Acquisition and Placing
July 12 2000 - 3:29AM
UK Regulatory
RNS Number:7186N
Capital Radio PLC
12 July 2000
ACQUISITION OF BEAT 106 LIMITED AND PLACING OF 3.85 MILLION NEW CAPITAL
RADIO PLC ORDINARY SHARES
Capital Radio plc ("Capital"), Britain's leading commercial radio group, today
announces the acquisition of Beat 106 Limited ("Beat"), an FM music radio
station transmitting across Edinburgh, Glasgow and the rest of Central
Scotland, for an aggregate consideration of #33.75 million. The consideration
will be satisfied through the issue of 2.25 million new Capital ordinary
shares (representing approximately 3% of its current issued share capital), of
which 1.85 million will be the subject of an institutional placing at 1500p
per ordinary share and approximately 400,000 will be retained by shareholders
of Beat. In addition, a further 2 million new Capital ordinary shares
(representing approximately 2.6% of the issued share capital of Capital) will
be placed for cash at 1500p per ordinary share to raise #30 million (before
expenses).
The Acquisition
* Beat will provide Capital with a regional FM station in central Scotland,
with a transmission area covering 60% of the Scottish population and the key
cities of Glasgow and Edinburgh.
* Beat is a young station, broadcasting a dynamic mix of new rock and dance
music. Launched in November 1999, it targets the 15-39 age group which is
particularly attractive to advertisers.
* With Beat's regional licence covering 2.6 million adults, it will be
Capital's third largest transmission area, increasing Capital's reach by
3.9%, its listening hours by 3.4% and its potential audience by 10%.
* Beat has had an outstanding start. In its first RAJAR survey, covering the
first quarter of 2000, Beat achieved a weekly reach of 12.8% and a 5.5%
share of total listening hours in its transmission area.
Benefits of the Acquisition
* The acquisition of Beat is an important step towards achieving Capital's
stated strategy of developing a national presence (see Strategy below).
Following the acquisition, Capital will have the potential to broadcast to
some 58% of the UK's adult population, giving advertisers improved access to
audiences and helping to drive Capital's national advertising revenues.
* Personal disposable income in Scotland is the highest in the country outside
London and the South East (source: Office for National Statistics), and the
addition to the group of Glasgow and Edinburgh will give Capital access to
all the major conurbations in the UK with the exception of those in
Yorkshire. Capital will be applying for the new regional analogue licence
for Yorkshire to be advertised by the Radio Authority later this year.
* Capital believes that it can significantly enhance Beat's audiences and
revenues through the combination of a distinctly Scottish station supported
by Capital's programing and national advertising sales expertise.
* Beat will provide Capital with a base in Scotland from which to operate its
new digital Xfm stations, both of which will be on air this year. Capital
will also seek to put Beat onto the regional digital multiplex which is
scheduled to be awarded in November.
* Beat enhances Capital's internet offering by increasing Capital's exposure
to more customers with greater cross-promotional opportunities.
* Capital believes the acquisition of Beat will enable it to continue its
strong track record of adding value through its radio acquisitions.
Invicta, for example, has increased its adult weekly reach from 34% on
acquisition in May 1994 to 41% for the 6 months to March 2000, while Red
Dragon's adult weekly reach has increased from 27% on acquisition in May
1998 to 37% for the 6 months to March 2000 (source: RAJAR).
The Placing
* The acquisition of Beat will be financed by the issue of 2.25 million new
Capital ordinary shares (representing approximately 3% of Capital's current
issued share capital), of which 1.85 million are today being placed in the
market with institutional investors at a price of 1500p per ordinary share
and approximately 400,000 are being retained by shareholders of Beat.
* In addition, there will also be a placing of 2 million new Capital ordinary
shares being issued for cash at 1500p per ordinary share to raise #30
million.
* The additional capital raised will give Capital the flexibility to pursue a
range of opportunities in radio which are currently being reviewed by its
management.
* The new ordinary shares issued pursuant to the placing equate to
approximately 5.0% of Capital's total current issued share capital. The
issue of new ordinary shares pursuant to the placing has been fully
underwritten by Cazenove & Co.
* All the shares the subject of the placing are being placed by Cazenove & Co
on normal T+5 settlement terms. They will rank pari passu with the existing
ordinary share capital of Capital, including the right to receive any final
dividend in respect of the year to 30 September 2000.
* The placing is conditional, amongst other things, on all the shares the
subject of the placing being admitted to the Official List and to trading on
the London Stock Exchange's market for listed securities ("Admission").
Applications for Admission have been made and it is expected that Admission
will occur, and that unconditional dealings in the shares the subject of the
placing will commence on Wednesday 19 July 2000.
Strategy
Capital's stated strategy for growth is:
* to build a national presence for its business, in order to offer its
advertisers the opportunity to reach listeners across the country and
thereby strengthen its position as the leading radio sales organisation in
the UK;
* to add new analogue radio stations to the group, both by acquisition and by
successful new licence applications;
* to build on its leading position in digital radio - Capital's network of 22
digital licences to date will reach 82% of the UK population by 2002;
* to create the UK's leading music websites, based on Capital's trusted
brands, strong relationships with the music industry, access to constantly
changing music content and ability to cross-promote the sites to listeners
on Capital's radio stations;
* to distribute Capital's music content via other digital platforms, as
illustrated by the carriage deal with Sky Digital for Xfm and Capital Gold;
and
* to foster international relationships with a view to expanding Capital's
radio business overseas.
Update on the Border Acquisition
* Following the completion of the Border acquisition and a detailed review of
its radio assets, Capital believes that the potential is even better than
originally envisaged.
* Capital has fast-tracked the integration of the new stations into the group:
- by appointing new managing directors and a Regional Programme Controller
for the Border stations, drawing on expertise that has been developed at
local stations across the Capital group;
- by bringing national advertising sales into Capital Radio Advertising -
there has already been an encouraging response from advertisers; and
- by completing the integration of systems and financial integration.
* For the year ending 30 September 2000 Border's five month contribution will
be reported separately from the rest of the group's results.
Current Trading
Capital is pleased to report that since its last trading statement at the
Interim Results announcement on 9 May 2000, the advertising market has
remained strong. Management therefore expects Capital's second half revenue
growth to reflect a continuation of the trends in the first half.
David Mansfield, Chief Executive of Capital, commented:
"The Beat acquisition has further strengthened Capital's strong position in UK
radio, building on the acquisition of Border's Century stations. Our leading
position in both analogue and digital radio and the development of our new
websites mean the company has an extremely bright future ahead of it, and I am
delighted with the progress we have made."
Neither this document nor any copy of it may be taken, transmitted or
distributed, directly or indirectly, in the United States, Canada, Australia
or Japan. Any failure to comply with this restriction may constitute a
violation of US, Canadian, Australian or Japanese securities laws. Capital
ordinary shares proposed to be issued in connection with the placing may not
be offered or sold in the United States absent registration under the US
Securities Act 1933 (as amended) or an exemption from such registration. It
is intended that any new Capital Shares to be offered under the placing to
persons in the United States will be issued in reliance upon an exemption from
such registration. This announcement is not an offer of any new Capital Shares
for sale or subscription in the United States or elsewhere. Cazenove & Co.
are acting for Capital plc in connection with the placing and the acquisition
of Beat and will not be responsible to any other person for provided the
protections afforded to their customers or advising any such person in
connection with the placing or such acquisition.
Editors' Note:
Capital has also made a number of announcements about its Interactive business
today in a separate release.
Enquiries:
David Mansfield Capital Radio plc 020 7766 6288
Peter Harris
www.capitalradiogroup.com
John Paynter Cazenove & Co. 020 7588 2828
Rupert Younger Finsbury 020 7251 3801
James Leviton
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