RNS Number:3410B
Sportsworld Media Group PLC
24 November 1999
SPORTSWORLD EXPANDS IN AUSTRALIA & THE ASIA PACIFIC REGION
PLACING AND A 3 FOR 10 OPEN OFFER OF 11,319,149 ORDINARY SHARES AT AN ISSUE
PRICE OF 280P PER SHARE TO RAISE #31.7 MILLION GROSS
ACQUISITION OF AUSTRALIAN MEDIA HOLDINGS PTY LIMITED FOR A TOTAL CONSIDERATION
OF #22.4 MILLION PAYABLE IN CASH AND SHARES
* Sportsworld Media Group plc, the international sports television
production, sponsorship and event marketing company, announces
- a placing and open offer fully underwritten by Investec Bank (UK)
Limited to raise #31.7 million
- the acquisition of Australian Media Holdings Pty Limited ("AMH")
- that Investec Henderson Crosthwaite has agreed to place 2,000,000
Ordinary Shares at 280p per share on behalf of the trustees of a trust
of which Jeffrey Chapman, Chairman of the Company, is a beneficiary, in
order to satisfy in part institutional demand for Ordinary Shares of
Sportsworld
* The consideration for AMH comprises a cash consideration of #8.4 million
and 4,997,322 New Ordinary Shares in the Company
* AMH is an Australian-based television and print media sales and sports
sponsorship and television production group
* Sportsworld expects to benefit from AMH's:
- expertise and contacts in the Australian television and print media;
- relationships with media representatives and key media buyers in
Australia and Asia;
- stable cashflow; and
- the potential through AMH to grow recently developed revenue streams
* AMH fits Sportsworld's acquisition criteria by increasing the Group's
customer base and geographic coverage and by providing opportunities to
expand core businesses and develop new revenue streams
* In the year ended 30 June 1999, AMH achieved pre-tax profits of #919,000
on turnover of #3.2 million
* The acquisition follows the flotation of Sportsworld in December 1998 and
the subsequent purchase of SSM Freesports, Netsports and Lone Eagle
* Net proceeds of the Placing and Open Offer of #29.8 million will fund the
cash element of the consideration, finance further acquisitions and
provide additional working capital for the Enlarged Group. Shareholders
can subscribe for 3 Open Offer Shares for every 10 Existing Ordinary
Shares held at 280p per share
* Sportsworld is currently trading in line with Directors' expectations
Commenting on the acquisition and the fund-raising, Geoff Brown, Sportsworld's
Chief Executive said:
"The acquisition of AMH is the next logical step in Sportsworld's
international expansion and is consistent with our strategy of creating an
international sports media and entertainment group, both through acquisitive,
and organic, growth.
AMH has well developed relationships with television groups and media
representatives in Australia and Asia. We expect to capitalise on these in the
sale of our current sports programmes. We also anticipate that as part of a
larger sports media group, AMH's businesses in sports sponsorship,
merchandising and event management will show good growth.
AMH has developed a strong market position through a talented management team.
For Sportsworld, this is a good deal at a fair price.
The fundraising provides us with the ideal financial platform from which to
pursue our strategy of building a global sports media and entertainment
group."
Enquiries:
Geoff Brown, Chief Executive
Andy Fletcher, Chief Financial Officer
Sportsworld Media Group plc Tel: 0207 240 9626
Jagjit Mundi, Managing Director of Corporate Finance
Investec Henderson Crosthwaite Tel: 0207 597 5970
Tim Spratt, Director / Tania Wild
Financial Dynamics Tel: 0207 831 3113
There will be a presentation to analysts at 11.00 a.m. and a press briefing at
12.15 p.m., both at Investec Henderson Crosthwaite, 2 Gresham Street, London,
EC2V 7QP.
Introduction
Sportsworld announces that it has entered into a conditional agreement to
acquire the entire issued share capital of Australian Media Holdings Pty
Limited.
The total consideration for the Acquisition is approximately #22.4 million.
The consideration comprises approximately #8.4 million payable in cash on
Completion and the issue of 4,997,322 New Ordinary Shares, which at the Issue
Price, have an aggregate value of #14.0 million. Those of the Vendors who are
involved in the management of AMH have agreed, subject to certain exceptions,
not to dispose of their Consideration Shares until 30 April 2001.
Sportsworld also announces an Open Offer to Qualifying Shareholders to raise
approximately #29.8 million net of expenses (#31.7 million before expenses)
which is fully underwritten by Investec Bank. The proceeds of the Placing and
the Open Offer will be used to fund the cash element of the consideration, to
finance further acquisitions and to provide the Enlarged Group with additional
capital to develop its businesses. Following the satisfaction of the cash
element of the consideration and the costs of the Proposals, approximately
#21.4 million will be placed on deposit by the Company.
In view of its size in relation to Sportsworld, the Acquisition is
conditional, inter alia, upon the approval of Shareholders which is to be
sought at an Extraordinary General Meeting to be held at 10.15 a.m. on 20
December 1999 at the offices of Norton Rose, Kempson House, Camomile Street,
London EC3A 7AN.
Investec Henderson Crosthwaite has agreed to place 2,000,000 Ordinary Shares
at the Issue Price on behalf of the trustees of a trust of which Jeffrey
Chapman, Chairman of the Company, is a beneficiary, in order to satisfy in
part institutional demand for Ordinary Shares of Sportsworld. This trust will
retain 18,313,347 Ordinary Shares which will represent 33.8 per cent of the
issued share capital of the Company as enlarged by the Proposals. This
placing is conditional upon the Proposals.
Information on AMH
AMH is a diverse media group headquartered in Sydney, Australia, which has
operations in Australia and which also represents clients based in the Asia
Pacific Rim. The businesses of AMH include television and print media sales
representation, sports sponsorship, licensing, merchandising, television
programme creation and co-production.
Television airtime sales
The majority of AMH's turnover currently relates to the sale of regional
television airtime for independently owned television stations, including
regional affiliates of the Channel Ten Network, one of Australia's three
commercial television networks. These affiliates operate in the aggregated
television markets and are owned by two of AMH's major customers, Southern
Cross Broadcasting (Australia) Limited and Telecasters Australia Limited.
AMH also represents non-aggregated regional television networks in South
Australia and the Northern Territory. In addition it represents Optus Vision,
one of Australia's cable television operators, and provides Australian
representation for overseas television networks including Television New
Zealand (TVNZ) and the Asia region Network Star TV (Star TV).
Relationships have been developed with international and Australian media
buying companies, including Zenith Media, OMD, Young & Rubicam, Mitchell Media
Partners and Carat Bray Media. These relationships represent a significant
proportion of the programme sponsorship and airtime sales of AMH.
AMH also manages airtime sales and sponsorship for the in-flight entertainment
system of Australia's Ansett Airlines.
Print media sales
AMH has been engaged to sell advertising space in a variety of international
newspapers and magazines with a business focus. In addition, it offers
companies seeking to raise their profile the opportunity to sponsor such
publications.
AMH's print media sales business covers a diverse range of international
publications sold in Australia. Relationships have been developed with
high-profile international publications such as the London Financial Times,
Asia Week and Der Spiegel.
Sports sponsorship, licensing and merchandising
AMH sources and implements sponsorship for sporting events such as the rugby
Super 12 tournament and Surf Life Saving and also for Netball Australia and
New South Wales cricket.
AMH is also involved in merchandising and licensing activities for the
Australian National Rugby League competition and world record swimmer Ian
Thorpe and was engaged in securing sponsorship, licensing and merchandising
opportunities for the 1999 Australian tours by Pavarotti and the Kirov Ballet.
Management of AMH
AMH has a strong management team which the Directors believe has developed
excellent relationships within its markets.
Financial Record of AMH
Set out below is a summary of the financial record of AMH for the three years
ended 30 June 1999, which has been extracted without material adjustment from
the accountants' report to be set out in Part 3 of the Prospectus to be sent
to Shareholders.
Year ended Year ended Year ended
30 June 1997 30 June 1998 30 June 1999
#'000 #'000 #'000
Turnover 2,832 2,637 3,202
Operating profit 806 704 931
Profit before tax 765 680 919
The turnover and operating profit as reported in AUS$ and as restated using a
constant exchange rate of AUS$2.384 to #1.00 sterling (the closing rate at 30
June 1999) were as follows:
Year ended Year ended Year ended
30 June 1997 30 June 1998 30 June 1999
Turnover
As reported in AUS$'000 5,841 6,374 8,381
--------- --------- --------
Restated in #'000 at
AUS$2.384/#1.00 2,455 2,678 3,516
--------- --------- --------
Operating profit
As reported in AUS$'000 1,578 1,644 2,405
--------- --------- --------
Restated in #'000
at AUS$2.384/#1.00 662 690 1,009
--------- --------- --------
Background to and reasons for the Acquisition and the Placing and the Open
Offer
It is the Directors' strategy to broaden Sportsworld's existing business to
create a global sports media and entertainment group both through organic
growth and, where appropriate, by acquiring businesses whose profitability can
be enhanced by the Company.
The Directors believe that Sportsworld will benefit from:
- the expertise and contacts in Australian television and print media
established by AMH;
- the relationships which AMH has developed both with media representatives
and key media buyers in Australia and Asia;
- the addition of a business with stable cashflow; and
- the potential to grow recently developed revenue streams.
The Consideration
The total consideration payable by Sportsworld to the Vendors under the
Acquisition Agreement for AMH is #22.4 million. This is to be satisfied
through the payment of #8.4 million in cash on Completion and through the
Issue to the Vendors of the Consideration Shares. #3.7 million of the cash
consideration will be paid into an escrow account and shall be applied to the
settlement of any tax liability of the Vendors arising in respect of the
Acquisition. Any amount standing to a Vendor's credit as at 30 April 2001
shall be paid to the relevant Vendor as soon as practicable after that date.
Those of the Vendors who are involved in the management of AMH have agreed,
subject to certain exceptions, not to dispose of their Consideration Shares
until 30 April 2001. The Vendors have given limited warranties (subject to
certain limitations) to the Company relating to the business of AMH and its
subsidiaries, and in addition have given an indemnity with regard to taxation.
In addition, two of the Vendors, Richard Hutchinson and Graham Hartmann will,
at completion, enter into service agreements, terminable on 12 months' notice,
with the Company to continue in their respective roles as Chairman and
Managing Director of AMH.
Details of the Placing and Open Offer
The Placing and the Open Offer, which have been fully underwritten by Investec
Bank, will raise approximately #31.7 million gross (#29.8 million net of
expenses) which will be used to fund the cash element of the consideration, to
provide finance for smaller acquisitions and to provide the Enlarged Group
with additional capital to develop its businesses. Save as to the extent
required to fund the cash element of the consideration and the costs of the
Proposals, the proceeds of the Placing and Open Offer will be placed on
deposit.
General
The Open Offer Shares will, in aggregate, represent approximately 20.9 per
cent. of the enlarged ordinary share capital of the Company on Admission. The
Open Offer Shares will be issued credited as fully paid and will, on issue,
rank pari passu with the Existing Ordinary Shares and the Consideration
Shares.
The Placing and the Open offer are conditional, inter alia, on:
(a) the passing of the Resolution;
(b) the Placing Agreement becoming unconditional, save for Admission, by no
later than 23 December 1999, (or such later time as the Company and
Investec Bank may agree being not later than 11 January 2000) and not
having been terminated in accordance with its terms;
(c) the Acquisition Agreement becoming unconditional and having completed
(save as regards payment and satisfaction of the consideration) prior to
Admission and not having been terminated prior to Admission; and
(d) Admission.
Dealings in the Open Offer Shares are expected to commence on 23 December
1999.
The Placing and the Open Offer
Investec Henderson Crosthwaite, as agent for the Company, has conditionally
agreed to procure placees (including itself in respect of 217,454 New Ordinary
Shares) for the Open Offer Shares at the Issue Price subject to recall (save
for those Open Offer Shares in respect of which irrevocable undertakings not
to take up have been received, as described below) to satisfy valid
applications by Qualifying Shareholders pursuant to the Open Offer.
Qualifying Shareholders will be invited by Investec Henderson Crosthwaite, as
agent for the Company, to subscribe under the Open Offer for New Ordinary
Shares at the Issue Price free of expenses, pro rata to their existing
shareholdings, on the basis of:
3 Open Offer Shares for every 10 Existing Ordinary Shares
held on the Record Date and so in proportion for any greater or smaller number
of Existing Ordinary Shares then held. The amount due in respect of each
application for Open Offer Shares is payable in full on application.
Entitlements to Open Offer Shares will be rounded down to the nearest whole
Open Offer Share. Fractional entitlements will not be allotted but will be
aggregated and placed for the benefit of the Company. The maximum entitlement
of a Qualifying Shareholder will be indicated on the Application Form which
will accompany the Prospectus to be posted to Shareholders. Application Forms
are personal to the Shareholder(s) named thereon and may not be transferred,
assigned or split except to satisfy bona fide market claims in relation to
purchases of Existing Ordinary Shares through the market prior to the date
upon which the Existing Ordinary Shares were marked "ex" the entitlement to
the Open Offer by the London Stock Exchange. Applications for Open Offer
Shares in excess of such maximum entitlement will be treated as applications
for the maximum pro rata entitlement. Any Open Offer Shares not taken up
under the Open Offer will be subscribed for pursuant to the terms of the
Placing and otherwise in accordance with the Placing Agreement.
Irrevocable Undertakings
Irrevocable undertakings not to take up their entitlements under the Open
Offer have been received from the trustee of trusts of which Jeffrey Chapman
and Geoff Brown are beneficiaries in respect of, in aggregate, 22,655,633
Existing Ordinary Shares, representing approximately 60.0 per cent. of the
Existing Ordinary Shares. The entitlements arising from these shares, being
in aggregate, 6,796,689 New Ordinary Shares, have been placed firm by Investec
Henderson Crosthwaite Securities (as agent for the Company) with institutional
investors.
Current trading and prospects
The Company is benefiting from the strengthening of the Company's sales force
and management and is currently trading in line with the Directors'
expectations. As a result, in part, of the fact that the industry's major
trade shows do not begin until the fourth quarter of the calendar year, a
significant portion of the Company's budgeted revenue for the year ending 30
June 2000 is again expected to be attributable to the Company's trading
performance in the second half of the financial year.
The directors of AMH have confirmed that AMH is currently trading within their
expectations and, accordingly, the Directors believe that the Enlarged Group
is well positioned to exploit the opportunities which the Directors believe
will be available to it in the future.
Expected Timetable of Principal Events
Record Date for the Open Offer Monday 22 November 1999
Announcement of Proposals, Existing Ordinary
Shares marked "ex" Wednesday 24 November 1999
Prospectus posted to Qualifying Shareholders
Thursday 25 November 1999
Latest time and date for splitting (to satisfy
bona fide market claims only) Monday 13 December 1999
Open Offer closes Wednesday 15 December 1999
Latest time and date for receipt by Harford Registrars
of form of proxy Saturday 18 December 1999
EGM Monday 20 December 1999
Admission of New Ordinary Shares Thursday 23 December 1999
CREST accounts credited Thursday 23 December 1999
Share certificates dispatched, where relevant
Friday 24 December 1999
Prospectus
It is expected that a Prospectus, setting out details of the Acquisition and
the Placing and the Open Offer and including a notice of Extraordinary General
Meeting, will be posted to Qualifying Shareholders on Thursday 25 November
1999.
Definitions
In this announcement, and in the Prospectus, the following words and
expressions shall, except where the context requires otherwise, have the
following meanings:
"Acquisition" the proposed acquisition of AMH
"Acquisition Agreement" the conditional agreement dated 24 November 1999
between (inter alia) Sportsworld and the Vendors
relating to the acquisition of AMH by the Group
"Act" the Companies Act 1985 (as amended)
"Admission" the admission of the New Ordinary Shares to the
Official List of the London Stock Exchange
becoming effective
"AMH" Australian Media Holdings Pty Limited
"AMH Group" AMH and its subsidiaries
"Application Form" the non-renounceable application form which will
accompany the Prospectus for use by Qualifying
Shareholders who wish to apply for Open Offer
Shares under the terms of the Open Offer
"AUS$" Australian dollars
"Board" or "Directors" the board of directors of Sportsworld
"Company" or "Sportsworld" Sportsworld Media Group plc
"Completion " completion of the Acquisition, expected to take
place on 23 December 1999
"Consideration Shares" the 4,997,322 New Ordinary Shares to be issued
to the Vendors pursuant to the Acquisition
Agreement
"Enlarged Group" the Company and its subsidiaries following
Completion
"Existing Ordinary Shares" the 37,730,498 Ordinary Shares in issue at the
date of this announcement
"Extraordinary General
Meeting" or "EGM" the extraordinary general meeting of the Company
to be convened for 10.15 a.m. on 20 December
1999, or any adjournment of such meeting
"Group" the Company and its subsidiaries
"Investec Bank" Investec Bank (UK) Limited
"Investec Henderson
Crosthwaite" Investec Henderson Crosthwaite, a division of
Investec Bank
"Issue Price" 280 pence per New Ordinary Share
"Listing Rules" the Listing Rules of the London Stock Exchange
"London Stock Exchange" London Stock Exchange Limited
"New Ordinary Shares" the Open Offer Shares and the Consideration
Shares
"Official List" the official list of the London Stock Exchange
"Open Offer" the invitation to be made by Investec Henderson
Crosthwaite on behalf of the Company to
Qualifying Shareholders to subscribe for Open
Offer Shares at the Issue Price on the terms and
conditions to be set out in the Prospectus and
in the Application Form
"Open Offer Shares" 11,319,149 New Ordinary Shares which are to be
made available to Qualifying Shareholders
pursuant to the Open Offer and which have been
conditionally placed under the Placing
"Ordinary Shares" the ordinary shares of 1p each in the share
capital of the Company
"Placing" the conditional placing by Investec Henderson
Crosthwaite of the Open Offer Shares at the
Issue Price, subject to the right of the
Qualifying Shareholders to apply for such shares
pursuant to the Open Offer
"Placing Agreement" the agreement dated 24 November 1999 between
Investec Bank (UK) Limited, acting through its
division Investec Henderson Crosthwaite (1) and
the Company (2) relating to the Placing and the
Open Offer
"Proposals" the Acquisition, the Placing and the Open Offer
"Prospectus" the prospectus relating to the Proposals
expected to be posted to shareholders on or
before 25 November 1999
"Qualifying Shareholders" Shareholders on the register of members of the
Company at the close of business on the Record
Date, other than certain overseas Shareholders
"Record Date" the close of business on 22 November 1999
"Resolution" the special resolution to be proposed at the EGM
"Shareholder" a holder of Ordinary Shares
"Vendors" the shareholders of AMH, being the companies and
individuals set out or referred to in the
Acquisition Agreement
Unless otherwise specified, all currency equivalents shown in this
announcement are based on an exchange rate of AUS$ 2.54 to #1.00 sterling,
the exchange rate prevailing at 23 November 1999, the latest practicable date
prior to the publishing of this announcement.
END
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