 5
Resolution 5, which is an ordinary resolution, authorises the Directors to
increase the authorised share capital of the Company.
Resolution 6
Resolution 6, which is an ordinary resolution, authorises the Directors to allot
the Consideration Shares and otherwise to allot relevant securities (as defined
in Section 80 of the 1985 Act) up to an aggregate nominal amount of GBP12,318
conditional on the passing of Resolutions 1 and 5.
Resolution 7
Resolution 7, which is a special resolution, empowers the Directors, pursuant to
section 95 of the 1985 Act, to disapply the statutory pre-emption rights of the
Shareholders in respect of the allotments referred to in Resolution 6 and
pre-emptive offerings to Shareholders and to otherwise allot equity securities
(as defined in the 1985 Act) for cash on a non pre-emptive basis up to an
aggregate nominal amount of GBP1,847 conditional on the passing of Resolutions 1
and 5.
15. Irrevocable undertakings
The Independent Directors who hold Ordinary Shares have entered into irrevocable
undertakings to vote in favour, or procure the vote in favour of, the Whitewash
Resolution in respect of their beneficial interests in Ordinary Shares
amounting, in aggregate, to 654,341 Ordinary Shares, representing 0.8 per cent.
of the Existing Ordinary Shares and 1.2 per cent. of the Existing Ordinary
Shares not held by the Concert Party.
The Directors who hold Ordinary Shares have entered into irrevocable
undertakings to vote in favour, or procure the vote in favour of, the
Acquisition in respect of their beneficial interests in Ordinary Shares
amounting, in aggregate, to 22,351,850 Ordinary Shares, representing 28.8 per
cent. of the Existing Ordinary Shares.
In addition, TMN Group has received irrevocable undertakings or letters of
intent from certain other Shareholders to vote in favour, or procure the vote in
favour of, the Resolutions in respect of their beneficial interests in Ordinary
Shares amounting, in aggregate, to 14,252,976 Ordinary Shares, representing
18.4 per cent. of the Existing Ordinary Shares and 25.5 per cent. of the
Existing Ordinary Shares not held by the Concert Party.
Accordingly TMN Group has received irrevocable undertakings or letters of intent
from Shareholders to vote in favour of the Acquisition in respect of, in
aggregate, 36,604,826 Ordinary Shares, representing 47.2 per cent. of the
Existing Ordinary Shares and has received irrevocable undertakings or letters of
intent from Shareholders to vote in favour, or procure the vote in favour, of
the Whitewash Resolution in respect of in aggregate 14,907,317 Existing Ordinary
Shares representing 26.7 per cent. of the Existing Ordinary Shares not held by
the Concert Party.
Further details of these irrevocable undertakings and letters of intent are set
out in the Re-Admission Document.
16. Further information
The Re-Admission Document is being made available to Shareholders electronically
in "read only" format on the TMN Group website at
http://www.tmnplc.com/tmn/investors/reports/ where it can be printed.
All Shareholders have the right to receive the Re-Admission Document and copies
of any documents incorporated by reference in the Re-Admission Document solely
upon a written or verbal request as detailed below. Such request must state the
address to which the documentation must be sent and confirm whether or not they
wish for future correspondence in relation to the Acquisition to be sent in
printed form. Requests for copies of any such document should be directed to:
Capita Registrars Limited, Proxies Department, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU or by telephoning the shareholder helpline on 0871 664
0321 (or +44 (0)20 8639 3399, if telephoning from outside the UK) or by
emailing: ssd@capitaregistrars.com. Calls to the 0871 664 0321 number cost 10
pence per minute (including VAT) plus your service provider's network extras.
Following such request, copies of the Re-Admission Document and copies of any
documents incorporated by reference in the Re-Admission Document will be
provided within two business days, without charge.
Copies of the Re-Admission Document and copies of any documents incorporated by
reference in the Re-Admission Document will not be provided unless such a
request is made.
17. Action to be taken
A Form of Proxy for use at the Extraordinary General Meeting has today been sent
to Shareholders. The Form of Proxy should be completed and signed in accordance
with the instructions thereon and returned to the Company's registrars, Capita
Registrars Limited, Proxies Department, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU, as soon as possible, but in any event so as to be
received by no later than 10 a.m. on 22 June 2009. The completion and return of
a Form of Proxy will not preclude Shareholders from attending the Extraordinary
General Meeting and voting in person should they so wish.
18. Recommendation
The Independent Directors, having been so advised by Investec, consider the
terms of the Acquisition and waiver of Rule 9 of the City Code to be fair and
reasonable and in the best interests of the Company and the Independent
Shareholders. In providing advice to the Independent Directors, Investec has
taken into account the Independent Directors' commercial assessments.
Accordingly the Independent Directors unanimously recommend Shareholders to vote
in favour of the Resolutions to be proposed at the Extraordinary General Meeting
as, in each case, they have irrevocably undertaken to do so in respect of their
beneficial holdings amounting, in aggregate, to 654,341 Ordinary Shares,
representing approximately 0.8 per cent. of the Existing Ordinary Shares.
DEFINITIONS
The following definitions apply throughout this announcement, unless the context
otherwise requires:
+-------------------------------------+-------------------------------------+
| "1985 Act" | the Companies Act 1985 (as amended) |
| | |
+-------------------------------------+-------------------------------------+
| "2006 Act" | the Companies Act 2006 (as amended) |
| | |
+-------------------------------------+-------------------------------------+
| "Acquisition" | the proposed acquisition by the |
| | Company of Progressive pursuant to |
| | the Acquisition Agreement |
| | |
+-------------------------------------+-------------------------------------+
| "Acquisition Agreement" | the conditional agreement dated 5 |
| | June 2009 and made between (1) the |
| | Company and (2) Michael Danson |
| | relating to the Acquisition, |
| | details of which are set out in |
| | Part VI of the Re-Admission |
| | Document |
| | |
+-------------------------------------+-------------------------------------+
| "the Acts" | the 1985 Act and the 2006 Act |
| | |
+-------------------------------------+-------------------------------------+
| "AIM" | AIM, a market operated by the |
| | London Stock Exchange |
| | |
+-------------------------------------+-------------------------------------+
| "AIM Rules for Companies" | the AIM rules for Companies |
| | published by the London Stock |
| | Exchange from time to time |
| | |
+-------------------------------------+-------------------------------------+
| "Articles" | the articles of association of the |
| | Company |
| | |
+-------------------------------------+-------------------------------------+
| "Board" or "Directors" | the directors of the Company, whose |
| | names are set out in the |
| | Re-Admission Document |
| | |
+-------------------------------------+-------------------------------------+
| "City Code" | the City Code on Takeovers and |
| | Mergers |
| | |
+-------------------------------------+-------------------------------------+
| "Combined Code" | the combined code on corporate |
| | governance published by the |
| | Financial Reporting Council from |
| | time to time |
| | |
+-------------------------------------+-------------------------------------+
| "Company" or "TMN Group" | TMN Group plc |
| | |
+-------------------------------------+-------------------------------------+
| "Completion" | completion of the Acquisition in |
| | accordance with the terms of |
| | the Acquisition Agreement |
| | |
+-------------------------------------+-------------------------------------+
| "Concert Party" | together Michael Danson and Simon |
| | Pyper (each a "Concert Party |
| | Member") |
| | |
+-------------------------------------+-------------------------------------+
| "Consideration Shares" | the 291,942,672 new Ordinary Shares |
| | to be allotted and issued by the |
| | Company pursuant to the Acquisition |
| | Agreement |
| | |
+-------------------------------------+-------------------------------------+
| "CREST" | the relevant system (as defined in |
| | the CREST Regulations) for |
| | paperless settlement of share |
| | transfers and holding shares in |
| | uncertificated form which is |
| | administered by Euroclear |
| | |
+-------------------------------------+-------------------------------------+
| "CREST Regulations" | the Uncertificated Securities |
| | Regulations 2001 (SI 2001 No. 3755) |
| | (as amended) |
| | |
+-------------------------------------+-------------------------------------+
| "Disclosure and Transparency Rules" | the Disclosure and Transparency |
| | Rules made by the Financial |
| | Services Authority pursuant to |
| | section 73A of the FSMA |
| | |
+-------------------------------------+-------------------------------------+
| "EMI" | enterprise management incentives, |
| | under the terms of the EMI code as |
| | defined in section 527 of the |
| | Income Tax (Earnings and Pensions) |
| | Act 2003 |
| | |
+-------------------------------------+-------------------------------------+
| "EMI Options" | Enterprise Management Incentive |
| | options granted in accordance with |
| | Schedule 5 to Income Tax (Earnings |
| | and Pensions) Act 2003, subject to |
| | the rules of the TMN Group plc |
| | Unapproved Scheme further details |
| | of which are set out in paragraph |
| | 11 of Part VI of the Re-Admission |
| | Document |
| | |
+-------------------------------------+-------------------------------------+
| "Enlarged Group" | the Group, as enlarged following |
| | Completion |
| | |
+-------------------------------------+-------------------------------------+
| "Enlarged Share Capital" | the 369,547,686 issued Ordinary |
| | Shares upon Re-Admission, |
| | comprising the Existing Ordinary |
| | Shares and the Consideration Shares |
| | |
+-------------------------------------+-------------------------------------+
| "Escrow Completion" | completion of the Acquisition |
| | Agreement subject, inter alia, to |
| | Re-Admission |
| | |
+-------------------------------------+-------------------------------------+
| "Euroclear" | Euroclear UK & Ireland Limited, a |
| | company incorporated under the laws |
| | of England and Wales |
| | |
+-------------------------------------+-------------------------------------+
| "Existing Ordinary Shares" | the 77,605,014 Ordinary Shares in |
| | issue immediately prior to |
| | Re-Admission being the entire |
| | issued ordinary share capital of |
| | the Company prior to the issue of |
| | the Consideration Shares |
| | |
+-------------------------------------+-------------------------------------+
| "Existing Shareholders" | holders of Existing Ordinary Shares |
| | |
+-------------------------------------+-------------------------------------+
| "Existing Share Option Schemes" | together, the Unapproved Scheme and |
| | the EMI Options |
| | |
+-------------------------------------+-------------------------------------+
| "Extraordinary General Meeting" | the extraordinary general meeting |
| | of the Company to be held at the |
| | offices of Investec, 2 Gresham |
| | Street, London EC2V 7QP at 10 a.m. |
| | on 24 June 2009 |
| | |
+-------------------------------------+-------------------------------------+
| "FSMA" | the Financial Services and Markets |
| | Act 2000 (as amended) |
| | |
+-------------------------------------+-------------------------------------+
| "Form of Proxy" | the form of proxy to be used by |
| | Existing Shareholders in connection |
| | with the Extraordinary General |
| | Meeting |
| | |
+-------------------------------------+-------------------------------------+
| "Group" | the Company and its subsidiary |
| | undertakings at the date of this |
| | announcement and "Group Company" |
| | should be interpreted accordingly |
| | |
+-------------------------------------+-------------------------------------+
| "HMRC" | Her Majesty's Revenue and Customs |
| | |
+-------------------------------------+-------------------------------------+
| "IFRS" | International Financial Reporting |
| | Standards |
| | |
+-------------------------------------+-------------------------------------+
| "ITEPA" | the Income Tax (Earnings and |
| | Pensions) Act 2003 |
| | |
+-------------------------------------+-------------------------------------+
| "Independent Directors" | the Directors other than Michael |
| | Danson |
| | |
+-------------------------------------+-------------------------------------+
| "Independent Shareholders" | the Shareholders other than the |
| | Concert Party Members at the date |
| | of this announcement |
| | |
+-------------------------------------+-------------------------------------+
| "Investec" | Investec Bank plc, the Company's |
| | nominated adviser (as defined |
| | in the AIM rules for Nominated |
| | Advisers published by the London |
| | Stock Exchange from time to time) |
| | |
+-------------------------------------+-------------------------------------+
| "London Stock Exchange" | London Stock Exchange plc |
| | |
+-------------------------------------+-------------------------------------+
| "Non-executive Directors" | each of Vince Smith, Bruce Fair, |
| | Michael Danson and Peter Harkness |
| | |
+-------------------------------------+-------------------------------------+
| "Notice of Extraordinary General | the notice convening the |
| Meeting" | Extraordinary General Meeting, |
| | which is set out in the |
| | Re-admission Document |
| | |
+-------------------------------------+-------------------------------------+
| "Ordinary Shares" | ordinary shares of 0.01p each in |
| | the capital of the Company |
| | |
+-------------------------------------+-------------------------------------+
| "Panel" | the Panel on Takeovers and Mergers |
| | |
+-------------------------------------+-------------------------------------+
| "Progressive" | Progressive Digital Media Group |
| | Limited |
| | |
+-------------------------------------+-------------------------------------+
| "Progressive Group" | Progressive and its subsidiaries |
| | and subsidiary undertakings |
| | |
+-------------------------------------+-------------------------------------+
| "Proposed Directors" | Kenneth Appiah and Simon Pyper |
| | |
+-------------------------------------+-------------------------------------+
| "Prospectus Rules" | the prospectus rules made by the |
| | Financial Services Authority |
| | pursuant to section 73A of the FSMA |
| | |
+-------------------------------------+-------------------------------------+
| "Re-Admission" | the re-admission of the Enlarged |
| | Share Capital to trading on AIM |
| | becoming effective in accordance |
| | with the AIM Rules for Companies |
| | |
+-------------------------------------+-------------------------------------+
| "Registrar" | Capita Registrars Limited, Northern |
| | House, Woodsome Park, Fenay Bridge, |
| | Huddersfield, West Yorkshire HD8 |
| | 0GA |
| | |
+-------------------------------------+-------------------------------------+
| "Resolutions" | the resolutions set out in the |
| | Notice of Extraordinary General |
| | Meeting |
| | |
+-------------------------------------+-------------------------------------+
| "Shareholder" | a holder of Ordinary Shares |
| | |
+-------------------------------------+-------------------------------------+
| "UK" | the United Kingdom of Great Britain |
| | and Northern Ireland |
| | |
+-------------------------------------+-------------------------------------+
| "UKLA" or "United Kingdom Listing | the Financial Services Authority, |
| Authority" | acting in its capacity as the |
| | competent authority for the |
| | purposes of Part VI of the FSMA |
| | |
+-------------------------------------+-------------------------------------+
| "uncertificated" or "in | recorded on the register of |
| uncertificated form" | Ordinary Shares as being held in |
| | uncertificated form in CREST, |
| | entitlement to which, by virtue of |
| | the CREST Regulations, may be |
| | transferred by means of CREST |
| | |
+-------------------------------------+-------------------------------------+
| "Unapproved Scheme" | the TMN Group plc Share Option Plan |
| | adopted on 23 May 2000, further |
| | details of which are set out in |
| | paragraph 11 of Part VI of the |
| | Re-Admission Document |
| | |
+-------------------------------------+-------------------------------------+
| "US", "USA" or "United States" | the United States of America, each |
| | state thereof, its territories and |
| | possessions and the District of |
| | Columbia and all other areas |
| | subject to its jurisdiction |
| | |
+-------------------------------------+-------------------------------------+
| "VAT" | UK value added tax |
| | |
+-------------------------------------+-------------------------------------+
| "Whitewash Resolution" | the ordinary resolution of the |
| | Independent Shareholders concerning |
| | the waiver of obligations under |
| | Rule 9 of the City Code to be |
| | proposed on a poll at the |
| | Extraordinary General Meeting and |
| | set out in the Notice of |
| | Extraordinary General Meeting |
| | |
+-------------------------------------+-------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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