Earn out update

15 November 2012

reach4entertainment enterprises plc

("r4e" or "the Company")

Earn Out update

reach4entertainment, the transatlantic media and entertainment company, today announces that pursuant to a debt repayment agreement entered into on 14 November 2012 (the "Agreement") with Mr Drew Hodges, the vendor of Spot and Company of Manhattan Inc. ("SpotCo") the Company has restructured the outstanding debt of US$4.2 million relating to the Company's acquisition of SpotCo in 2008.

The material terms of the Agreement are as follows:

(a) US$0.2 million has been repaid in cash on signing the Agreement;

(b) The Company will repay US$3 million in 12 quarterly instalments ("Instalment Payments") of US$0.25 million each in cash starting on 1 January 2013;

(c) Once the US$3 million referred to in paragraph (b) has been repaid, the Company has the right to require the remaining US$1 million due to be satisfied by the subscription for such number of Ordinary Shares at the prevailing mid-market price.

If the number of Ordinary Shares so issued would cause an obligation to make a mandatory offer for the entire issued share capital of r4e under Rule 9 of the City Code on Takeovers and Mergers, the vendor shall be obliged to subscribe only for such number of Ordinary Shares as would not trigger such obligation, and the balance of the debt due will be written off; and

(d) The Instalment Payments may be subject to the following adjustments which would accelerate such instalment programme:

(i) The Company may elect to accelerate repayments at any time and by any amount if it is in a position to do so; 

(ii) The first such quarterly payment following publication of the Company's year end results will be increased by an amount equal to 50 per cent. of the amount by which actual EBITDA exceeds certain EBITDA projections for the relevant financial year; and 

(iii) Payments will be increased by 25 per cent. of the net proceeds in the event of a disposal by the Company of the Group of a material asset (subject to consent of the Company's lending banks; if consent is denied, interest will accrue at 5 per cent. per annum on the amount that would otherwise have been paid).

David Stoller, Executive Chairman, commented:

"We are very pleased to announce that we have reached a mutually beneficial agreement with Drew Hodges on his final earn out payment, enabling all parties to move forward with clarity and shared focus. Drew has confirmed his commitment to leading SpotCo as its CEO, and I look forward to working together with Drew to further enhance SpotCo's market leading position as well as advancing a number of new Group initiatives that we believe will drive profitable growth in the medium term." 

Established in 1996 and based in New York, SpotCo, a 100 per cent owned subsidiary of reach4entertainment plc, is a world-leading theatrical marketing agency that also services clients across opera, dance, music, galleries, museums and live events.

Ends

Enquiries:

reach4entertainment +44 (0) 20 7993 0000

David Stoller, Executive Chairman

Shirley Stapleton, Finance Director

Blythe Weigh Communications +44 (0) 20 7138 3204

Paul Weigh

Seymour Pierce Limited +44 (0) 20 7107 8000

Stewart Dickson/Tom Sheldon (Corporate Finance)

Katie Ratner/Jacqui Briscoe (Corporate Broking)