Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

Restoration of trading to AIM

8th Aug 2007 07:30

Interactive World plc08 August 2007 Interactive World plc ("Interactive World" or "the Company") Restoration of trading to AIM Acquisition of Sport Newspapers Limited Placing of 58,266,667 Placing Shares at 75 pence per share Vendor Placing of 19,273,148 Existing Ordinary Shares at 75 pence per share Application for admission of the Enlarged Share Capital to AIM Change of name to Sport Media Group plc Notice of Extraordinary General Meeting Further to the Company's announcement on 25 June 2007 regarding discussionsconcerning the proposed acquisition of Sport Newspapers Limited ("SportNewspapers"), Interactive World plc, the mobile content technology company, hasconditionally agreed to acquire the entire issued share capital of SportNewspapers by way of a reverse takeover for a total consideration ofapproximately £50 million. The Company has raised gross funds of £43.7 millionby way of a conditional Placing of 58,266,667 new A Ordinary Shares in the Group("the Placing Shares"), at a placing price of 75p. The consideration for theAcquisition will be satisfied in cash and by the issue of £5 million of LoanNotes. Following completion of the Acquisition, Interactive World will berenamed Sport Media Group plc ("Sport Media Group"). The Existing OrdinaryShares of Interactive World will be restored to trading on AIM at 7:30 a.m. on 8August 2007. In addition Daniel Stewart & Company plc ("Daniel Stewart") has conditionallyplaced David Sullivan's entire beneficial holding of 19,273,148 Ordinary Shares("the Vendor Placing Shares"), representing 49.95% in Interactive World in orderto raise approximately £14,454,861, before expenses, with institutional andother investors. Furthermore, as David Sullivan (one of the Vendors) is aSignificant Shareholder (as defined in the AIM Rules), having a beneficialinterest representing 49.95 per cent. of the Existing Ordinary Shares, theAcquisition is also a related party transaction under the AIM Rules. TheIndependent Directors have consulted with Daniel Stewart in giving theirrecommendation set out below. The Acquisition constitutes a reverse takeover pursuant to the AIM Rules and istherefore subject to shareholder approval which will be sought at theExtraordinary General Meeting. Application has been made to the London StockExchange for Admission to trading on AIM of the Placing Shares and the ExistingOrdinary Shares of Interactive World on 5 September 2007. Admission isconditional, inter alia, on the passing of certain Resolutions at the EGM.Accordingly an EGM has been convened for 10 a.m. on 3 September 2007, at theoffices of Daniel Stewart & Company plc, Becket House, 36 Old Jewry, London,EC2R 8DD. The Placing Shares have no right to receive or to be paid any dividend inrespect of the Company's financial year ending 31 July 2007 and accordingly havebeen constituted as a separate class of Ordinary Shares and a separate class ofAIM securities. The Placing Shares and the Ordinary Shares have different ISINand SEDOL numbers. The Placing Shares will automatically convert into OrdinaryShares no later than 31 January 2008. Simon Hume Kendall has not taken any partin the consideration by the Board of the Proposals as to the recommendation. TheIndependent Directors, who have been so advised by Daniel Stewart & Company plc,consider the Proposals to be fair and reasonable and in the best interest of theCompany and its shareholders as a whole and therefore recommend the Shareholdersto vote in favour of the Resolutions to be proposed at the EGM. In giving itsadvice, Daniel Stewart & Company plc has taken into account the IndependentDirectors' commercial assessments. Certain Shareholders have irrevocablyundertaken to vote in favour of the Resolutions in respect of 20,298,375Ordinary Shares held by them (representing 52.61 per cent. Of the ExistingOrdinary Shares). Comment Andrew Fickling, Managing Director of Sport Newspapers and proposed ExecutiveDirector of the enlarged Group, said: "By gradually refocusing the editorialdirection of the Sport Titles, increasing our coverage and analysis of sport,and building on the existing humour and glamour content, we will broaden ourreadership and advertising base. The strengthened relationship with InteractiveWorld is a natural choice providing us with the opportunity to grow in theonline and mobile content markets and greatly improve our offering to readers.Just a small increase in our daily readership can create a real impact on thebottom line of the business." Andrew Fletcher, Chief Financial Officer of Interactive World and proposed ChiefFinancial Officer of Sport Media Group said: "Sport Media Group would combine anestablished national newspaper brand with recognised experience in the deliveryof content through digital channels, including both broadband and mobile. Byintegrating traditional print with new media digital content, we will be able toexpand our target audiences beyond our current loyal users and readers. Theenlarged Group will also build upon the brand to attract a more diverse audiencethereby attracting a broader base of significant advertisers. The integrationalso provides significant cross selling and marketing opportunities yet bothcompanies are already highly cash generative and we would look to continue withInteractive World's progressive dividend policy." Interactive World Interactive World sells digital media content through mobile telephones via theinternet to mobile customers of major UK mobile network operators and users ofkey UK internet search engines. Interactive World does not create its owncontent but sources a significant amount through a current five year rollingagreement with Sport Newspapers. Incorporated in 1999, ordinary shares inInteractive World were admitted to trading on AIM on 8 May 2006. The Group hasbeen profitable and has declared dividends since incorporation. Current trading for the Group is in line with market expectations and theDirectors are confident with the prospects for the forthcoming year. Theperformance of Interactive World since Admission has been one of continuinggrowth and development and the Directors are optimistic that such performancecan be maintained. Sport Newspapers Sport Newspapers is an established UK national tabloid newspaper house withtitles including the Daily Sport and Sunday Sport. Established in 1986, thepublications have grown to become recognised UK brands, with current circulationin the UK for the Daily Sport at approximately 108,000 copies on weekdays,67,000 on Saturdays, and 96,000 for the Sunday Sport. The Sport Titles (beingthe Daily Sport and the Sunday Sport) currently represent 1.6% of the 'red top'tabloid newspaper market. Sport Newspapers, a private limited company, wasestablished in 1986 by David Sullivan (who owns 50 per cent. of the shares ofSport Newspapers) and Ralph and David Gold (who each own 25 per cent. of theshares of Sport Newspapers. The Directors believe that the Sport Newspapers' editorial content andadvertising has lacked focus in recent years. This has contributed to decliningcirculation since April 2005 when daily circulation was at a peak of 189,473copies on a weekday, 110,785 on a Saturday and 167,971 for the Sunday Sport. TheDirectors and the Proposed Director believe that the Sport Titles are a nicheoffering and that the enlarged Group is in a strong position to benefit from arefocusing of editorial content, distribution and advertising strategies. SportNewspapers has been profitable since incorporation with profit before tax forthe nine months to 31 May 2007 of £2.8 million on a turnover of £19.6 million,of which approximately 48% of this is generated from newspaper sales, 44% fromadvertising revenue, and the remainder from magazine and internet and mobilephone revenue. Key Strengths The Directors believe that the key strengths of Sport Newspapers include: • its position on national newspaper news-stands in approximately 62% of the UK retail universe; • a well known and established newspaper brand; • a well defined demographic of readers, making it an efficient vehicle for promotion of products and services to the male C2DE profile; • a non-unionised and efficient production unit; • long-standing relationships with key advertisers, contributors and retailers; and • a long history of profitable trading. Strategy The Directors and Proposed Director believe that following the Acquisition theywill able to implement straight-forward and low cost changes to Sport Newspapersthat will have a positive impact on copy sales and advertising revenue from theSport Titles as follows: • Gradually refocus the editorial direction of the Sport Titles to strengthen the glamour and humour content within the newspapers; • Improve the quality and depth of sport coverage and analysis in the Sport Titles; • Refocus the advertising content and profile of the Sport Titles to attract blue chip advertising whilst maintaining existing advertising revenue; • Strengthen the branding of the enlarged Group to allow further growth in print, online and mobile content markets; and • To build on Sport Newspaper's position as a national tabloid newspaper publisher by targeting current non-selling retailers and broadening the readership base through advertising control and editorial strategies. A copy of the Admission Document sent to shareholders, dated today, 8 August2007, can be found on the Company's website; www.interactiveworld.com. - Ends - For further information, please contact:Interactive World plcAndrew Fletcher, Chief Financial Officer + 44 (0) 20 8507 6969 www.interactiveworld.com Daniel Stewart & Company plcAlastair Cade / Katie Shelton + 44 (0) 20 7776 6550 www.danielstewart.co.uk Media enquiries:Abchurch CommunicationsChris Lane / Gareth Mead Tel: +44 (0) 20 7398 7700chris.lane@abchurch-group.com www.abchurch-group.com The following information has been extracted without material adjustment fromthe circular and AIM admission document sent to shareholders dated today, 8August 2007.The phrases and definitions used in the following information havethe same meaning as set out in the AIM admission document dated 8 August 2007. Business Activities Sport Newspapers, a private limited company, was established in 1986 by DavidSullivan (who owns 50% of the shares of Sport Newspapers) and Ralph and DavidGold (who each own 25% of the shares of Sport Newspapers). The sale ofnewspapers also generates income from the sale of advertising space within thenewspapers and via royalties from an agreement with Interactive World. The Sport Titles are printed at three centres around the UK: Broughton Printersin Preston, Westferry Printers in London and Johnston Press in Portadown, withlong-term printing agreements in place at Broughton and Westferry until 2018.The Sport Titles are distributed from the print centres by CEVA (formerly TNT). Although selling to individual members of the public, Sport Newspapers maintainsa relationship with the UK wholesale network to manage the distribution andsales of the Sport Titles, on a sale or return basis. The current selling price per newspaper is 50p for the Daily Sport and 80p forthe Sunday Sport. Sport Newspapers has been a content supplier and a means ofadvertising for Interactive World since 2000. The relationship is based on arevenue share basis and the two companies have worked closely to initiate newand up to date content and routes to consumers. Market and Competition Recent ABC figures show that approximately 5.9 million newspapers are sold inthe tabloid market in the UK on a daily basis. The National Readership Surveyfigures show that between 2 and 2.5 people read each copy sold, equating tobetween 11.8 million and 14.75 million daily readers. The main titles in themarket include The Sun, News of the World, The Daily and Sunday Mirror, TheDaily and Sunday Star, The People and the Daily Record (published in Scotlandonly). In terms of content, the Daily Star is seen to be the closest competitorto the Sport Titles (with an average circulation of 770,000 copies per day inApril 2007), representing approximately 13% of the market. External factors have contributed to a market-wide decline in circulation fortabloid newspapers, for example, other national newspapers have seen competitionfrom the internet affect their circulation (to a greater or lesser degree). TheDirectors believe that due to the Daily Sport's and Sunday Sport's more specificreader profile (blue-collar male) these papers are often read in environmentswhere the internet is not commonly available (such as by vehicle-bound workersand on building sites) and the Directors believe that by exploiting thisposition through targeted marketing and editorial strategies growth can beachieved within this sector. The Directors and Proposed Director believe that the introduction of men'sweekly magazines Nuts and Zoo which, combined, sell around 500,000 copies perweek has also impacted on the tabloid daily newspapers market, taking some ofthe market share. The Directors and the Proposed Director believe that there isan opportunity to be gained from the editorial style and production values ofthese publications which can be applied to the Sport Titles. Principal terms of the Acquisition, the Loan Stock and the proposed change ofname On 8 August 2007 the Company entered into the Acquisition Agreement with theVendors to acquire the entire issued share capital of Sport Newspapers. Underthe terms of the Acquisition Agreement, the Company has agreed to payconsideration of £50 million to be satisfied by the payment of £39.7 million onAdmission, the payment of £5 million on 31 December 2007, the issue to theVendors of £5 million Loan Stock on Admission and the payment of the sum of£300,000 which will be paid into a joint retention account pending thedetermination of the net current assets of Sport Newspapers on Admission. Following Admission, there will be a determination of the value of the netcurrent assets of Sport Newspapers and its subsidiaries on Admission accordingto the terms of the Acquisition Agreement. If the net current assets of SportNewspapers and its subsidiaries exceed the sum of £4.85 million the jointretention account will be released to the Vendors and in addition there will bepaid to the Vendors, by way of additional consideration, a sum equal to theamount of any excess above £5.15 million. If the current net assets of SportNewspapers on Admission are less than £4.85 million, payment of a sum equal tosuch shortfall will be made by the Vendors to the Company by way of deductionfrom the joint retention account. If the net current assets of Sport Newspaperson Admission are less than £4.55 million then in addition to the sum of £300,000to be paid to the Company from the joint retention account, the Vendors will payto the Company, a sum equal to the amount by which the net current assets onAdmission are less than £4.55 million. The Acquisition Agreement is conditional, inter alia, on the passing of theResolutions and Admission. Under the terms of the Acquisition Agreement theVendors have given normal commercial warranties and an indemnity in respect ofthe taxation liabilities of Sport Newspapers and its subsidiaries prior toAdmission, such warranties and indemnity being limited as to time and amount. Under to the terms of the Loan Note the Company is proposing to issue £5 millionof the Loan Stock to the Vendors on Admission. The Loan Note will be constitutedby the Company immediately following the EGM and the Loan Stock will be issuedto Vendors immediately following Admission. The Loan Note is for £5 million redeemable on 31 August 2008 if not previouslypurchased or redeemed. The Loan Note carries interest, payable quarterly inarrears, at 2% over the base rate of The Bank of England from time to time. TheLoan Note is redeemable at any time by the Company. The Directors have notapplied, and do not intend to apply, to the London Stock Exchange or any otherrecognised investment exchange for the Loan Stock to be admitted to trading. TheLoan Stock is transferable in amounts or integral multiples of £50,000. Theissue of the Loan Stock is conditional on Admission. In order to reflect the new business of the Company, it is proposed to changethe name of the Company to Sport Media Group plc subject to approval of theShareholders at the EGM. On 15 June 2007, the Company entered into an Agreement with London & AthensLimited, a company of which Simon Hume Kendall is a Director and which acts inaccordance with his directions or instructions, pursuant to which London &Athens Limited agreed to negotiate the purchase by the Company of SportNewspapers. In consideration for these services, the Company agreed to payLondon & Athens Limited a success related fee equal to 2 per cent. of the valueof the Acquisition plus VAT. This fee of £1,000,000 plus VAT is payable by theCompany on Admission. This Agreement is a related party transaction within themeaning of the AIM Rules. Therefore Simon Hume Kendall has not taken any part inthe consideration by the Board of the Proposals. Current Trading and Prospects Current trading for the Group is in line with market expectations and theDirectors are confident with the prospects for the forthcoming year. Theperformance of Interactive World since First Admission has been one ofcontinuing growth and development and the Directors are optimistic that suchperformance can be maintained. Existing Directors and the Proposed Director Brief biographical details of the Existing Directors and the Proposed Directorare set out below. Existing Directors Simon Hume Kendall, Non Executive Chairman (aged 53) Simon has extensive public company board experience having served as a Directoron a number of FTSE listed companies and is currently Chairman of ClydesdaleBank plc, Kent and is also Chairman of RISC Holdings plc and Kent AttractionsLLP. He spent 25 years in the shipping industry and was co-founder of BurrenEnergy plc. Simon has international experience with directorships and interestsin Europe. Andrew Fletcher ACA, Chief Financial Officer (aged 42) Andrew qualified as a chartered accountant in 1989 with Price Waterhouse andthen worked at a number of companies including EMI Music Worldwide, The RankOrganisation plc and Viacom. He was involved in the flotation of SportsworldMedia Group plc, before leaving to become Chief Executive Officer of Digital RumLimited, a venture capital backed mobile technology company. He has board levelexperience in FTSE 250, AIM and venture capital backed companies and has beeninvolved in many successful fund raisings. Andrew also holds a MBA from LondonBusiness School. Nigel Blythe-Tinker LLB FCIS, Non Executive Director (aged 57) Nigel has extensive experience over thirty years in publicly listed companies indifferent business sectors within the UK and overseas. He has held seniorexecutive management and legal positions in FTSE 100 companies including TheRank Organisation plc and William Hill plc. His experience covers mergers andacquisitions work, corporate finance, restructuring, flotations and corporategovernance in public companies. He is currently a Non Executive Director ofGaming VC Holdings S.A. which is AIM listed and also Non Executive Chairman ofPentasia Limited. Proposed Director Andrew Fickling, Proposed Executive Director and Managing Director, SportNewspapers (aged 34) Sponsored throughout his university degree by Sport Newspapers, Andrew joinedSport Newspapers in 1991 as a Manager within the IT department, where he led theimplementation of modernising the IT infrastructure and systems. Andrew becameHead of IT in 2000, Technical Director in 2002 and Executive Director Designatein 2004. During his tenure in this role he oversaw the closure of the Leicesteroffices of the company including the advertising, circulation and accountsdepartments and the recreation of these departments within the existingManchester offices. He was appointed as Managing Director of Sport Newspapers inJanuary 2007. Senior Management Roger Bannister FCCA, Finance Director, Sport Newspapers (aged 60) Roger joined Sport Newspapers in March 1994. He is responsible for theaccounting functions and financial affairs of Sport Newspapers and itssubsidiaries. He trained with Grant Thornton, qualifying as a certifiedaccountant in 1971 and became a fellow of the Association of Chartered CertifiedAccountants in 1980. He has wide ranging business experience, having worked fora variety of companies in the manufacturing and distribution sectors. He is aDirector of Moresport Limited and Melton Enterprises (subsidiaries of SportNewspapers), trustee of the Sport Newspapers pension scheme and finance directorof AIM quoted company Birmingham City plc. Board of Directors on Admission Simon Hume Kendall, Andrew Fletcher and Nigel Blythe-Tinker will continue asDirectors of the Company. Simon Hume Kendall will continue in the position ofNon Executive Chairman and Andrew Fletcher will continue as Chief FinancialOfficer. They will be supported by Nigel Blythe-Tinker as a Non ExecutiveDirector. On Admission Andrew Fickling will be appointed as an ExecutiveDirector of the Company and will continue as Managing Director of SportNewspapers. The Directors and the Proposed Director also intend to appoint a newChief Executive Officer of the Enlarged Group as soon as is practicablefollowing Admission. Immediately following the EGM but conditional upon Admission, Andrew Ficklingwill enter into a service agreement with the Company pursuant to which he willbe employed as an Executive Director of the Company for an annual salary(subject to review) of £175,000, a car allowance and 15 per cent. pensioncontribution. The service agreement may be terminated upon either party givingnot less than 12 months' notice which can be served at any time. The agreementcontains provisions for early termination, inter alia, in the event of a breachby Andrew Fickling. The agreement will restrict Andrew Fickling from competingwith the Company for a period of 6 months after termination of employment and/orsoliciting customers for a period of 12 months after termination of employment.Upon termination of the service agreement, no benefits (other than thoseaccruing in respect of the notice period) are due to Andrew Fickling. On 7 August 2007, Robert Johnson and Clive Sullivan resigned as Directors of theCompany. Robert Johnson will remain as Managing Director of Netcollex Limited, asubsidiary of the Company. Details of the Placing and the Vendor Placing The Company proposes to raise approximately £40 million (net of expenses) by theissue of 58,266,667 Placing Shares at 75p per share. The net cash proceeds ofthe Placing will be used to fund the Acquisition and to fund costs relating tothe Acquisition, the Placing and Admission. The Placing Shares will represent 151% of the Existing Ordinary Shares and60.16% of the Enlarged Share Capital. The Placing Shares will, when issued haveno right to receive or to be paid any dividend for the Company's financial yearending 31 July 2007 and will automatically convert into Ordinary Shares by 31January 2008. The Placing Shares will otherwise rank pari passu in all respectswith the Existing Ordinary Shares. Daniel Stewart has conditionally agreed, as agent for the Company, to use itsreasonable endeavours to procure cash subscribers for the Placing Shares to beissued under the Placing. The Placing Shares are not being made available toholders of Existing Ordinary Shares in proportion to their holdings of ExistingOrdinary Shares. Simon Hume Kendall has agreed to subscribe 970,065 PlacingShares pursuant to the Placing and to acquire 363,268 Vendor Placing Sharespursuant to the Vendor Placing. The conversion of the Placing Shares into Ordinary Shares is expected to beregarded as a reorganisation of share capital for capital gains tax purposes, tothe effect that the holders of the Placing Shares will be deemed not to havemade a disposal of their Placing Shares. Following the conversion, the newOrdinary Shares will be treated as replacing the original Placing Shares andcarry the original base cost for the purpose of any future share disposals. Application has been made to HMRC for advance assurance that certain of thePlacing Shares are capable of forming a qualifying holding for a Venture CapitalTrust. Accordingly certain of the Placing Shares, which the Directors believewill be capable of forming a qualifying holding for a Venture Capital Trust,will be unconditionally issued and allotted, on separate days, following the EGMbut prior to Admission and will not therefore be conditional upon completion ofthe Proposals (including the Acquisition). The Placing is conditional, inter alia, upon the Resolutions being passed at theEGM, the Placing Agreement becoming unconditional and not being terminated inaccordance with its terms and, save for those of the Placing Shares which theDirectors believe will form a qualifying holding for a VCT, Admission occurringby no later than 8.00 a.m. on 5 September 2007, or such later date (being nolater than 8.00 a.m. on 5 October 2007) as Daniel Stewart and the Company maydecide. Daniel Stewart has, pursuant to the Vendor Placing Agreement, conditionallyplaced 19,273,148 Existing Ordinary Shares on behalf of David Sullivan and AWDTrustees Limited in order for them to realise approximately £14,454,861 beforeexpenses with institutional and other investors. Use of the Proceeds The gross proceeds of the Placing receivable by the Company are approximately£43.7 million and will be used as follows: • £40 million as consideration for the Acquisition; and • £3.7 million for commissions, costs and expenses which are payable by the Company relating to the Acquisition, the Placing and Admission. Dividend Policy The Directors and the Proposed Director intend to pursue a dividend policy whichis consistent with its current dividend policy, subject to the profitability andcash requirements of the Enlarged Group. The Placing Shares will have no rightsto receive or to be paid any dividend in respect of the Company's financial yearending 31 July 2007. - Ends - This information is provided by RNS The company news service from the London Stock Exchange

Related Shares:

SPMG.L
FTSE 100 Latest
Value9,061.49
Change37.68