Loan Notes & Proposed Capital Reorganisation

DCD Media plc

("DCD Media" "the Group" or "the Company")

Issue of New Convertible Loan Notes and Proposed Capital Re-organisation

DCD Media Plc today announces that it has secured additional funding of £0.79 million (before costs) through the issue of a new tranche of convertible loan notes ("Convertible Loan Notes") to the Company's largest shareholders, of which £0.57 million will be used to settle outstanding payments in respect of director services. In addition, David Green intends to subscribe for £0.03 million of Convertible Loan Notes following publication of the Company's annual report and accounts for the year ended 31 December 2013. Conversion of the Convertible Loan Notes is dependent on approval of certain resolutions that are being put to shareholders at the Company's Annual General Meeting ("AGM") on 30 June 2014.

Background to and Reasons for the Convertible Loan Notes

As announced on 30 September 2013, the Company was informed that WE tv would not be commissioning an new series of Bridezillas, a production which had made a large contribution to the Group's revenue in recent years. At that time, the Board stated its intention to reduce costs as a result of reduced revenue expectations. On 24 March 2014, the Board confirmed that the Group had been reducing costs and that trading continued to be difficult in the Production division, though the outlook in the Rights and Licensing division was strong. Notwithstanding this, the Company's cash reserves remain low.

David Craven, Executive Chairman and CEO, Neil McMyn, Director and John Farquharson, Financial Controller, are all employees of Timeweave and related companies. As part of the reshaping of the cost base and in order to conserve cash, contractual payments to Timeweave in respect of their services have been deferred. In order to settle these outstanding payments, the Company is issuing £0.57 million of Convertible Loan Notes to Timeweave. In addition, the Company will issue £0.03 million of Convertible Loan Notes to David Green, Executive Director, in respect of payment for director services.

Furthermore, the Company has an immediate requirement for short-term working capital and as such is raising further capital by way of the issue of £0.22 million Convertible Loan Notes to Henderson.

As detailed above, the Company requires immediate funding without which the Company would struggle to meet its debts as they fall due. Given the current position of the Company, it would be very difficult to secure any further funding from external providers and as such the Board believes that the issue of the Convertible Loan Notes is the best option for the Company and its shareholders.

Key Terms of the Convertible Loan Notes

The Convertible Loan Notes shall, subject to a prior conversion by the noteholders, be repayable on 31 May 2016 (the "Maturity Date"). The noteholders may, however, determine at any point prior to the Maturity Date to convert all, or part of, the outstanding principal sum (together with accrued but unpaid interest) into new ordinary shares of £1 each in the capital of the Company following the capital re-organisation as described below ("New Ordinary Shares"). The principal and accrued interest shall convert into New Ordinary Shares at a price of £1.00. In addition, the conversion price of the convertible loan notes that were signed in May 2013 will be changed to match that of the new 2014 convertible loan notes.

The Convertible Loan Notes will earn interest at 10% per annum from the date of issue, however, if the resolutions required to allow conversion of the notes are not approved at the AGM (including the capital re-organisation resolution referred to below), the rate will increase to 20% per annum from date of issue. The Convertible Loan Notes are unsecured and subordinate to the Company's existing debt with Coutts & Co bank.

The following shareholders have subscribed for, or intend to subscribe for, the undernoted amounts of Convertible Loan Notes:

* "Henderson" means together Henderson Global Investors Limited and certain funds managed by Henderson Alternative Investment Advisor Limited.

** These percentages are based on the assumption that the convertible loan notes issued on 31 May 2013 are also converted in full on their maturity date at the revised conversion price of £1 per ordinary share.

*** David Green intends to subscribe for the noted amount of Convertible Loan Notes once the close period in relation to the publication of the Company's results for the year ended 31 December 2013 has ended. During 2013, David Green transferred half of his shareholding to his former spouse as part of a divorce settlement. The percentage holding shown above is in relation to David only.

Proposed Capital Re-organisation

Ordinary Share Sub-Division

In order to facilitate conversion of the Convertible Loan Notes, one of the resolutions to be considered by shareholders of the Company at the forthcoming AGM shall be a resolution to approve, inter alia, a share sub-division of each existing ordinary share of £5 each in the capital of the Company ("Existing Ordinary Share") into one new ordinary share of £1 each ("New Ordinary Share") and four new deferred shares of £1 each (the "Sub-Division"). Save for their nominal value, the New Ordinary Shares will be identical to the Existing Ordinary Shares. Immediately following the Sub-Division, each shareholder will hold the same number of New Ordinary Shares as the number of Existing Ordinary Shares held immediately before the Sub-Division.

Further detail on the Convertible Loan Notes, the capital re-organisation and the resolutions that are being put to shareholders at the AGM will be provided in the notice of AGM to be sent to shareholders on 6 June 2014. The proposed timetable for the capital re-organisation is as follows:

· General Meeting: 30 June 2014

· Record date for Sub-Division: 6 p.m. on 30 June 2014

· Admission of New Ordinary Shares to trading on AIM: 8 a.m. on 1 July 2014

Shareholders should be aware that if the resolutions to facilitate the conversion of the Convertible Loan Notes are not passed, then the interest payable in respect of the Convertible Loan Notes will increase from 10% per annum to 20% per annum.

Related party transactions

The issue of Convertible Loan Notes to Timeweave, Henderson and David Green constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules. There are no independent directors for the purposes of providing the fair and reasonable statement required under Rule 13. finnCap Limited, the Company's Nominated Adviser, considers that the terms of the Convertible Loan Notes are fair and reasonable insofar as the shareholders of the Company are concerned. 

Furthermore, the modification to the conversion price of the convertible loan notes issued in 2013 (the "Modification") constitutes a related party transaction for the purposes of Rule 13 of the AIM Rules. Again, there are no independent directors for the purposes of providing the fair and reasonable statement required under Rule 13. finnCap Limited, the Company's Nominated Adviser, considers that the Modification is fair and reasonable insofar as the shareholders of the Company are concerned. 

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