RNS Number:8706S
e-quisitor PLC
23 October 2000
e-quisitor plc
PROPOSED ACQUISITION OF US BASED TV INTERACTIVE
Placing and Open Offer to raise #1.9m (before expenses)
e-quisitor plc ("Company"), the AIM listed company established by Gartland
Whalley and Barker plc ("GWB") to acquire controlling interests in profitable
"information-oriented" businesses, today announces that it has posted a
circular ("Circular") to shareholders in connection with the proposed
acquisition of TV Innovations Inc, trading as TV Interactive and GETV, Inc
(together "TVI") which was announced on Monday 16 October 2000.
e-quisitor also announced on Monday 16 October 2000 that it intended to raise
approximately #1.9 million (before expenses) through a Placing and Open Offer
to provide the Company with additional capital required to part-fund the
acquisition of TVI. The placing price for the Open Offer Shares is 200p per
share.
The Circular gives details of the proposed acquisition, the Placing and Open
Offer and convenes an Extraordinary General Meeting to be held on 13 November
2000 in order to approve the acquisition.
As a result of the posting of the Circular to Shareholders, the Company has
requested to the London Stock Exchange plc that the suspension in the dealings
of the ordinary share capital of the Company be lifted and therefore expects
such dealings to recommence at 8am on Monday 23 October 2000
Further details of the Placing and Open Offer are given in the main text of
this announcement.
Copies of the Circular are available during business hours from the Company at
Crossley House, Belle Vue Park, Hopwood Lane, Halifax West Yorkshire HX1 5EB
and from Peel Hunt, 62 Threadneedle Street , London EC2R 8HP.
A copy of the Circular will also be available from the e-quisitor website at
www.e-quisitor.com
Highlights
* TVI is a US based cross media production company, specialising in the
creation of high quality programming for the internet and other media.
* The acquisition fits well with e-quisitor's strategy
+ TVI is an information-oriented business leveraging the distribution
potential of the internet, which has strong management and is both
profitable and cash generative, and has significant opportunities for
growth
* Open Offer of 954,545 shares at 200p per share on the basis of 3 Open
Offer Shares for every 11 Ordinary Shares
* The acquisition will be earnings enhancing
* The consideration payable for TVI comprises:
+ $10 million payable in cash on completion on the basis that TVI is
debt free and cash free at that time
+ deferred and additional consideration dependent upon the level of
future profits achieved by TVI
The acquisition will be funded from a combination of e-quisitor's existing
cash resources, the proceeds of the Placing and Open Offer and from the #25
million acquisition facility provided by Barclays Bank PLC.
Commenting, Bob Bond, e-quisitor's Chief Executive said: "The acquisition fits
well with our objective to deliver substantial growth in earnings per share
initially by completing earnings enhancing acquisitions and supported by
organic growth within the acquired businesses."
For further information
e-quisitor plc
Bob Bond, Chief Executive
Tel: 01422 301 917
Millham Communications Ltd
Keeley Middleton
Tel: 0113 242 1171
e-quisitor plc
PROPOSED ACQUISITION
OF US BASED TV INTERACTIVE
Information on the Enlarged Group
e-quisitor plc
Background
e-quisitor was incorporated in March 2000 and was admitted to AIM on 19 May
2000 when it raised #3 million (before expenses) by means of a placing and
offer for subscription. The Company's aim is to acquire controlling interests
in "information-oriented" businesses that are already successful, fast-growing
and profitable and which are in the process of or planning to leverage the
distribution potential of the internet.
Vision
As we move into the new millennium individuals, companies and governments all
require access to accurate and timely information to enable them to make
better decisions, whether personal, corporate or legislative. At the same
time, more and more data is being captured in relation to these entities via
the internet, call centres and computerised systems. e-quisitor's Directors
believe that these factors, coupled with the ever increasing number of
channels through which information can be transmitted, such as television,
satellite, the internet, print and telephony, are the fundamental drivers of
the "information economy" that we are now entering. The Directors believe that
the powerhouses of this sector will be businesses that understand how to
capture, manage, analyse, produce or distribute information for the benefit of
their customers and for profit. These are the businesses that e-quisitor is
targeting.
Strategy
The Company's objective is to deliver substantial growth in earnings per share
initially by completing earnings enhancing acquisitions supplemented by
organic growth within the acquired businesses. e-quisitor aims to achieve this
goal by targeting information-oriented businesses with proven management,
profits and sustainable growth that are in the process of, or are planning to,
leverage the distribution potential of the internet in order to achieve growth
in both sales and profits.
An important part of the Company's strategy is to leverage the sales and
marketing skills and expertise of the company's Chief Executive, Bob Bond. The
Directors envisage that this will enable the Company to exploit opportunities
within target businesses and, in particular, to refine, develop and expand
existing sales and marketing functions to help target businesses achieve their
full potential. Recommendations made by Bob Bond during the course of
negotiations for TVI have already been implemented by TVI's management,
resulting in increased sales activity in an area on which TVI's management
have not previously focused.
TVI
TVI, founded in 1995, is a US-based cross-media production company,
specialising in the creation of high quality programming for the internet (by
the use of video streaming technology), television and video news releases
(VNRs). The Directors believe that TVI is amongst a small number of companies
that have created a profitable business model based on the convergence of
television, satellite technology and the internet.
In an era when brand recognition and "time to market" are of significant
importance to many businesses, TVI has created a marketing proposition that
enables its clients to gain national and international coverage for promoting
their marketing messages across a wide variety of media, including video
streaming on the internet via Yahoo!Broadcast and TVI's own website, national
television via CNBC and Bravo, traditional print media including Access
Magazine, traditional video content for promotional use and specially edited
VNR format content which are made available by satellite broadcast to over 700
regional TV newsdesks around the US.
TVI has been successful in developing an effective marketing proposition by
combining promotional and informative content with well known presenters and
efficient production methods. To date, TVI's programming has focused
principally on two high growth sectors in the US economy:
* technology
* pharmaceuticals
The technology sector is covered by the ".COM" show, hosted by Mark Hamill of
Star Wars fame, and normally consists of six or seven three to four minute
segments linked by commentary from the show's host to create a 30 minute show.
The production of this is pre-funded by TVI's clients. Each segment is
conceptualised, scripted, directed and produced by TVI in consultation with
the client with a clear emphasis on education and brand association rather
than outright product promotion.
The pharmaceutical sector is covered by the "Healthy Solutions" show, hosted
by Mariette Hartley and follows the same profitable, well proven model as
".COM".
Major clients include:
Microsoft
Eli Lilly
Pfizer
Compaq
America Online
Forbes
Sprint
Prodigy
American Airlines
IBM
Unisys
Smithkline Beecham
US Internal Revenue Service
AT&T
E*Trade
Hitachi
Texas Instruments
Citibank
Nations Bank
Sun Microsystems
Hewlett Packard
The Directors believe that these blue chip clients have chosen to use TVI's
services for a number of reasons, including:
* the provision by TVI of a comprehensive package of cross-media products
at a competitive fixed price. The package includes:
Television TVI's shows are broadcast on
CNBC and Bravo cable channels on which TVI
purchases air-time. These channels provide
access to some 60 million and 40 million
viewers respectively in the US;
Internet individual segments are streamed
on the Yahoo! Broadcast website. In addition,
segments are streamed on the TVI website and
via the client's own website;
Print each show, and its
contributors, are trailed in nationwide
publications, including Access Magazine (10
million readers) and other relevant
publications;
Local News each segment is also made
available via satellite in a specially edited
newsroom format to over 700 regional newsdesks
around the US; and
Video clients receive the right to
use the segment, along with their own
videotape, at promotional events (but without
having the right to re-broadcast the segment).
* as with any marketing activity, success is a product of creativity,
relevance and consistency. The TVI package allows clients to work with
experienced, creative professionals in an efficient manner to produce a
high quality product that reflects the client's view of itself and which
is in tune with its marketing message. The key benefit for clients is that
they only have to go through the production and approval process once in
order to create an effective campaign that is consistent across a broad
range of media;
* the TVI package provides a cost-effective means of targeting a wide
potential audience. For less than the cost of producing a corporate video,
TVI gives clients access to a potential audience of over 100 million
people;
* TVI has successfully blended high-tech delivery media such as the
internet and satellite, with well proven television production skills to
provide clients with promotional content in a programme with a clear
emphasis on education and brand association; and
* the ability to promote a clients' website to an extensive potential
audience thus generating increasing volumes of visitors to its website in
the period immediately following a programme air-date.
In addition to forming part of the package, VNRs are also produced as a stand
alone product. VNRs are produced for easy integration into news broadcasts
either in their original format or edited by the newsroom using additional
features which are incorporated into the VNR product such as optional voice
overs and additional video footage.
Having recognised the potential of promoting VNRs as a stand alone product,
principally targeted at PR agencies acting for major corporations, TVI has
recently established TVI News as a separate operation to develop this sector
of the market.
Future potential for TVI
TVI started business in 1995 as an internet service provider (ISP) and website
designer. TVI's management saw the opportunity to develop an informative
program promoting both its clients' web activity and the potential for the web
which, at that time, was in its infancy. Over the following few years TVI
concentrated on developing this product further and consequently reduced its
activities as an ISP and in website design.
TVI's management developed the package of products referred to above by
capitalising on their considerable experience within the television industry,
whilst also leveraging the distribution potential of the internet and
satellite communications. TVI's management have also identified a number of
additional areas that could fuel further expansion of the business, including:
* diversification of programming content into other topical sectors such
as women's issues or parenting;
* expansion of the Video News Release service as a stand alone operation
(branded as TVI News);
* the possibility of delivering content via the mobile internet and more
specifically 3rd generation telephony as a result of TVI's continuing
quest for broad media coverage; and
* european expansion to further extend TVI's media coverage for clients
requiring a global brand presence
The Directors believe that TVI's key strengths include:
* the provision of a single point of reference for marketing professionals
requiring cross media coverage. It is believed that no competitor offers
the same range of services as a complete package at a fixed price;
* a well-managed, efficient and cost competitive production process;
* a talented production team containing a blend of traditional TV skills
and internet expertise, particularly in the field of video streaming and
website design and management; and
* a business model which is profitable, strongly cash generative and which
has significant growth opportunities
Management
TVI's senior management comprises a small team of highly motivated individuals
possessing a broad range of relevant skills and experience both in relation to
TV production and internet infrastructure and distribution technologies.
Following completion of the Acquisition, TVI's management team will continue
in their existing roles, as follows:
Ron Godfrey (aged 45), Chief Executive Officer. Ron is one of the founding
shareholders of TVI. Ron, together with Jim Wilhelm established the original
business which developed into TVI as an ISP and website designer. Prior to
this Ron was responsible for and launched many nationally distributed
television programmes in the US including "Today's Environment", "Parenting in
the 90s" and "Today's Health". Ron's key responsibilities involve defining the
vision for the business, approving all creative content and establishing
strategic partnerships.
Jim Wilhelm (aged 52), Executive Vice President. Jim has more than 25 years
experience of media production and co-founded TVI. Within TVI he is
responsible for the production team, with particular emphasis on bringing the
highest levels of broadcast production standards to TVI's programming and
ensuring that programmes are delivered on budget and on time.
Al Bauman (aged 56), Executive Vice President, TVI News. Al has more than 30
years experience in entertainment production including co-producing the
Broadway production of "Joseph and his Amazing Technicolour Dreamcoat" and the
opening and closing sequences for the 1992 Olympics in Barcelona. Al is
responsible for establishing and developing TVI News as a separate division
within TVI. He has long-standing relationships with PR agencies who are
believed to be the natural target audience for VNRs.
Marti Shiner (aged 45), Sales and Marketing Manager. In conjunction with Patty
Elliott, one of TVI's founding shareholders, Marti is responsible for all
aspects of sales and marketing within TVI including the recruitment and
training of a sales team of some 21 highly motivated individuals.
US Financial Information on TVI
Set out below is a summary of TVI's recent trading performance.
Year ended 6 months
Year ended 31 Dec 99 ended
31 Dec 98 30 June 00
US$'000 US$'000 US$'000
Turnover 4,643 6,140 4,802
Gross profit 1,900 3,088 2,404
Operating profit 322 559 705
TVI has achieved significant growth in sales over the last two years when the
success of .COM resulted in a significant increase in the number of shows
aired and the average revenue per show which arose from TVI optimising the
number of segments included in each show. In 2000, TVI has been successful in
securing repeat work from clients including the US Internal Revenue Service
and Compaq. This significant increase in activity level over the last two
years, coupled with careful cost control, has led to significant improvement
in TVI's operating profits both in absolute terms and in terms of operating
profit percentage.
Reasons for the Acquisition
e-quisitor considers that TVI meets its stated acquisition criteria in that it
is an information oriented business which understands how to create and
distribute high quality content across a broad range of media. TVI has
established itself as a profitable business with blue chip clients which
offers significant opportunities for future growth.
The Directors believe that TVI's business has proven management, established
profits and has been strongly cash generative. e-quisitor believes that there
are considerable opportunities to expand TVI's business both by organic growth
from its existing customer base and also from the development of new customers
and new markets, including the continued development of the Video News Release
business under the TVI News brand.
e-quisitor's Directors believe that the Acquisition will be of significant
benefit to, and will accelerate the development of, the Group.
Financial effects of the Acquisition
The Acquisition will be earnings enhancing. The price being paid for TVI
represents a premium to net assets because of its positive effect on earnings.
Although the Acquisition is being funded partly through bank borrowings, it is
expected that there will be a substantial level of interest cover.
e-quisitor does not intend to issue any shares in the capital of the Company
in order to repay all or any part of the term loan under the Facility
Agreement with Barclays Bank PLC. However, it remains the long-term strategy
to finance future acquisitions through a combination of bank debt and the
issue of shares.
e-quisitor current trading and prospects of the Enlarged Group
Since e-quisitor's incorporation the Directors have identified a number of
potential acquisition opportunities and have had discussions with a number of
potential targets. Common characteristics of these businesses are that they:
* are fast growing;
* have a history of profitability, making substantial profits with strong
margins;
* have adopted internet technology;
* are operating in the business-to-business arena; and
* are investing in developing new generations of products and/or services
TVI satisfies e-quisitor's acquisition criteria, and as a consequence is
recommended as the Company's first acquisition.
The Directors expect the Acquisition to enhance the Enlarged Group's earnings
per share (before amortisation of goodwill) in the current financial year.
They also consider that the increased size of the Enlarged Group following the
acquisition will put it in an even stronger position from which to take
forward future development, both through organic growth and through continuing
to pursue its acquisition strategy.
Terms of the Acquisition
e-quisitor through a wholly owned subsidiary has conditionally agreed subject,
inter alia, to shareholder approval, to acquire the entire issued share
capital of TVI for an initial cash consideration, payable on completion, of
US$10 million on the basis that TVI is debt free and cash free at completion.
The acquisition will occur in two stages with 90 per cent. of the issued share
capital of TVI being acquired on completion and the balance being acquired
after the 31st December 2003. The consideration payable for the remaining 10
per cent. will be dependent on the level of profits achieved by TVI in the
four years ending 31 December 2003 and in the 12 months ending on the same
date.
In addition, Deferred Consideration may be payable depending on the level of
profits achieved by TVI for the four years ending 31st December 2003.
The Deferred Consideration and the remaining share consideration will be
payable in Ordinary Shares or cash at e-quisitor's option unless at the
relevant date Ordinary Shares are not listed or traded on any stock exchange
when such consideration will be payable in cash.
The Initial Consideration will be financed out of e-quisitor's own resources,
from the proceeds of the Placing and Open Offer and from a drawdown from the #
25 million acquisition facility provided by Barclays Bank PLC.
The Placing and Open Offer
The Placing and Open Offer is intended to raise approximately #1.9 million
before expenses. Qualifying Shareholders will be given the opportunity to
subscribe for Open Offer Shares under the Open Offer at a price of 200p per
share, payable in full on acceptance, up to a maximum entitlement calculated
on the following basis:
3 Open Offer Shares for every 11 Ordinary Shares
and so in proportion for any other number of Ordinary Shares held on the
Record Date.
The Open Offer Shares, when issued and fully paid, will rank pari passu in all
respects with the Existing Ordinary Shares, including the right to receive all
dividends and other distributions declared, made or paid after the date of
their issue.
Application forms are personal to shareholders and may not be transferred
except to satisfy bona fide market claims.
The Placing and Open Offer is conditional inter alia, on the passing of the
Resolution, the Acquisition Agreement and the Placing and Open Offer Agreement
each becoming unconditional and not being terminated and on Admission becoming
effective. It is expected that Admission of the Open Offer Shares and Existing
Ordinary Shares will take place and dealings in those shares will commence on
14 November 2000.
GWB has irrevocably undertaken to subscribe for its maximum entitlement under
the Open Offer, which amounts in aggregate to 859,090 Open Offer Shares (90
per cent). The remaining 95,455 Open Offer Shares (10 per cent.) have been
unconditionally placed with GWB subject to clawback to satisfy valid
applications under the Open Offer.
In addition to GWB's undertaking, certain of the Company's Directors, Dylan
Wilk, Phillip Bennett and Bob Bond, who hold 25,000, 15,000 and 5000 Existing
Ordinary Shares respectively, have irrevocably undertaken to Peel Hunt to
subscribe for their maximum entitlements under the Open Offer, which amount in
aggregate to 12,271 Open Offer Shares (approximately 1.3 per cent).
Expected timetable of principle events
Record date 13 October 2000
Impact day 20 October 2000
Last splitting date 8 November 2000
Open offer close date 10 November 2000
Extraordinary General Meeting 13 November 2000
Dealings 14 November 2000
CREST credit accounts + 5 days
Certificates issued + 10 days
Eq Group (LSE:EQI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Eq Group (LSE:EQI)
Historical Stock Chart
From Jul 2023 to Jul 2024
