TIDMMSQ

RNS Number : 5765S

Media Square PLC

22 November 2011

Media Square plc ("Media Square" or the "Group")

Legal Action and Trading Update

The Board of Media Square plc, the international marketing communications group, announces today that it has begun legal proceedings against Porta Communications plc ("Porta"), which was recently floated on the AIM market and its Chief Executive, David Wright.

The Board of Media Square believes that Mr Wright, in his role as Chief Executive of Porta, attempted to effect an unlawful conspiracy, as part of a project to allow Porta to back the acquisition of all, or part of the Media Square Group. Media Square is seeking to recover a minimum of GBP760,000 in damages.

Porta Communications was formally informed of the intention to bring the claim and the initial level of damages to be claimed on 11 October 2011. At this stage, we anticipate that the claim will be defended.

The Board of Media Square is continuing to consider its position with regard to action against other related parties who may be connected to this conspiracy.

The actions of Mr Wright and Porta have caused disruption to Media Square's advertising division. This disruption and the provision for a bad debt of approximately GBP100,000, resulting from the administration of MF Global (a client in New York), are likely to mean that the Group will not now meet its profit expectations for the year ending 29 February 2012 and that profit will be below the level reported for the prior year.

The Group's current banking facility with Lloyds Banking Group runs until July 2013 and needs to be refinanced during 2012. The Board has started discussions with Lloyds about structuring an appropriate new facility to reflect the Group's size and performance.

Background to the legal action

During the 1980s and 90s a quoted marketing communications group called Incepta plc grew rapidly by acquisition. Mr Wright was Chief Executive and later Chairman of Incepta plc. He resigned from Incepta on 29 February 2004.

In March of 2005 Incepta merged with Huntsworth plc. Certain Incepta agencies were retained by Huntsworth. The rest were sold to Media Square plc in September 2005 in a transaction valued at GBP63 million.

In October 2009 certain shareholders in Media Square requisitioned a General Meeting with the objective of having Mr Wright appointed as a Director and Chief Executive of Media Square. This requisition was withdrawn in March 2010.

In November 2010 the AIM listed TSE Group plc was renamed Porta Communications and Mr Wright became its Chief Executive. It said its strategy was to make acquisitions in the marketing communications sector.

Enquiries to:

   Media Square plc                                         www.mediasquare.co.uk 
     Roger Parry                                                  020 3026 6602 
     Peter Reid                                                     020 3026 6607

Collins Stewart Europe Limited

 
 Matt Goode / Adam Miller       020 7523 8350

This information is provided by RNS

The company news service from the London Stock Exchange

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