Zinc Media Group PLC (AIM:ZIN) Proposed Acquisition and Placing to Raise £3.5m

Proposed Acquisition of Tern Television Productions Limited and proposed Placing of 389,603,280 new Ordinary Shares at 0.9p per new Ordinary Share to raise £3.5 million

Zinc Media Group plc, (AIM: ZIN), the TV and multimedia content producer, is pleased to announce the acquisition of Tern Television Productions Limited (“Tern”), for a total consideration of up to £5.45 million and an oversubscribed placing of 389,603,280 new Ordinary Shares in the Company (the “Placing Shares”) at a price of 0.9 pence per share (the “Placing Price”) to raise £3.5 million (before expenses) (the “Placing”).

Highlights

·      the acquisition of Tern, a profitable independent TV production company, for a total consideration of up to £5.45 million (comprising initial consideration of £2 million, plus £1.1 million for surplus cash and earnout consideration of up to £2.35 million) to be paid partly in shares and partly in cash

·      An oversubscribed placing to raise approximately £3.5 million at a price of 0.9 pence per share

·      In the financial year ended 31 March 2017, Tern’s turnover was approximately £5.3m with profit before tax of approximately £0.3m

Peter Bertram, Chairman, said: 

“We are delighted to announce this key acquisition for Zinc Media and are delighted to welcome the highly regarded Tern Television team into the Company. We believe this acquisition will place us in a strong position to further expand and grow in an industry which is experiencing ever-increasing demand for original content, due to the rapid growth of connected devices and new TV platforms.

“By augmenting our business through acquisitions such as that of Tern, the enlarged group will have greater abilities to reach new markets, to establish strategic relationships with broadcasters and international commissioners and to produce innovative content.

“At Zinc Media, we continue to remain focused on operating a high-quality and respected business, maximising shareholder value. I look forward to updating the market on the completion of this acquisition in due course.”

The Acquisition

Tern, established in 1988, is a successful profitable independent TV production company specialising in factual TV production. The company has key production bases in Scotland and Northern Ireland and typically produces over sixty hours of TV annually for UK broadcasters, including the BBC, Channel 4 and Sky 1, as well as international broadcasters such as Discovery, PBS and National Geographic Channels.  It has won numerous awards including BAFTAs, Prix Italia, Royal Television Society awards and a Cine Golden Eagle. Tern has a profitable track record and reported an increased turnover of approximately £5.3m in the financial year ended 31 March 2017, up from approximately £4.4m in the year ended 31 March 2016.  

This Acquisition is another pivotal step in Zinc Media’s buy and build strategy as it looks to satisfy the high demand for content, and to consolidate the fragmented independent TV production industry by targeting attractive and profitable companies in the UK and internationally.

Strategic Rationale

The Board believes that the Acquisition has a compelling strategic and financial rationale, as it:

·      provides an opportunity for the Company to expand its position as a TV production business of scale by being a consolidator within the industry, meeting the increased demand for high quality on-demand TV content

·      will broaden and enhance the Company’s creative capabilities, as Tern has experience and produces content in factual niches that the Company is not currently active in

·      is a leading dual nation TV producer, and Zinc Media will benefit from being able to produce major productions, specifically in these nations, where there are strong indications of future growth and interest by the major UK broadcasters

·      brings with it a high-quality and reputable management team, all of whom intend to stay with the Company following the completion of the Acquisition, and who will enhance the overall operations and management of Zinc Media

Transaction and Placing highlights

·      The Acquisition is for total consideration of up to £5.45 million, comprising initial consideration of £2 million, of which £0.75 million is to be satisfied by the issue of the Consideration Shares, plus £1.1 million for surplus cash and earnout consideration of up to £2.35 million. Of the earnout consideration, up to 50 per cent may be satisfied by the issue of additional Ordinary Shares, at the Company’s option.

·      The Placing will raise gross proceeds for the Company of £3.5 million.

·      Several of the Board are participating in the Placing.

·      The proceeds of the Placing are proposed to be used principally to finance the initial cash consideration due in respect of the Acquisition and to provide additional growth capital for the enlarged business.

·      The Placing is conditional on, inter alia, the passing of the Resolutions to be proposed at a General Meeting expected to be held at the offices of CMS Cameron McKenna Nabarro Olswang LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF at 9.00 am on 13 November 2017.  A circular which will provide further details of the Placing and include a notice convening the General Meeting (the “Circular”) is expected to be sent to Shareholders and be available on the Company’s website in the coming few days.

Website: zincmedia.com

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