MediaZestPlc ("MediaZest", the "Company" or "Group"; AIM: MDZ) Trading update and proposed placing MediaZest, the creative digital out-of-home advertising company, is pleased to update shareholders on current trading and to elaborate further on its announcement dated 10 April 2013. In addition, as a consequence of business progress in the financial year ending 31 March 2014 and in order to pay down debt, the Company is also pleased to announce a proposed placing to raise up to £358,000 before expenses through the issue of up to 143,200,000 shares at 0.25p per share, a premium of 35.1per cent.to the share price at the close of business on 18 June 2013. Trading Update As announced on 10 April 2013, the Company has won a significant global contract that is expected to deliver revenues in excess of £1 million over the next 18 months. The client, a constituent of the Consumer Staple sector of the S&P 500 index, has contracted with the Company through one of the world's biggest advertising agency groups. Given the size and international profile of the project, the Company has agreed to maintain ongoing confidentiality until the campaign is launched to the public. The Company expects to be able to provide more information at the time of the launch, later this calendar year. The Board believes this contract offers significant future business opportunities for the Company. Meaningful revenues have already been booked, and payment received, in respect of work performed by the Company through its engagement to deliver this project. In respect of other business, the Company announced in its interim report released in December 2012 the award of a large project thatwas anticipated to generate revenues in excess of £400,000. This was originally scheduled for delivery in Q3 2012 but is now expected to fall in its entirety into the current financial year (ending 31 March 2014). Both of these substantial contracts give the Company a strong business base for this financial year. HMV went into in administration in January 2013 and had been a long standing and valued client of the Company for many years. The Board had been monitoring the Company's financial exposure to HMV for some time and its failure left the Company with a bad debt of £27,000. However, the Board has worked hard to maintain good relationships during a difficult period for this client and consequently the Company is currently receiving ongoing business from the new ownership of HMV and hopes to increase this over time, to the extent that anticipated future revenue should more than cover the aforementioned write-off. From a cost perspective, the Company is no longer tied into an expensive lease agreement in respect of its Farnham premises. This has enabled it to explore far more cost effective options which it expects to consummate in the near future. Given the loss of business from HMV in the last quarter of the financial year ended 31 March 2013, and in the context of difficult trading conditions during those 12 months, the ancillary costs of financing and lease reparations, the Board expects those full year results to be similar to those of the prior year. However, the Company has continued to develop and gain business from both existing and new clients, in addition to the two large contracts already highlighted. Clients such as Fiat, JD Sport, Samsung and O2continue to conduct meaningful business with the Company and when the recurring contractual business earned from an array of customers is factored in, the Company has embarked upon the 2013/14 financial year in a strong commercial position. Proposed placing The Company is pleased to announce that it is proposing to raise up to £358,000 before expenses through a conditional placing of up to 143,200,000 new ordinary shares (the "Placing Shares") with institutional and other investors at a price of 0.25p per Placing Share (the "Placing Price") (the "Placing"). The Placing Price represents a premium of 35.1 per cent. to the closing price on 18 June 2013. The Company has received irrevocable commitments from new and existing shareholders to subscribe for 136,800,000 Placing Shares. In addition, it has received expressions of interest to subscribe on the same terms from Lance O'Neill, the Company's Chairman, in respect of a further 2,000,000 Placing Shares and from two directors of the Company's subsidiary company in respect of an aggregate of a further 4,400,000 Placing Shares. The Placing Shares will represent approximately 23.1 per cent. of the enlarged issued share capital of the Company. Use of proceeds Of the Placing, £50,000 is being raised by way of conversion of loan interest due to City and Claremont Capital Assets Ltd. The net cash proceeds of the Placing are expected to amount to approximately £284,000, of which £200,000 will be used to pay down a portion of the Company's existing debt (as explained below) in order to reduce the Company's financing costs and to strengthen the balance sheet. The balance will be applied for working capital purposes. Related party transactions City and Claremont Capital Assets Ltd ("C&C"), a related party by virtue of being a substantial shareholder of the Company as defined in the AIM Rules, is subscribing for 20 million Placing Shares in the Placing through the conversion of £50,000 of the Company's existing loan interest indebtedness to it. In addition, the Company will apply £160,000 of the net proceeds of the Placing to further reduce its loan principal indebtedness to C&C ("the C&C Transaction"). Lance O'Neill, the Company's Chairman, is one of two directors on the board of EP&F Capital plc ("EP&F") which is to be repaid £40,000 of the Company's existing indebtedness to it fromthe net proceeds of the Placing(the "EP&F Transaction"). EP&F is also deemed to be a related party under the AIM Rules. The C&C Transaction and the EP&F Transaction are deemed to constitute related party transactions under the AIM Rules. The Directors of the Company, other than Lance O'Neill in relation to the EP&F Transaction, consider, having consulted with Northland Capital Partners Limited, the Company's Nominated Adviser, that the terms of the C&C Transaction and the EP&F Transaction are fair and reasonable so far as the shareholders of the Company are concerned. Notice of General Meeting The Placing is conditional, inter alia, on the approval of the Company's shareholders and admission of the Placing Shares to trading on AIM. A circular containing a notice of the General Meeting is today being sent to the Company's shareholders with details of the Placing and seeking the approval of shareholdersfor the issue of the Placing Shares. The General Meeting will be held at the offices of Nabarro LLP atLacon House, 84 Theobald's Road, London WC1X 8RWat10.00am on 5 July 2013. A copy of the circular will be available on the Company's website: www.mediazest.com The Placing Shares will be issued credited as fully paid and will rank paripassuin all respects with the existing ordinary shares, including the right to receive all dividends and other distributions declared on or after the date on which they are issued. Lance O'Neill, MediaZest Chairman, commented: "The Board is pleased with the level of commitment exhibited by both current and new investors. The savings on financing costs from paying down part of the existing debt will reduce the Company's cost base as well as strengthen the Company's balance sheet. The transformational contract win announced in April will propel the Company into an exciting growth phase and give the Company a much enhanced international profile." Enquiries: Geoff Robertson Chief Executive Officer MediaZestPlc 020 7724 5680 Gavin Burnell / Edward Hutton Nominated Adviser Northland Capital Partners Limited 020 7796 8800 Claire Noyce / William Lynne Broker Hybridan LLP 020 7947 4350 Notes to Editors: About MediaZest MediaZest is a creative media agency that specialises in providing innovative out-of-home marketing solutions to leading retailers, brand owners and corporations, but also works in the public sector in both the NHS and Education markets. The Group supplies an integrated service from content creation and system design to installation, technical support and maintenance. MediaZest was admitted to the London Stock Exchange's AIM market in February 2005. For more information, please visit www.mediazest.com END -0- Jun/19/2013 06:11 GMT
MEDIAZEST PLC: Trading Update & Proposed Placing
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