7th May 2009 07:00
FOR IMMEDIATE RELEASE 7 May 2009
RAM INVESTMENT GROUP PLC
("RAM" or the "Company")
RAM INVESTMENT GROUP PLC ACQUIRES 49.9% OF TRAIN FX, ACQUIRES NEW PLANET INVESTMENTS ("NPI"),
PLACING OF NEW ORDINARY SHARES
AND CHANGE OF BROKER
Background
On 13 March 2009, RAM announced an investment of £177,500 in New Planet Investments Ltd ("NPI"), a special purpose vehicle established to acquire the assets of Train FX Ltd from the Vision Media Group plc ("VMG"). This initial investment secured RAM 18.2 % of NPI's issued share capital. In addition, RAM agreed an option (at RAM's call only) with VMG to acquire the remaining issued share capital of NPI in the event that NPI is successful in acquiring the remainder of Train FX from VMG and also made a loan of £200,000 to VMG. RAM has now agreed to restructure and increase this investment as set out below.
Investment in Train FX Limited
The Board of RAM Investment Group plc ("RAM") announces that it has agreed to invest £920,000 in Train FX. Having intended to acquire an interest in NPI (which in turn would have held an interest in Train FX) an opportunity arose to take a direct stake in Train FX. Broadly this deal would see RAM acquiring an initial stake, with an option to acquire further shares in due course. To date agreements have been entered into under which RAM have acquired a direct stake of 49.9%, and are due to be granted an option to acquire the remaining 50.1%. Under the existing arrangements if the option is not granted then RAM have the right to increase their stake to a 50% holding. However, the exercise of the option to acquire the remaining 50.1% and the right to increase RAM's holding to 50% are dependent upon compliance with the AIM Rules, under which these actions may require compliance with AIM Rule 14 as a 'reverse transaction' which would include the requirement for approval by RAM's shareholders.
The acquisition by RAM of 50% or more of Train FX under the above arrangements is also conditional on the approval of VMG's shareholders.
The investment in Train FX has been satisfied by conversion of the existing £200,000 loan by RAM to VMG and additional cash payments of £400,000 made on 24 April 2009 and £320,000 made on 30 April 2009. This investment secures RAM 49.9% of the issued ordinary share capital of Train FX and the Agreement provides RAM with either:
A) a call option, exercisable solely at the Company's discretion, to acquire the balance of Train FX free of any inter-company debts, with a long stop date of 31st August 2009 from VMG. The exercise of this option is subject, inter alia, to due diligence, financing and compliance with the applicable AIM Rules. The exercise price would be the aggregate sum of up to £1,270,000 which shall be satisfied as follows:
(i) £785,000 in cash;
(ii) £425,000 to be satisfied by the issue of 7,727,272 new RAM Ordinary Shares; and
(iii) up to £60,000 in RAM loan notes.
In relation to the issue of £425,000 of RAM shares (7,727,272 shares) to be issued to VMG upon exercise of the RAM Option, the shares will be priced at 5.5p and these will be locked in until 15th December 2009 unless RAM should choose to exercise an option to re-acquire these shares at 5.5p per share during the three month period after completion of the exercise of the RAM Option; or
B) if that option is not granted, the right to take additional shares giving RAM 50% of Train FX with joint board control.
Details on Train FX Limited
Train FX Ltd (under the 'Train TV' registered trademark) has signed contracts with National Express and First Capital Connect with the right to install digital TV screens and an ambient sound system on their railway carriage fleet. The system will broadcast passenger journey information, breakfast style news and advertising. The technology is also in place for the train operators to access back-haul information.
For the year ended 31 December 2007, Train FX made a loss of £561,612 on Turnover of £34,169. As at 31 December 2007, it had Net Liabilities of £1,630,646 and this included inter-company debt due to VMG of £2,045,142. For the year ended 31 December 2008 the draft results show that TrainFX made a loss of £0.5 million on turnover of £0.02 million and that as at December 2008 it had net liabilities of £2.2 million.
Acquisition of NPI
As part of the arrangements to make the further investment in Train FX, the Company has acquired 100% of NPI for £530,000 of which £130,000 has already been paid to NPI (which was used to acquire 18.2% of NPI). In addition to which, RAM also has loaned £73,500 to NPI. The balance of £400,000 is to be settled by the issue of 7,272,727 new ordinary shares in RAM at a price of 5.5p per share. The net assets of NPI as at 30 April 2009 were £165,775.20 principally comprising its investment in Train FX and its arrangements (as referred to below) in respect of the acquisition of Train FX, as announced on 13 March 2009.
NPI has the benefit of a non legally binding exclusivity arrangement with VMG in relation to Train FX, has also entered into advanced negotiations (including preparation of definitive agreements, under which it would have acquired Train FX) and has acquired through its management team a comprehensive understanding of the business and the assets of Train FX. NPI has made some advances to VMG, which in turn have been used to support Train FX, as a result of which NPI also holds certain rights in relation to Train FX and/or VMG. Some of these funds have been raised by NPI from third parties. Through the acquisition of NPI RAM has been able to accelerate its acquisition of the stake in Train FX. The Board of RAM also consider that the consideration paid covers the time and efforts of the management team of NPI (which includes some members of the boards of VMG and RAM) which have been involved in bringing the transaction to a successful conclusion.
Executive Chairman Tim Baldwin comments;
"We are very pleased to have been able, through our acquisition of NPI, to acquire a direct 49.9% interest in Train FX with additional right to take this stake to at least 50%. Having secured two contracts which cover 30% of the Greater London commuter market, Train FX is aiming to install its technology with other train operating companies covering the rail commuter market over ground. This represents approximately 800 million passenger train journeys a year. For UK advertisers, this market is the last bastion of captive broadcasting in mass transit. The programme will be rolled out on the East Anglia franchise by the start of the Olympic Games. Additionally, there are many other territories both here in the UK and through the world where the technology of Train TV is attractive and commercially viable. Train TV is an investment in which the Board has every confidence. RAM will continue to access other investment opportunities in line with its stated strategy of seeking to grow RAM into a substantial company."
The Placing
In order to provide the funding for the investment in Train FX and to provide the Company with additional working capital, the Company has placed 20,018,273 new ordinary shares of 1p each at a price of 5.5p per share to raise £1,101,005 before expenses, more than 80% of which is with institutional investors on behalf of clients. In addition, the Company has placed 581,818 new ordinary shares of 1p each of 5.5p in lieu of commission for fund raising.
Application will be made for 27,872,818 new Ordinary Shares in RAM (consisting of the NPI vendor consideration and Placing shares), which, when issued will rank pari passu with the existing Ordinary Shares in issue, to be admitted to trading on AIM. This is expected to be on 13 May 2009.
On completion of the above transactions:
Ruffer LLP will have 14,600,000 RAM Ordinary Shares representing 28.92% of the issued share capital of RAM.
John Mckeon will have 4,284,266 RAM Ordinary Shares representing 8.49% of the issued share capital of RAM.
Mike Cottman will have 1,965,603 RAM Ordinary Shares representing 3.89% of the issued share capital of RAM.
Melanie Haime will have 1,886,376 RAM Ordinary Shares representing 3.74% of the issued share capital of RAM.
Donal Boylan will have 1,818,182 RAM Ordinary Shares representing 3.60% of the issued share capital of RAM.
Related Party Transaction
As a result of the acquisition of NPI, Tim Baldwin, a director and current 14.92% Shareholder, will be issued with 943,188 new RAM Ordinary Shares at 5.5p per share equating to a consideration of £51,875. In addition, Hill Street Investments Plc, a company in which Tim Baldwin is a director and one in which Tim Baldwin exercises management control, will receive 160,342 new RAM Ordinary Shares at 5.5p per share equating to a consideration of £8,819. Therefore, this will bring Tim Baldwin's total holding to 4,478,101 RAM Ordinary Shares representing 8.87% of the enlarged issued share capital of RAM. The issue of new RAM Ordinary Shares to Tim Baldwin and to Hill Street Investments are Related Party Transactions requiring compliance with AIM Rule 13. Accordingly, the Independent Directors, being Edward Adams and Iain Manley, have consulted with Beaumont Cornish Limited, the Company's Nominated Advisor, and consider the terms of the transactions to be fair and reasonable insofar as the shareholders of the Company are concerned.
Change of Broker
The Company announces it has appointed Rivington Street Corporate Finance Limited as its broker with immediate effect.
For further information please call:
Tim Baldwin RAM investment Group plc 0207 518 4337
Roland Cornish Beaumont Cornish Limited 0207 628 3396
Monisha Varadan Rivington Street Corporate Finance Limited 0207 562 3389
Related Shares:
RAM.L