RNS Number:1944B
Virtue Broadcasting PLC
23 July 2004
For immediate release
Virtue Broadcasting Plc
("Virtue" or the "Company")
Merger with
World Television Group Limited
("World")
Virtue Broadcasting Plc is pleased to announce that the Company has
conditionally agreed to the merger of Virtue with World Television Group Ltd ('
World'). World is an international corporate television, news production and
event management company that offers a broad range of corporate communication
services through traditional broadcast media, business television networks and
IP networks.
Merger Highlights:
* The merger will be effected by the acquisition by Virtue of the entire
share capital of World for a total consideration of #18.1 million.
* The consideration will be satisfied by cash of #1.0 million and the
issue of 440,800,265 new ordinary shares, which represents 58.2 per cent. of the
share capital of the Company as enlarged by the merger.
* World achieved a profit before tax of #886,000 on turnover of #3.7
million in the six months ended 31 December 2003.
* As the merger is classed as a 'reverse takeover' under the AIM Rules
it is conditional upon approval by the Company's shareholders at an EGM which
has been convened for 18 August 2004.
* As at the date of this announcement, Virtue has received irrevocable
commitments to vote in favour of the merger in respect of 61,989,451 ordinary
shares representing 19.9 per cent. of the existing issued share capital of
Virtue.
Rationale and Benefits of the Merger:
Highly Complementary Services:
* Historically, Virtue has outsourced the services offered by World when
implementing its corporate communication solutions for its clients. As an
enlarged entity the Group will be able to capture the entire customer revenues
associated with corporate communications contracts.
Significant Strategic, Commercial and Financial Synergies:
* Beyond the capture of enlarged customer revenues it is firmly
believed that the value of both companies can be significantly enhanced through
cross-selling, improved margins, cost savings and broader customer contact
leading to more robust long term revenues.
Market Differentiation:
* The enlarged Group will differentiate itself by providing its
customers with fully integrated solutions which comprise of a broad set of
corporate communications services that are highly attractive and have
significant longevity. This will be underpinned by an organisation which has
scale, global reach and a clear focus on technical excellence.
Full Product Array:
* The enlarged Group's products will include content creation, content
management, webcasting, webconferencing and content distribution services which
will be delivered to a wide customer base of major corporate, government and
international organisations.
Efficient Integration and Profitability:
* Virtue has the capacity and experience to successfully integrate the
IP network service offering of World thus eliminating duplicated costs further
enhancing shareholder value.
* World has numerous long-term customer relationships and contracts,
significant profitability, and high quality management who have long and
reputable careers in this part of the industry. They will complement the current
management team extremely well, and add significant gravitas to the overall
business.
Mike Neville, Chairman of Virtue, commented:
"Over the past 18 months we have successfully grown Virtue into one a leading IP
based corporate communications company working with many blue chip companies
including British American Tobacco, Microsoft, UBS, BBVA and Reuters. Through
acquisition we have built a truly global IP communications solution that has
been warmly received by our existing client base.
The merger with World will enable us fully to exploit both our technical
expertise and global reach as well as providing us with the capability to
deliver a vertically integrated and complete IP based corporate communications
package. I firmly believe that our combined offering will be highly attractive
to both current and potential clients and that we will be able to capture
enhanced value through the numerous cross-selling opportunities that will be
afforded to us through both our own, and World's, ongoing mature commercial
relationships. World brings with it a truly impressive client base including BP,
Nestle, Reuters and Sony and I look forward to the coming months with increased
excitement."
This summary should be read in conjunction with the full text of the following
announcement.
For further enquiries, please contact:
Virtue Broadcasting Plc
www.virtuebroadcasting.com
Mike Neville, Chairman +44 (0) 20 7785 6000
James Ormondroyd, Finance Director +44 (0) 20 7785 6000
World Television Group Limited
www.world-television.com
Jon King, Chief Operating Officer +44 (0) 20 7388 8555
Hansard Communications
Andy Tan +44 (0) 20 7245 1100
For immediate release
Virtue Broadcasting Plc
("Virtue" or the "Company")
Merger with
World Television Group Limited
("World")
Earlier today, the Virtue board conditionally agreed to the merger of Virtue and
World (the "Merger") to be effected by the acquisition by Virtue of the entire
share capital of World for a total consideration of #18.1 million.
World is an international corporate television, news production and event
management company. It offers a broad range of corporate communication services
through traditional broadcast media, live events, IP ("Internet Protocol")
networks and business television networks. It achieved a profit before tax of
#886,000 on turnover of #3.7 million in the six months ended 31 December 2003.
The consideration will be satisfied by cash of #1.0 million and the issue of
440,800,265 New Ordinary Shares representing 58.52 per cent of the share capital
as enlarged by the Merger.
As the Merger is classed as a 'reverse takeover' under the AIM Rules, it is
conditional upon approval by the Company's shareholders at an extraordinary
general meeting of Virtue shareholders. In addition, for the Merger to proceed,
approval by Virtue shareholders is required for the waiver of Rule 9 of the
Takeover Code granted by the Takeover Panel. Your Board is also seeking approval
to appoint additional directors, conditionally upon and simultaneously with
completion of the Merger, to effect a capital reorganisation, and a share option
reorganisation, to increase the authorised share capital of the Company, to
grant authority to allot the consideration shares and for the dis-application of
statutory pre-emption rights on new share issues.
An EGM has been convened for these purposes to be held at the offices of Taylor
Wessing at Carmelite, 50 Victoria Embankment, London EC4Y 0DX at 10.00 a.m. on
18 August 2004.
Background to the Merger
In June 2003 the Board of Virtue made a strategic decision to concentrate the
Virtue group's resources to address the corporate communications market, in
which it has a blue chip customer base including PeopleSoft Inc, British
American Tobacco PLC and EMI Group PLC. The Virtue group's UK Media Services
Division was divested in June 2003, leaving the Group as a provider of IP based
corporate communications. Since that time, the Virtue group has enhanced its
service offering in Europe by acquiring the business of Unit.Net A.G. (with
offices in Switzerland, Germany, Spain and the UK) ("Unit.Net") in July 2003,
Kamera Holdings AB (Sweden) ("Kamera") in January 2004 and Foroso Communications
GmbH (Germany) in May 2004 as well as smaller acquisitions in Australia.
The Virtue board has consolidated these companies into one discrete, cost
efficient unit, which provides a scalable platform to deliver IP based services
to the Group's customers. The Board believes that the market is moving towards a
single, converged IP based voice-video-data network and is positioning the Group
to address this market.
The Virtue board believes that there are synergies and cross-selling
opportunities to be captured by vertical integration to provide a wider range of
services needed to fulfil government and corporate webcasting and
webconferencing needs. By augmenting its products and services with those
provided by World, the Company will be able to supply a multimedia
communications package to a European and Asia-Pacific customer base.
Virtue has, in addition, strengthened its balance sheet by the placing of #3.1
million (before expenses) of new shares in May 2004.
Strategic Rationale for the Merger
The Virtue business has experienced a significant turnaround over the last 12
months. The Virtue directors believe that the pace of consolidation within the
sector is quickening. As a result, the Virtue directors believe that those
organisations with scale, differentiation and geographical reach, who already
have a broad existing customer base, are well placed to take advantage of the
growth in integrated, value added services to corporate customers on a global
basis. The Virtue directors anticipate that as a result of the Merger, the
enlarged group will provide a wider range of corporate communications packages.
Virtue has managed to reduce its cost base, grow organically as well as by
acquisition, and position itself to become one of the leaders in corporate
webcasting across Europe. Virtue has also made an initial foray into
web-conferencing with the purchase of Foroso, which was announced in May.
In order to develop the business further, the Virtue directors have identified a
distinct need to develop an expanded business in the group's core area of
corporate communications, which depends upon a significant amount of managed
services, and where usually the average revenue per customer or event is
substantially higher compared with webcasting as a consequence. For these
reasons it is believed that the customer spend can be increased through
cross-selling activities within the enlarged group. At present, in many cases,
Virtue's provision of webcasting, whilst an integral part of a "whole event" for
a customer, is a small element of the overall service value. To date, Virtue or
its customers have outsourced much of the production and content creation
elements of the overall service to audio-visual companies on a sub-contract
basis.
The Merger with World is intended to create an entity that can deliver an array
of corporate communications services including content creation, content
management, webcasting and webconferencing and content distribution for major
corporate and governmental customers worldwide.
A world wide increase in the volume of communications distributed across IP
networks is expected to produce major growth over the coming years. World is
currently a profitable business recording profit before tax of #886,000 in the
six months to 31 December 2003. Virtue has recently strengthened its balance
sheet with the placing of #3.1 million (before expenses) of new shares in the
Company. The Directors believe that, when combined with World, which has a
complementary customer base of major corporate customers, the Enlarged Group
will be well positioned to take advantage of this growth opportunity in the
markets in which it operates.
The enlarged group will have a combined offering of depth and competencies,
together with a broad customer base across Europe and Asia Pacific, delivered
from offices in six countries.
Information on World
World is an international visual communications and news production company with
digital media distribution at the heart of its business. World's services
include consultancy, broadcast production, media relations, business television,
satellite media tours, webcasting and digital media distribution over IP
networks and content programming. Its aim has been to become the first choice
among corporations, governments and international organisations for integrated
internal and external communications. Further details of its operations are set
out below.
History of World
World was founded in 1991 by Andrew Booth and Peter Sibley to provide a range of
production services to international organisations such as Greenpeace and
Amnesty International to communicate their issues, activities and events to a
global audience.
In 1999, World launched Reuters World Alert, a global news service, enabling
organisations in the NGO (non-governmental organisation) sector to distribute
their news stories to broadcasters over the Reuters World News Service.
In 2000, World won a major long term contract, British Satellite News (BSN),
with the UK Government's Foreign and Commonwealth Office to provide a daily
television news service promoting Britain and British government policy
delivered via satellite to global broadcasters for use in their news
programming.
World established a business television unit in 2001 to expand its range of
services. This unit currently works with many of the world's leading businesses,
including BP plc, Nestle, Reed Elsevier plc, Reuters Group plc and Sony.
To provide a platform to support World's content delivery over IP networks, UCTX
Limited ("UCTX") was acquired in 2002. UCTX was a provider of webcast services
to the investor relations community which provided opportunities for further
growth. Streaming live, interactive or on demand content to screens and personal
computers now underpins World's business television, news and investor relations
content production. The platform has been integrated into World's business and
enables World to provide a range of services which support internal and external
communications.
The World directors believe that the Company's ability to produce and distribute
content with high quality customer service has been a key driver behind winning
clients like the World Economic Forum, MTV Europe and Nestle.
Jon King was appointed as Chief Operating Officer for the global business in
2002.
World won a variation to the BSN contract to produce strategic news service for
Iraq (called "Towards Freedom") following the cessation of major conflict in
that country in April 2003.
Recent developments include sponsored programming in which companies and
organisations can sponsor and pay for the production and placement of
programming. World buys airtime from CNBC Europe to develop sponsored
programming initiatives and has recently signed a contract with the United
Nations Development Programme to create and produce a sponsored series of
programmes.
World's Operations
World is based in London from where it provides a range of news and corporate
services for internal or external distribution for clients. These services
include:
Business television and corporate productions
World provides business television services which allow companies to communicate
with various groups, such as employees, shareholders or customers.
Distribution
Delivering content over the Reuters News Service to broadcasters around the
world.
Streaming/webcasting
With webcasting, financial, corporate or press events can be delivered to
audiences geographically spread throughout the world which is bundled into
software included in standard personal computers. On line programmes can be
live, on demand or interactive, with integration into other business oriented
intranet applications.
Programming
Growth in demand across the world for sponsored or paid-for programming provides
opportunities to positively influence audiences of scale. World is able to
provide sponsored or paid for facilities to clients, enabling it to purchase
airtime from broadcasters for company profiles or to publicise issues of wider
interest to the business community.
Consultancy
Providing strategic planning or creative solutions, effectively reaching target
audiences or meeting business objectives.
Production
Various production models can be provided, such as:
- a "B-roll" package , which is a compilation of interviews and
video footage edited for use by broadcasters (with a video news
release, narration is added); or
- a satellite media tour, where a spokesperson can be interviewed
live via satellite by selected broadcasters.
Media relations
Placing stories with news editors and correspondents around the world and
reporting on results.
Archive
Under the trading name World Images, World provides NGO footage, managing
archives and supporting clients' use of their content.
Live events
Conferences, product launches, press briefings and roadshows.
The Market
The UK market for corporate video and business television was worth #490 million
in 2003, according to IVCA (Source: International Visual Communications
Association (IVCA) Business Media Handbook 2004).
Whereas many sectors were weak in 2003, there is an expectation of growth of 5
per cent. in 2004 with additional growth resulting where producers can maximize
the potential of streaming technologies, which have proven their effectiveness
and have an ever-growing penetration.
On the basis of the IVCA's figures, World's UK market share in 2003 was
approximately 1 per cent. The UK market is characterised by considerable variety
in size among suppliers. There are several large companies and a vast range of
small to medium-sized companies.
The market in advanced integrated communications is experiencing growth, which
the World directors expect to continue over the coming years.
World's production proposition is based on integrated content creation and
distribution of this content over corporate IP networks, deregulated broadcast
programming outlets and the internet. The Proposed Directors believe that a
vertically integrated business will enable the creation of significant potential
value for shareholders.
These opportunities include new forms of live, interactive and on-demand
business communications and global news services for governments, international
organisations and businesses. World is creating a business delivering content
creation, content management and distribution services which its directors
anticipate will create new revenues and shareholder value in the future.
Financial Information on World
The trading record of World for the three years ended 30 June 2003 and the six
month period ended 31 December 2003 is summarised below, and has been extracted
from the Report and Accounts of World which are included as Appendices to this
document.
6 months Year ended Year ended Year ended
ended 31/12/03 30/06/03 30/06/02 30/06/01
#'000 #'000 #'000 #'000
Turnover 3,660 4,896 4,895 3,054
Gross Profit
- continuing operations 2,339 3,386 3,072 1,660
Operating profit/(loss)
- continuing operations 881 541 131 (1,190)
Profit/(loss) on ordinary
activities before tax 886 538 118 (1,209)
In the three and half years to 31 December 2003, World exhibited a growth in
turnover, and a corresponding increase in profit. The overall level of overheads
has not varied significantly over the period and, as a result, considerable
increases in profits have been achieved.
A significant amount of earnings has been accounted for by a small number of
clients, particularly with the UK Government's Foreign and Commonwealth Office
in each of 2001, 2002 and 2003.
Information on Virtue
Virtue is a corporate IP communications solutions provider in Europe and Asia
Pacific enabling corporations to communicate both internally and externally, to
support their business goals cost effectively. Virtue provides organisations
with the technology infrastructure, software solutions and services which enable
them to create and deliver communications which complement their global
communications strategies. It is headquartered in London, and has offices in
Zurich, Frankfurt, Munich, Stockholm, Madrid and Sydney, and serves several
hundred corporations.
Principal terms of the Merger
Earlier today, the Company and the majority shareholders in World (the
"Principal Vendors") entered into a sale and purchase agreement pursuant to
which Virtue has agreed to acquire, and the Principal Vendors have agreed to
sell, approximately 99.2 per cent. of the issued ordinary share capital of
World.
Completion of the Merger is conditional upon, inter alia, the acquisition,
simultaneously with the acquisition of the Principal Vendors', shares, by Virtue
of all the shares in World not held by the Principal Vendors pursuant to
separate, short-form sale and purchase agreements. In the event that any
minority shareholder declines to enter into such an agreement, Virtue will be
entitled to acquire the shares in World held by such holder pursuant to '
drag-along' provisions contained in World's articles of association.
The consideration to be paid by Virtue pursuant to the Merger values World at
#18.1 million. The consideration comprises the issue of 440,800,265 new ordinary
shares and #1.0 million in cash payable within 15 business days of completion.
The sale and purchase agreement is conditional, inter alia, upon:
(a) admission of the consideration shares to AIM; and
(b) the passing by Virtue shareholders of the resolutions to approve:
(i) the Merger;
(ii) the Rule 9 waiver by the Takeover Panel;
(iii) authorisation for the Directors to allot shares;
(iv) the dis-application of pre-emption rights; and
(v) the appointment of the Proposed Directors to the Board
Under the terms of the sale and purchase agreement, certain of the Principal
Vendors have given warranties to the Company and a tax deed of covenant, and the
Company has given limited warranties to certain of the Vendors.
The consideration shares will, upon completion, rank pari passu with the new
ordinary shares held by existing Virtue shareholders.
Current Trading
Virtue
The Board anticipates that Virtue will show further improvements in performance
for both existing and acquired businesses in 2004 compared with 2003. This is
evidenced by the Group winning business from 40 new clients in the first quarter
of 2004 including Carl Zeiss and Alliance & Leicester. In particular the Board
expects that the acquired Unit.Net business will contribute further to revenue
performance following its recovery from liquidation and that operating synergies
with Kamera, acquired in January 2004, will be achieved.
The integration of Kamera has now been completed and this business is performing
to expectation. The integration has delivered cost savings within the Kamera
organisation, and has enabled it to win new business including a contract with
Vodafone Sverige AB for the provision of mobile content services worth #300,000
over a one year initial period.
Central costs are expected to increase to enable the Board to manage better its
European operations and to assist in the implementation of the Group's policy of
expansion.
World
Trading at World continues to be strong following the completion of the "Towards
Freedom" contract in February 2004 and visibility going forward of confirmed
business is encouraging. The performance of the new areas of operations,
specifically programming and events, are demonstrating that they can deliver
revenues and further broaden the Enlarged Group's customer base.
Prospects for the Enlarged Group
By combining Virtue's and World's product service offerings and exploiting their
combined customer base, the Enlarged Group will become a provider of integrated
communication solutions and related services. Revenues per customer should be
enhanced through taking advantage of the cross-selling opportunities that will
be created by the merger.
Board Changes
Following completion, the Virtue board will comprise of Mike Neville as
non-executive Chairman, James Ormondroyd as Finance Director, Klaus Ackerstaff
as Chief Technical Officer and Giles English as non-executive director.
In addition Jon King, Andrew Booth and Peter Sibley will be appointed to the
Board as executive directors along with Anthony Bartlett as a non-executive
director.
The Board
Details of the Board following completion are set out below:
Michael Neville (aged 50) Chairman
Michael joined the Board as non-executive Chairman in June 2003, following over
15 years' experience in the telecoms sector. He has held senior management roles
at Cable & Wireless, and at Norweb Telecom where he was a main board director.
He is also a non executive director of a number of private companies, where he
specialises in corporate strategy, mergers and acquisitions. He has been
instrumental in re-focusing the Group's strategy since the disposal of Virtue
Media Services Limited in June 2003.
Jon King (aged 49) Chief Executive
Jon joined World as chief operating officer in mid-2002 and has successfully
implemented its business strategy, delivering growth and profits. He was
previously head of European business for John Ryan International's content
creation and delivery division, Screenred. Jon's previous roles include:
managing director of Convergent Technology Limited; main board director of
MarCom Group PLC, delivering streamed content to screens over IP networks and
the internet for major corporates; and director of group business development
for WPP's Clever Media Group.
James Ormondroyd (aged 32) Finance Director
James joined Virtue Broadcasting Limited in February 2000, and was appointed
Finance Director of the Company in November 2002 following the merger between
Tornado Group plc and Virtue Broadcasting Limited. He is a chartered accountant,
having qualified with PricewaterhouseCoopers in London in 1996. James was a
manager with PricewaterhouseCoopers until 2000, with responsibilities for many
FTSE listed companies and has a wide experience including financial planning,
listing, acquisition and disposal of both UK and US groups.
Klaus Ackerstaff (aged 38) Chief Technical Officer
Klaus joined the Group as CEO in July 2003 when Unit.Net was acquired. He joined
Unit.Net in 1999 as Chief Technology Officer of Unit.Net, where he led the
design and implementation of the existing delivery platform. He was appointed
Unit.Net's Chief Operating Officer in 2001 and managed its expansion across the
European market, before he was appointed CEO in 2002. Klaus began his
professional career in 1996 at CERN (Organisation Europeene pour la Recherche
Nucleaire) in Geneva, where he was responsible for the IT infrastructure of the
OPAL (particle physics) project, following the award of a Doctorate degree in
Physics from the University of Hamburg.
Andrew Booth (aged 43) Executive Director
Andrew is an executive director of World and co-founded the company in 1991. He
has worked in broadcast and new media communications and campaigns for 20 years.
He was a main board director of Greenpeace International, where he was
responsible for communications and campaigns world-wide, and has served as a
senior communications consultant to the United Nations. He is based in New
Zealand and is responsible for business development in the Asia Pacific region
and corporate strategy as a member of the World board.
Peter Sibley (aged 41) Executive Director
Peter is an executive director of World and co-founded the company in 1991.He
has had 20 years' experience in the broadcast, corporate communicationsand new
media sectors. Peter has also worked for Reuters, Greenpeace International and
Ogilvy and Mather. He is responsible for new business development in Europe and
corporate strategy as a member of the World board.
Giles English (aged 30) Non Executive Director
Giles originally co-founded the Virtue business in 1998 following a period
working in corporate finance with Williams de Broe. Having been the Sales and
Marketing Director of Virtue, he was appointed non executive director following
the disposal of Virtue Media Services Limited in June 2003.
Anthony Bartlett (aged 53) Non Executive Director
Anthony is a Chartered Accountant and is currently a corporate finance director
at Arden Partners Limited. He was previously a partner at Coopers & Lybrand (now
PricewaterhouseCoopers) and then a director at Beeson Gregory Group Plc.
Working Capital
The directors and proposed directors of Virtue are of the opinion that, having
made due and careful enquiry, the working capital available to the Virtue group
following Completion will be sufficient for its present requirements, that is
for at least twelve months from Admission.
The City Code
Under Rule 9 of the City Code, any person who acquires shares, which, when 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 in the
capital of the company.
Rule 9 of the City Code also provides that where any person or group of persons
acting in concert already holds shares carrying not less than 30 per cent. and
not more than 50 per cent. of the voting rights of a company which is subject to
the City Code, a general offer will normally be required if any further shares
in the company are acquired.
An offer under Rule 9 must be 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.
The members of the Concert Party are deemed to be acting in concert for the
purpose of the City Code. On completion of the proposals, the members of the
Concert Party will between them own 440,221,306 shares representing
approximately 58.44 per cent. of the Company's enlarged issued voting share
capital.
In addition, the Panel regards Mr Sibley and Mr Booth who together founded the
World business in 1991, as being a sub concert party which will, on completion
of the Proposals, own 231,868,979 shares representing approximately 30.78 per
cent. of the Company's enlarged issued voting share capital.
Furthermore Mr Newman, Archdream Limited, Arvon Limited, Mr Bartlett, Mr Walker,
Mr Ozturk, Mr Wharmby and Treve Investment Management Service Limited, who have
all acquired shares in World since 2000, are regarded as another sub concert
party and on completion of the Proposals will own 208,352,327 shares
representing approximately 27.66 per cent. of the Company's enlarged issued
voting share capital.
The Panel has agreed, however, to waive the obligation to make a general offer
that would otherwise arise as a result of the proposals, subject to the approval
of independent shareholders.
Accordingly, an ordinary resolution will be proposed at the EGM and will be
taken on a poll. No member of the concert party is a Virtue shareholder nor
entitled to vote on such resolution.
Following completion of the proposals, the members of the concert party will
between them hold more than 50 per cent. of the Company's voting share capital
and (for so long as they continue to be treated as acting in concert) may,
subject as mentioned below, accordingly increase their aggregate share holding
without any further obligation under Rule 9 to make a general offer.
Notwithstanding the waiver, the members of the concert party will not be able,
without incurring an obligation under Rule 9 to make a general offer to
shareholders, to increase their holdings in the Company if: a) to do so, any
individual member of the concert party, or either sub concert party in
aggregate, would come to hold 30 per cent. or more of the voting rights of the
Company; or b) at the relevant time, the individual member of the concert party,
or the relevant sub concert party in aggregate, holds not less than 30 per cent.
but not more than 50 per cent. of the voting rights of the Company.
In addition, for so long as the founders' sub concert party holding remains
between 30 and 50 per cent. of the issued share capital of the Company, no
member of the founders' sub concert party will, as a result, be entitled to
purchase further shares without triggering any obligation under Rule 9 of the
City Code to make a general offer to the other shareholders of the Company.
In addition, no individual member of the investors' sub concert party can
acquire additional shares which, when taken together with shares already held by
him and other shares held by other members of the investors' sub concert party,
would result in the investors' sub concert party holding shares carrying 30 per
cent. or more of the voting rights of the Company.
Capital Reorganisation
It is proposed that the Company will undertake a capital reorganisation
effectively converting each existing ordinary share of 0.1p into a new ordinary
share of 2.5p. This will be effected by means of a bonus issue to all
Shareholders on the register at the Record Date of 24 new Ordinary Shares for
every 1 existing Ordinary Share held. Immediately thereafter every 25 Ordinary
Shares will be consolidated into 1 new ordinary share of 2.5p (a "New Ordinary
Share").
The effect of this is to leave the number of ordinary shares held by
shareholders exactly the same as before the reorganisation, whilst increasing
the nominal value of each share to 2.5p from 0.1p.
It is proposed that the authorised share capital is increased, inter alia to
permit the issue of the Consideration Shares.
Arrangements with Directors
Following completion, it is proposed that the following options are granted over
New Ordinary Shares ("the Bonus Options") to key Virtue directors:
Mike Neville - 3,250,000
James Ormondroyd - 3,250,000
Klaus Ackerstaff - 3,250,000
It is proposed that these bonus options are granted immediately prior to
completion. These bonus options will have an exercise price of 0.1p per share
which will be payable by each recipient. These bonus options are normally
exercisable at any time 6 months following completion and the Directors will be
subject to a Lock-in arrangement until 12 months following completion.
These options have been granted for two reasons. First, to compensate the
directors concerned for reducing their notice period under their service
contracts from twelve months to six months in order to bring them into line with
the notice period under the proposed directors' service contracts, and secondly,
to incentivise these directors, post Admission, to integrate the Virtue and
World businesses successfully.
As the grant of these options is contingent upon the successful completion of
the Merger, it constitutes a related party transaction under the AIM Rules.
The independent director, Giles English, having consulted with Brewin Dolphin
Securities, as nominated adviser, considers that the terms of these transactions
are fair and reasonable insofar as Shareholders are concerned.
The Virtue board has recognised for some time that the Company needs to grow
both by acquisition as well as organically in order to develop, particularly in
a consolidating industry. The Company has undergone considerable change since
July 2003; and the board has been focussed upon raising finance for the Company,
acquiring, and then integrating, suitable companies to increase the scale of the
Company and increasing profitable business activity. A bonus scheme was put into
place at the start of this financial year to incentivise the executive Directors
to achieve these goals. It has been agreed as part of the negotiations
surrounding the Merger that these arrangements will be terminated and that
future incentive arrangements will be reviewed by the enlarged group's
remuneration committee post Admission. The Company's existing remuneration
committee has therefore reviewed the achievements for the period from the start
of the financial year through to 30 June 2004, and payments will be made, based
upon the scheme's criteria, to the executive Directors on a pro rata basis.
Options
At present there are options outstanding over 11,625,000 World shares to
employees. These represent around 8.6 per cent of World's issued share capital.
It is proposed that these options are replaced by options over Virtue shares
following admission. It is proposed that these options will, in aggregate,
amount to 25.1 million new Virtue shares, and will be exercisable at a price of
0.6p. Of these options, half will vest immediately upon Completion, and the
balance will vest 12 months following completion.
Availability of the Admission Document
Copies of the Admission Document will be available to the public free of charge
from the registered office of Virtue during normal business hours on any week
day (Saturday and public holidays excepted), from the date of their document
until the date of Admission.
Expected Timetable of Principal Events 2004
Latest time and date for receipt of completed Forms of Proxy for the EGM 10am on 16 August
EGM 10am on 18 August
Capital Reorganisation effective 18 August
Record Date 18 August
Completion of the Merger 19 August
Admission to trading on AIM of the Consideration Shares and re-admission to trading 19 August
on AIM of the Ordinary Shares
New share certificates issued 26 August
For further enquiries, please contact:
Virtue Broadcasting Plc
www.virtuebroadcasting.com
Mike Neville, Chairman +44 (0) 20 7785 6000
James Ormondroyd, Finance Director +44 (0) 20 7785 6000
World Television Group Limited
www.world-television.com
Jon King, Chief Operating Officer +44 (0) 20 7388 8555
Hansard Communications
Andy Tan +44 (0) 20 7245 1100
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQRJMLTMMBTBAI
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