Issue of Convertible Loan
March 28 2003 - 6:24AM
UK Regulatory
RNS Number:3465J
Internet Music & Media PLC
28 March 2003
28th March, 2003
INTERNET MUSIC & MEDIA PLC ("IMM" or "the Company")
Issue of Convertible Loan and Corporate Restructuring
The Company announces that it has entered into an agreement with Mr Mark Wadhwa
and Mr Timothy Robinson ("the Investors")under which the Investors have agreed
to provide #250,000 by way of a loan to the Company, secured on the assets of
the Company and 8,477,135 Ordinary Shares in the Company held by Mr Nick Cowan,
the Chairman of the Company. The loan, which is repayable on 27th March, 2005
(or earlier upon certain events, including the failure of shareholders to
approve the arrangements set out below), will be applied in subscribing for
25,403,211 new Ordinary Shares at a price of 0.984p per share, conditional upon,
inter alia, shareholder approval and the conversion of all outstanding
convertible loan notes, amounting to #760,000, which, on conversion, would
result in the issue of 27,703,030 new Ordinary Shares. Following their
subscription, the Investors would hold in aggregate 25,403,211 Ordinary Shares,
representing 28.68 per cent. of the issued share capital of the Company as
enlarged by the above conversions and subscription and the exercise of the
Groovetech option set out below. The Investors have the right to be appointed
to the board of the Company, at their request.
In addition, conditional upon shareholder approval, the Investors have been
granted an option to subscribe for a further 43,279,544 new Ordinary Shares at
0.578p per share, amounting to #250,000, on or before 28th March, 2004. If this
option were to be exercised and no other shares were to be issued by the
Company, the Investors would then hold 68,682,755 Ordinary Shares, representing
52.09 per cent. of the thus enlarged issued share capital of the Company.
In conjunction with the above proposals, the Company intends to seek shareholder
approval to a capital reorganisation to permit the above shares to be issued at
prices below the current nominal value of 1p per share.
Furthermore, the Investors have the option to advance up to a further #100,000,
secured over the assets of the Company.
Mr Cowan currently provides a cash-backed guarantee for a #700,000 loan advanced
to the Company by Coutts & Co. He has agreed to procure the personal assumption
of that loan (on an unsecured basis) by an assignment, or similar means,
enabling Coutts & Co to be repaid in full. On the second anniversary of the
personal assumption of the loan he will have the option to convert #350,000 into
new Ordinary Shares at a price 10 per cent. below the mid-market price of an IMM
Ordinary Share at that time. The remainder of the loan will be repayable on
demand at any time on or after four years after the assumption of the loan.
The Company has granted an option to the Investors, conditional upon shareholder
approval, to subscribe for Ordinary Shares, at the same time as the part
conversion of the loan advanced by Mr Cowan set out above, at a cost of #350,000
at the same subscription price as the conversion of the loan advanced by Mr
Cowan.
The Company has agreed to procure the grant of an option by Groovetech LLC for
outsourcing the Group's software and development costs to the Investors, or a
company owned and controlled by them, under which all the intellectual property
rights (other than trade marks, service marks, logos, business names and domain
names which will be retained by Groovetech LLC) will be acquired by the
Investors and licenced back to Groovetech LLC on an exclusive, irrevocable and
perpetual basis. Under these arrangements the Investors will become responsible
for paying the costs of development including the remuneration costs of those
employees whose duties primarily relate to the development and maintenance of
the intellectual property rights of Groovetech LLC. It is envisaged that a
licence fee to be agreed will be payable under these arrangements.
Under Rule 9 of the City Code ("Rule 9") when (i) any person acquires shares
which, when taken together with shares already held by him or shares held or
acquired by persons acting in concert with him, carry 30 per cent. or more of
the voting rights of a company subject to the City Code or (ii) any person who,
together with persons acting in concert with him, holds not less than 30 per
cent. but not more than 50 per cent. of the voting rights of a company subject
to the City Code and such person, or any person acting in concert with him,
acquires additional shares which increases his percentage of the voting rights,
that person is normally obliged to make a general offer to all shareholders at
the highest price paid by him, or any person acting in concert with him, within
the preceding 12 months.
It is intended that the Panel will be asked to waive the obligation on the
Investors (both individually and collectively) and on Mr Cowan to make a general
offer to Shareholders under Rule 9 which would otherwise arise as a result of
the issue of the Ordinary Shares pursuant to the agreements with Mr Wadhwa, Mr
Robinson and Mr Cowan. Such a waiver would require the approval on a poll of
independent shareholders at an extraordinary general meeting of the Company.
The Company announces that pursuant to an agreement dated 24th March, 2000
between the Company and Groovetech Technologies Inc. as amended by a deed of
variation dated 13th July, 2001, the Company has today exercised its option to
acquire from Groovetech Technologies Inc. the remaining 90,000 membership units
in Groovetech LLC that it does not already own. Under the terms of the amended
option agreement, the Company will issue 1,556,190 new Ordinary Shares in
satisfaction of the consideration due.
As a result, Groovetech Technologies Inc., in which Jonathan Cunningham, Brian
Pember and Zachary Jenkins each have a one-third interest, will hold 1,556,190
Ordinary Shares, representing 4.39 per cent. of the issued share capital of the
Company prior to the conversion of all outstanding convertible loan notes and
the subscriptions by the Investors.
Application will be made for the above shares to be admitted to trading on the
Alternative Investment Market and it is expected that trading in these shares
will commence on 9th April, 2003.
The Company also announces the resignation of Brian Pember, Zachary Jenkins and
David Rogers as directors of the Company.
A circular setting out further details of the above agreements, complying with
the requirements of the City Code and containing a notice of extraordinary
general meeting of the Company to approve the above transactions and the capital
reorganisation will be sent to shareholders in the near future.
Enquiries:
Internet Music & Media PLC 020 8691 0484
Nick Cowan - Chairman
This information is provided by RNS
The company news service from the London Stock Exchange
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