TIDMPAA
RNS Number : 8193X
Parallel Media Group PLC
29 November 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA,
JAPAN, AUSTRALIA, OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.
The information contained within this Announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ("MAR"). Upon
publication of this Announcement, this information is now
considered to be in the public domain.
29 November 2017
PARALLEL MEDIA GROUP PLC
Proposed Acquisitions of Brick Live, Parallel Live and the
shares in BLFE not already owned by Brick Live International and
the settlement of David Ciclitira's commission arrangements
Placing of 4,200,000 New Ordinary Shares at 30p per share
Conversion of GBP2.03 million of existing debt into 6,766,667
New Ordinary Shares
Waiver of the requirements of Rule 9 of the City Code
Disposal of Certain Subsidiaries, Director's Fees Settlement,
Proposed name change,
Adoption of New Articles of Association,
Admission of the Enlarged Issued Share Capital to trading on
AIM
and General Meeting Notice
Parallel Media Group plc ("PMG" or "the Company") (AIM: PAA)
today announces that it has conditionally agreed to acquire Brick
Live and Parallel Live, to create a new live entertainment events
company - Live Company Group - and bring BRICKLIVE to London's
Alternative Investment Market (AIM).
The acquisition of the two companies and of partners' shares in
Brick Live Far East, are valued at GBP10m, and the company is
raising GBP1.26m through a share placing at 30p. On completion, the
enlarged group will have a market value of GBP14.5m.
To reflect the Enlarged Group's new business focus it will be
renamed Live Company Group plc (AIM: LVCG) on Completion.
The acquisitions of Brick Live and Parallel Live are part of the
PMG's strategic plans to expand its live entertainment offering.
BRICKLIVE events have been well-received globally and last weekend,
BRICKLIVE shows were hosted simultaneously across three continents
- Europe, Asia and South America.
The directors believe that the increased profile of being part
of a public company will assist Brick Live's growth strategy and
support it in finding further high-quality licensee partners for
events.
The Company's strategy is to build on the success of BRICKLIVE
partner-driven events in the UK, South Korea, Japan, Switzerland
and Brazil to further extend the global footprint of these shows,
with a focus on the Far East and China, in particular.
Brick Live has delivered a significant number of events in 2017.
During the past two months alone BRICKLIVE exhibitions have run in
Birmingham, Brussels, Campinas in Brazil and Osaka. Meanwhile, the
latest BRICKLIVE show will open in Naples tomorrow (Friday 1(st)
December), before ending the year with a special Christmas showcase
at London's Saatchi Gallery, which launched on 25(th) November and
will run until 7(th) January 2018. Brick Live will have delivered a
total of 17 events by the end 2017, with expansion expected to
bring 30 new shows in 2018.
David Ciclitira, executive chairman at Parallel Media Group,
said: "Since our Birmingham NEC show in October 2016, we have been
on an amazing growth journey that is testament to both the talented
BRICKLIVE team, and our phenomenal partners. The acquisition of
Brick Live and Parallel Live, and the bringing of BRICKLIVE to the
public market, couldn't come at a better time. Having just
successfully launched three BRICKLIVE shows on three continents
simultaneously, this is a momentous point in a very successful
year. This transaction will give us the springboard we need to take
our stand-out events to the next level; expanding into an even
greater geographic and fostering an incredible learning environment
for even more children around the globe, teaching them that there's
no limit to their creativity."
The Proposed Acquisitions constitute a reverse takeover under
the AIM Rules requiring the approval of Independent Shareholders at
a General Meeting.
The Company is today publishing an Admission Document, which is
being posted to shareholders, together with the Notice of General
Meeting to be held at 11.00 a.m. on 22 December 2017.
In order to implement the Proposals, the Company is seeking the
approval of Independent Shareholders of a waiver of the obligations
on the part of the Concert Party to make a general offer to
Shareholders under Rule 9 of the City Code.
The Admission Document will be available from the Company's
website at www.parallelmediagroup.com.
It is expected that the suspension in the trading of the
Company's Ordinary Shares will be lifted at 7.30 a.m. today, 29
November 2017.
Application will be made for the Enlarged Issued Share Capital
to be admitted to trading on AIM, conditional on Completion. If the
Resolutions are passed at the General Meeting, it is expected
Admission will become effective and dealings in the Enlarged Issued
Share Capital will commence on AIM on 27 December 2017.
The Company is also today posting a Notice of Annual General
Meeting, to be held at 10.00 a.m. on 22 December 2017, to
Shareholders.
Enquiries:
Parallel Media Group Plc
David Ciclitira Tel: 020 7225 2000
Stockdale Securities Limited, Nominated Adviser and Broker
Richard Johnson / Edward Thomas Tel: 020 7601 6100
Parallel Media Group
Parallel Media Group is a sports and live event entertainment
agency founded by David Ciclitira in 1987 and admitted to AIM since
August 2001. PMG worked within the golf sector for more than 25
years, promoting tournaments on the European tour before moving
further into entertainment. In recent years, it has focused on
connecting international brands with music solutions in Asia.
Brick Live Group
Brick Live is a network of partner-driven fan-based shows using
BRICKLIVE-created content worldwide. It owns the rights to
BRICKLIVE - interactive experiences built around the creative ethos
of the world's most popular construction toy - LEGO(R). BRICKLIVE
actively encourages all to learn, build and play, and provides an
inspirational central space where like-minded fans can push the
boundaries of their creativity. Brick Live Group is not associated
with the LEGO Group and is an independent producer of
BRICKLIVE.
Parallel Live Group
Parallel Live was founded by David Ciclitira in 2015 and owns
the rights to LEGO(R) LIVE in the USA as part of a three-year
contract. It will be responsible for running and promoting those
events. Including the location hire, event design, event
construction, advertising and marketing, media planning, website
design, event management, public relations and ticket sales, while
Lego Systems, Inc will provide some of the content.
The following letter has been extracted from the Company's
Admission Document being published today:
LETTER FROM RANJIT MURUGASON, NON-EXECUTIVE DIRECTOR OF
Parallel Media Group plc
(Incorporated and registered in England and Wales with
registered number 00630968)
Directors: Registered Office:
David Ciclitira (Executive Chairman) 3 Park Court
Serenella Ciclitira (Non-Executive Director) Pyrford Road
Ranjit Murugason (Non-Executive Director) West Byfleet
SurreyKT14 6SD
Proposed Directors:
Andrew Smith (Executive Director and Managing Director of Brick
Live Group)
Simon Bennett (Non-Executive Director)
29 November 2017
Dear Shareholder,
Proposed Acquisitions of Brick Live, Parallel Live and the
shares in BLFE not already owned by
Brick Live International and the settlement of David Ciclitira's
commission arrangements
Placing of 4,200,000 New Ordinary Shares at 30p per share
Conversion of GBP2.03 million of existing debt into 6,766,667
New Ordinary Shares
Waiver of the requirements of Rule 9 of the City Code
Disposal of Certain Subsidiaries, Director's Fees Settlement,
Proposed name change,
Adoption of New Articles of Association,
Admission of the Enlarged Issued Share Capital to trading on
AIM
and General Meeting Notice
1. INTRODUCTION
The Company has announced today that it has conditionally agreed
to acquire Brick Live and Parallel Live to be satisfied by the
issue of 20,000,000 New Ordinary Shares, equivalent to 41.5 per
cent. of the Enlarged Issued Share Capital, which at the Placing
Price values the Brick Live Acquisition and the Parallel Live
Acquisition at GBP6 million in aggregate. Further details of the
Brick Live Acquisition and the Parallel Live Acquisition are set
out below and in paragraph 12.1 in Part VIII of this document.
David Ciclitira, the Executive Chairman of Parallel Media, owns 75
per cent. of Brick Live and 100 per cent. of Parallel Live and will
receive 12,500,000 and 3,333,333 New Ordinary Shares, equivalent to
25.9 per cent. and 6.9 per cent. respectively of the Enlarged
Issued Share Capital as his share of the Consideration Shares.
The Board consider that Asia and in particular China, will be
important areas for Brick Live in the future and as a result, the
Company has also announced today, that terms have been agreed for
the acquisition by the Company of the 61.1 per cent. of Brick
Live's joint venture company BLFE that Brick Live International
does not already own. The consideration for the BLFE Acquisition
will be GBP2.95 million, to be satisfied by the issue of 9,832,060
New Ordinary Shares. The vendor, Brick Live Lab, will also retain
the rights to 25 per cent. of the distributable profits of BLFE for
the next five years. Further details of the BLFE Acquisition are
set out below and in paragraph 12.1.3 in Part VIII of this
document. In addition, CIDEA, a company which, with Brick Live Lab,
is controlled by Mr Hyun Seok Kim, was granted certain
merchandising rights for the aforementioned territory and has
agreed to relinquish these rights and will as a result be issued
with 333,333 New Ordinary Shares, which at the Placing Price have a
value of GBP100,000.
In December 2016 Brick Live agreed an arrangement with David
Ciclitira, whereby David Ciclitira would be paid a commission on
all sales generated by him for and on behalf of Brick Live. It has
been agreed that these arrangements will be terminated with effect
from Admission in consideration of a payment of GBP1 million by
Brick Live to David Ciclitira which he will immediately apply in
subscribing for 3,333,333 New Ordinary Shares at the Placing Price,
equivalent to 6.9 per cent. of the Enlarged Issued Share Capital.
Further details of this agreement are set out below and in
paragraphs 12.1.5 and 12.2.2 of Part VIII.
The Company is also proposing to raise GBP1.26 million
(approximately GBP0.66 million net of expenses), by the issue of
4,200,000 New Ordinary Shares through the Placing at a price of 30p
per New Ordinary Share. The Placing will represent approximately
8.7 per cent. of the Enlarged Issued Share Capital. Further details
of the Placing are set out in paragraph 6 of this Part I.
The Company has agreed to repay to David Ciclitira the Existing
Debt (comprising GBP1.95 million in relation to formalised loan
agreements and accrued interest, together with GBP80,000 of further
amounts owed to him but not subject to formal loan agreements),
which David Ciclitira will immediately apply in subscribing for
6,766,667 New Ordinary Shares at the Placing Price, equivalent to
14.0 per cent. of the Enlarged Issued Share Capital. At Admission
the amounts due to David Ciclitira by the Company will be
approximately GBP0.15 million, which are interest free and
repayable on demand, subject to the Enlarged Group's working
capital requirements at that time. Further details of the Loan
Conversion are set out below and in paragraph 12.1.6 of Part
VIII.
As part of the process to rationalise and simplify the existing
corporate structure of the Company, James Golf, a company
wholly-owned by David Ciclitira, has agreed to acquire the Disposal
Subsidiaries. James Golf will be responsible for the settling of
any creditors, and the Company will reimburse James Golf the costs,
capped at GBP65,571. The Company shall also reimburse James Golf in
connection with any costs relating to the winding up or dissolution
of the Disposal Subsidiaries which are settled by James Golf,
subject to a maximum aggregate of GBP70,000. Further details are
set out below and in paragraph 12.1.7 of Part VIII.
The Company is also updating its articles of association. A
summary of the proposed New Articles is set out at paragraph 6 of
Part VIII of this document and a summary of the principal
differences between the Existing Articles and the New Articles is
set out at paragraph 27 of Part I of this document.
For my own part, as at 30 September 2017 I am owed a total of
GBP149,950 by Parallel Media for director's fees and associated
costs that have accrued, but not been paid, since 2013. Further, I
have agreed with the Company that my fees with regard to the
Proposals set out in this document will be GBP35,000, which will be
payable at Admission. The Company has agreed to pay the total
amount which is due to me of GBP184,950 which will immediately be
applied in subscribing for 616,500 New Ordinary Shares at the
Placing Price, equivalent to 1.3 per cent. of the Enlarged Issued
Share Capital.
The Proposed Acquisitions constitute a reverse takeover under
Rule 14 of the AIM Rules for Companies and accordingly require
Shareholder approval, which is being sought at the General Meeting
to be held at the offices of Fieldfisher LLP, Riverbank House, 2
Swan Lane, London EC4R 3TT at 11.00 a.m. on 22 December 2017. In
addition, the proposals resulting in the issue of New Ordinary
Shares to the Concert Party are also conditional on the approval by
the Independent Shareholders voting on a poll, of a waiver of the
obligation on the Concert Party under Rule 9 of the City Code to
make a general offer to acquire all of the Existing Ordinary Shares
not already owned by the Concert Party as a result of the issue to
them of New Ordinary Shares pursuant to the Proposals. Further
information relating to the Concert Party is set out in paragraph
19 below and in Part VI (Rule 9 Waiver Information). The Proposals
set out in this document are conditional upon, amongst other
things, the passing of the Resolutions.
The Brick Live Acquisition, the Parallel Live Acquisition, the
settlement of commission arrangements with David Ciclitira, the
Loan Conversion, and the Disposal will constitute related party
transactions between the Company and Mr Ciclitira for the purposes
of Rule 13 of the AIM Rules for Companies. The BLFE Acquisition
will constitute a related party transaction for the purposes of
Rule 13 of the AIM Rules for Companies, due to David Ciclitira's
controlling interest in Brick Live, the parent company of Brick
Live International. The Director's Fees Settlement will constitute
a related party transaction between the Company and myself for the
purposes of Rule 13 of the AIM Rules for Companies.
All the New Ordinary Shares will rank pani passu with the
Existing Ordinary Shares. Application will be made for the
admission of the Enlarged Issued Share Capital to trading on AIM
which is expected to occur on 27 December 2017.
This document sets out further information about Brick Live and
Parallel Live and the Resolutions and the reasons for and the
principal terms of the Proposed Acquisitions and the other
Proposals. In addition, this document explains why I, as a
Non-Executive Director, consider that the Proposals are in the best
interests of the Company and its Shareholders as a whole, and
therefore includes the recommendation set out in paragraph 34 of
this Part I.
Shareholders should read this entire document and your attention
is drawn to Part II (Risk Factors) and Parts III to VII of this
document, which contain important information in relation to the
Proposals.
2. BACKGROUND ON PARALLEL MEDIA GROUP
Parallel Media is a sports and live event entertainment agency
which was founded by David Ciclitira in 1987 and was admitted to
trading on AIM in August 2001.
In sports, Parallel Media has to date specialised in golf,
promoting tournaments on the European tour. Parallel Media
successfully moved the Ballantines Championship in Korea to
Singapore and promoted and managed the second Prudential Causeway
Trophy, a Ryder Cup style tournament, between Singapore and
Malaysia. Parallel Media still holds the rights to the renamed
Singapore Championship (formally the Ballantines Championship). In
entertainment, Parallel Media has, in recent years, specialised in
connecting international brands with music solutions in Asia and
created AIA K-Pop, a collaboration between AIA, one of Asia's
leading financial services companies and one of Korea's best music
exports, K-Pop, the music genre with millions of young followers
around the world. In addition, Parallel Media has promoted the Blue
& White festival and the AIA Real Life: NOW Festival in
Korea.
At 31 December 2016 the balance sheet of the Company showed a
deficit of GBP2.75 million and in recent years David Ciclitira has
continued to support the working capital requirements of the Group.
At the date of this document the sums due to him amounted to
GBP2.18 million.
The Board has been looking for an acquisition in the live
entertainments sector for some time and has considered a number of
such opportunities. Against this background, I am pleased to
announce the Proposed Acquisitions.
In the event that the Company is unable to implement the
Proposals or that Shareholders do not approve the Resolutions,
there can be no certainty that David Ciclitira will continue to
provide financial support for the Company. Under those
circumstances, one of the options available to the Board would be
to seek a cancellation of the Company's listing on AIM, in
accordance with Rule 41 of the AIM Rules for Companies.
Summary Financials of Parallel Media
The following audited financial information relating to Parallel
Media has been extracted from the audited annual report and
accounts referenced in Part IV of this document.
31 December 31 December 31 December
2014 2015 2016
Year ended GBP'000s GBP'000s GBP'000s
Revenue 692 221 241
Operating loss before exceptional items (1,027) (266) (522)
Exceptional items (3,648) - (1,182)
Profit from discontinued operations - 920 -
(Loss)/profit before tax (4,611) 611 (1,734)
Net assets/(liabilities) (1,654) (1,009) (2,749)
3. BACKGROUND TO THE PROPOSED ACQUISITIONS
Background
Clive Morton co-founded Brick Shows Limited, and the first
"BRICK" event, an event based around LEGO(R) 's interlocking
plastic bricks, was held in 2014 at ExCel, London ("ExCel") and
attracted over 40,000 visitors.
In 2014 Informa PLC ("Informa"), the FTSE 100 international
content provider, were looking to extend their activities in fan
based events and in 2015 agreed to buy the business from him. In
2015, BRICK events were held in two different venues in the UK,
namely, ExCel and the National Exhibition Centre ("NEC"),
Birmingham. The shows were a success and in aggregate attracted
over 60,000 visitors.
As a result of a change of strategy at Informa, in 2016, Clive
formed an investment group, which included Parallel Media's
Executive Chairman, David Ciclitira, to buy back certain assets,
including the rights to the BRICK event. A new company called Brick
Live was formed to make the acquisition and the first BRICKLIVE
event was held at the NEC in October 2016.
BRICKLIVE events are fan based and the Directors of Brick Live
consider BRICKLIVE to be one of most successful LEGO(R) based
events in the world, not directly produced by LEGO(R) .
The business of Brick Live
Brick Live is an early stage business involved in fan based live
events, whose principal source of revenue is licensing fee income.
As such, whilst Brick Live did organise the BRICKLIVE show at the
NEC in October 2016 and is organising BRICKLIVE CHRISTMAS at the
Saatchi Gallery in London in Q4 of 2017, in the future, the company
does not currently intend to run any of the events it is
supporting. LEGO(R) is a trademark of the LEGO Group and Brick Live
Group is not associated with the LEGO Group and is an independent
producer of BRICKLIVE events.
Brick Live has registered BRICKLIVE as a trademark in the
European Union, with applications pending in other
jurisdictions.
Licensee Partners and business model
The Brick Live Group currently works with 9 licensee partners in
different geographic regions around the world. Licensee partners
are granted a licence to organise and stage a BRICKLIVE event in
the territory specified in the licence. Typically, the license
agreement will be for a period of 3 to 5 years, sometimes with an
option to terminate after the first year. Brick Live retains the
right to terminate such agreements with cause at any time.
Principally, Brick Live has three different income streams,
namely, licence fee income, revenue sharing arrangements with the
licensee partner and merchandising income. Licence fee income
represents the largest part of the Brick Live Group's revenue and
will usually include an up-front non-refundable fee, which is
applied to cover the cost of purchasing the content required by the
licensee partners for their events and which needs to be paid by
the licensee partner before the order is placed. The floorplan and
content required for each BRICKLIVE event is agreed between Brick
Live and the relevant licensee partner and licence agreements
specify what content is included within the licence fee and what
content is or may be provided at an additional cost to the licensee
partner. Brick Live does not make any of the content that is used
in BRICKLIVE events and will only initiate orders with certified
LEGO(R) professional building companies in the UK and elsewhere for
this service.
In addition, Brick Live also charges an annual licence fee
and/or a fee for each event staged in the territory. Licenses
granted may be terminated if the licensee partner does not stage
the minimum number of events required within the specified period
(usually a 12 month period) in the contract. All shipping costs for
the content supplied by Brick Live are generally required to be
paid by the licensee partner prior to these items being
shipped.
Licence agreements would usually include strict non-compete
clauses, mainly for a duration of four years from termination,
standard confidentiality clauses and, occasionally, a termination
fee if the licensee partner terminates the agreement early or Brick
Live terminates for justifiable cause. All of Brick Live's
intellectual property rights are retained by the company and all
promotional materials used by the licensee partner need to be prior
approved by Brick Live 's Global Compliance Officer. Detailed event
manuals, including operating and health and safety guidelines, are
provided to the licensee partners and are incorporated into the
license agreements with the licensee partners and any breaches of
the key manuals (in particular brand manuals, and requirements
relating to health and safety and child safety) are considered to
be a material breach.
Certain of the Brick Live licences include a revenue sharing
arrangement whereby the Brick Live Group will benefit from a
proportion of the revenue, typically 3 per cent. to 10 per cent.,
earned by the licensee partner from the sale of tickets,
merchandise and other products at their event. The directors of
Brick Live consider that, in the future, as a result of the success
of BRICKLIVE events, the Brick Live Group will be able to attract
international and other sponsors and thus derive an additional
source of sponsorship income from these events.
BRICKLIVE events
BRICKLIVE events are flexible and can be tailored to the
requirements of the space that is available. Typically, an event
will utilise an area of 4,000sq. metres to 10,000 sq. metres,
although the company has recently developed floor plans for pop-up
and semi-permanent smaller events of 1,000 sq. metres.
Whilst the specific format of a BRICKLIVE event is subject to
agreement between Brick Live and its licensee partner, it would not
be unusual for a 10,000 sq. metre event to include some of the
following:
l Brick Pits - each filled with 200,000 LEGO(R) bricks where
visitors can design and build
their own creations;
l Graffiti Wall - for individual visitors to leave their own messages;
l DUPLO area - bigger bricks for the younger visitors;
l Race Track - where individual visitors can build and race
their own cars built of
LEGO(R) bricks;
l Mosaic - each visitor makes a small piece of a pre-formulated
design and the
individual pieces are then joined together to make an enormous
12 metre by 12 metre mosaic;
l Bespoke Map - a bespoke map of the individual city in which
the event is being held;
l Fan Zone - where Adult Fans of LEGO(R) display models that
they have created;
l Live Stage - for interactive events with visitors of all ages;
l Specialist zones - which may include areas with LEGO(R)
Architecture, LEGO(R) City, LEGO(R)
Creator, LEGO(R) Ninjago(R) or LEGO(R) Star WarsTM bricks and
features;
l Statues - statues and other features made of LEGO(R) bricks.
BRICKLIVE events would typically also include areas for LEGO(R)
retailers or distributors to sell LEGO(R) products and specialised
and themed BRICKLIVE merchandise and a cafe for food, beverages and
other consumer products. The directors of Brick Live are working
with certain licensee partners to develop an education programme at
BRICKLIVE events. For example, the Brick Live Group's Korean
licensee partner has incorporated an educational programme for
children and in the UK, in conjunction with Multiplay (UK) Limited,
the company's UK licensee partner, the BRICKLIVE Minecraft build
zone at ExCel in 2017 featured a Minecraft education zone.
The directors of Brick Live have been successful in extending
the global footprint for BRICKLIVE events in 2017. From two events
held in the UK at the NEC, Birmingham and at the Korean
International Exhibition & Convention Centre ("Kintex") in
2016, Brick Live now has 16 events organised by its licensee
partners that have either taken place or are planned in the
remainder of 2017, as follows: Japan (5 locations), Korea (3
locations) and the UK (5 Locations), with a BRICKLIVE event having
been held at the prestigious Basel Exhibition Centre, Switzerland
in May 2017. For the remainder of 2017, further events are planned
in Brazil and Naples, Italy and one event is being organised by the
Brick Live Group itself, who will be acting as the event's promoter
with all the inherent risks and potential rewards that this
entails, at the Saatchi Gallery in London in November and December
2017.
The number of BRICKLIVE events that have taken place or are
planned for the remainder of 2017 is as set out in the table
below:
2017
Month Venue
March Coex, Seoul, South Korea*
April Fukuoka, Japan
Yokohama, Japan
May Basel, Switzerland
July Ananti Busan, South Korea
SECC, Glasgow, UK
ExCel, London, UK
August TEC, Belfast, UK
Shizuoka, Japan
Starfield 3, Goyang, South Korea*
Kyoto, Japan
October Brussels, Belgium
NEC, Birmingham, UK
November Saatchi Gallery, London, UK
Osaka, Japan
Iguatemi Campinas, Brazil
* = BRICKLIVE centre - launch month
For 2018, whilst there can be no certainty that Brick Live will
be able to agree acceptable terms with one or more potential
licensee partners in new territories, in addition to the foregoing,
the directors of Brick Live have contracted for new BRICKLIVE
events in:
Europe: A minimum of 15 BRICKLIVE events from the following list
of countries: Austria, Belarus, Czech Republic, France, Georgia,
Northern Germany, Gibraltar, Iceland, Italy, Kosovo, Liechtenstein,
Netherlands, Norway, Morocco, Poland, Russia, Spain, Sweden, Turkey
and Ukraine;
Asia: China, Indonesia, Japan, Malaysia, Singapore and Thailand;
Americas: A minimum of 6 BRICKLIVE events from the following
list of countries: Argentina, Brazil, Ecuador, Mexico, Puerto Rico
and Uruguay.
The directors of Brick Live consider that, provided each
licensee promotes the minimum number of events specified in their
individual contract, a total of more than 30 BRICKLIVE events will
be held during the year ending 31 December 2018 taking the number
of BRICKLIVE events for the three years ending 31 December 2018 to
over 50 events.
BLFE
In November 2016, Brick Live International entered into a joint
venture agreement with Brick Live Lab, a company incorporated in
South Korea and controlled by Mr Hyun Seok Kim, Brick Live's Korean
licensee partner. Mr Hyun Seok Kim, aged 44, is a Korean national
and businessman. In 2004 he joined Daegu Paper Recycling and, in
2012, was appointed CEO. In 2012 he founded Hongik Construction Co.
in Daegu, South Korea, diversifying his business interests into
real estate development and construction. In 2014 he established
H&H in Daegu, South Korea, which provides construction services
for projects in both commercial and retail property. In order to
invest into the education sector, he established Brick Live Lab in
2016.
Under the terms of the joint venture agreement, Brick Live Lab
invested $1.5 million (approximately GBP1.1 million) to acquire a
50 per cent. holding in BLFE, a subsidiary of Brick Live
International (which is wholly owned by Brick Live) and a ten year
license by Brick Live International to promote BRICKLIVE events,
principally in the Greater China region Brick Live's role was to
provide content at cost for these events and Brick Live
International's Korean partner was to provide working capital for
the joint venture and to work with Brick Live to find suitable
licensee partners. Subsequently on 14 November 2017 Brick Live Lab
acquired a further 11.1 per cent. in BLFE from Brick Live
International for GBP660,000 in cash.
The Directors of Brick Live consider that Asia in general and
China in particular will be areas where BRICKLIVE events will be
well received. It has also been announced today that terms have
been agreed for the acquisition by the Company of the 61.1 per
cent. of Brick Live's joint venture company BLFE that Brick Live
International does not already own from Brick Live Lab. The
consideration for this acquisition is GBP2.95 million, to be
satisfied by the issue of 9,832,060 New Ordinary Shares at the
Placing Price. Brick Live Lab will also receive a 25 per cent.
share of the distributable post tax profits of BLFE for the next
five years. Further details of the BLFE Acquisition are set out in
paragraph 12.1.3 in Part VIII of this document.
In addition, as part of the earlier agreements, CIDEA, a company
incorporated in Korea and controlled by Mr Hyun Seok Kim, was
granted certain merchandising rights for the aforementioned
territory. CIDEA has agreed to relinquish these rights and will as
a result be issued with 333,333 New Ordinary Shares, which at the
Placing Price have a value of GBP100,000.
Taking into account the New Ordinary Shares to be received for
the BLFE Acquisition and the New Ordinary Shares to be issued in
consideration of relinquishing the merchandising rights, Mr Hyun
Seok Kim will in aggregate be interested in 10,165,393 New Ordinary
Shares representing 21.1 per cent. of the Enlarged Issued Share
Capital of the Company.
Brick Live in China
The directors of Brick Live consider that China is an important
area of growth for the Brick Live Group and in July 2017 BLFE
entered into a long term agreement with Fortune Access, to create a
jointly owned limited liability foreign enterprise company in the
People's Republic of China, BRICKLIVE China. BLFE has agreed to
invest 980,000 RMB (approximately GBP112,000) for a 49 per cent.
shareholding in BRICKLIVE China, payable in three instalments with
the final payment being due by 30 December 2018. Profits after
taxation are distributable in accordance with the parties'
respective equity shareholdings. Fortune Access is a company
incorporated in Hong Kong, in which each of Chong Yuet Sarah and
her previous husband, Tang Siu Kong, are 50 per cent. shareholders.
Initially established as a property investment company, since 2014
Fortune Access has focused on the education sector in mainland
China, primarily in winter sports education in response to
preparations for the 2022 Beijing Winter Olympics. Ms Chong Yuet
has also established other enterprises in China to promote winter
sports education into the China schools system. Further details of
the agreement with Fortune Access are set out in paragraph 12.2.1
in Part VIII of this document.
The objective of BRICKLIVE China is to establish a series of
permanent educational development centres in locations with a high
footfall, for example, shopping malls, across the People's Republic
of China, with a typical floor plan of these centres being
approximately 1,000 sq. metres. BLFE has granted a license to
BRICKLIVE China to operate these centres across China, and Brick
Live International has agreed to provide content to BRICKLIVE
China, with Fortune Access being responsible for finding suitable
sub-licensees who will promote these educational development
centres. Under the terms of these agreements, BLFE will receive
nominal licence fees from BRICKLIVE China for each educational
development centre and Brick Live International will receive a
content fee from the local sub-licensee which will enable it to
finance the purchase of the content to be used in each centre.
The Brick Live Group retains the right under the BLFE license
agreement with BRICKLIVE China to promote through different
licensee partners temporary BRICKLIVE events in the major cities in
China and may terminate the contract with BRICKLIVE China in the
event of a material breach of the contract at any time.
The business of Parallel Live
Parallel Live was founded and established by David Ciclitira,
Parallel Media's Executive Chairman. David Ciclitira considers that
the United States is an important area of growth for the company
and Parallel Live has entered into a three year contract with Lego
Systems, Inc, part of the LEGO Group, to promote LEGO(R) live
shows, the first of which, "LEGO(R) LIVE" is scheduled to be held
in New York, USA in the first quarter of 2018.
For the majority of Brick Live's business, the financial and
other risks of promoting the BRICKLIVE events are borne by the
company's licensee partners. Parallel Live will, under the terms of
its contract, act as promoter of the event in the United States
with all the inherent risks and potential rewards. As a
consequence, Parallel Live will be responsible for the majority of
the costs associated with the event, including the location hire,
event design, event construction, advertising and marketing, media
planning, website design, event management, public relations and
ticket sales and Lego Systems, Inc will provide some of the content
for the event. Should the event prove to be a commercial success,
Parallel Live will seek to promote additional events in the United
States.
Competitive environment
In general, there are two types of competitive events to
BRICKLIVE events, namely those produced by Adult Fans of LEGO(R)
("AFOL") and LEGO(R) User Groups ("LUG"), and events that are
promoted by the LEGO Group itself.
Regardless, most if not all have either BRICK or LEGO in the
name and have similar content. The difference being that none have
a global network, and the other BRICK events tend to be small (with
a few exceptions) and stand alone.
Other competitors to BRICKLIVE include the LEGOLAND Discovery
Centers, which have similar activities and are indoor events but
tend to be located in permanent structures in shopping malls or
free standing buildings. Currently there are LEGOLAND Discovery
Centers located in eleven cities in the US, Canada, Europe, Asia
and Australia. There are also 8 LEGOLAND theme parks globally.
4. REASONS FOR THE PROPOSED ACQUISITIONS AND THE BLFE ACQUISITION
The Board of Parallel Media have been looking for an acquisition
in the live entertainment sector for some time. Brick Live and
Parallel Live fall within this category and the geographic areas
that these companies operate within are largely well known to
Parallel Media.
Consequently, I am providing the recommendation set out in
paragraph 34 of this Part I, as the Proposed Acquisitions provide
an opportunity for Shareholders to participate in the potential
further growth of Brick Live and Parallel Live. Further, the
increased profile of being a public company along with the
additional financial resources available following the Placing,
will assist the Enlarged Group with its planned growth and with
finding further high quality licensee partners.
5. CURRENT TRADING AND FUTURE PROSPECTS FOR THE ENLARGED GROUP Brick Live Group
In its first trading period to 31 December 2016 Brick Live Group
achieved revenue of GBP1,735,000 which includes GBP428,000 from the
BRICKLIVE event the group promoted at the NEC, Birmingham and
GBP1,308,000 licence income, principally from Brick Live Group's
Korean licensee partner for a ten year licence to promote BRICKLIVE
events in the Greater China region. Brick Live Group achieved a
profit before income tax of GBP60,000 and a profit for the period
of GBP49,000.
In the six month period ended 30 June 2017 Brick Live Group
achieved revenue of GBP1,067,000 which was largely licensing income
and recorded a loss before taxation of GBP185,000. The directors of
Brick Live Group consider that in the future most of the Company's
revenue will be derived from licensing income.
The directors of Brick Live Group have been successful in
extending the global footprint for BRICKLIVE events from the 2
events held in 2016 to the 17 events organised or planned for the
calendar year 2017, including the group's event at the Saatchi
Gallery in London in November 2017, which Brick Live Group will be
promoting for its own account.
Summary Financials
The following financial information relating to Brick Live Group
has been extracted from the historical financial information set
out in Part IV of this document.
Audited Period ended Unaudited Period
31 December 2016 GBP'000s ended 30 June 2017
Consolidated Income Statement GBP'000s
Revenue 1,735 1,067
Gross profit 1,342 818
Profit/(loss) before income tax 60 (185)
Income tax (expense)/income (11) 35
Profit/(loss) for the period 49 150
Consolidated Statement of Financial
Position
Total assets 1,284 1,186
Total liabilities 1,235 1,286
Parallel Live Group
Parallel Live Group has entered into a three year contract
(unless terminated beforehand) with Lego Systems Inc, part of the
LEGO Group, to promote LEGO(R) live shows, the first of which is
scheduled to be held in New York in the first quarter of 2017.
For the period ended 31 December 2016 Parallel Live Group had
not traded. For the six months ended 30 June 2017 Parallel Live
Group had recorded a loss for the period of GBP28,000.
6. PLACING
The Company is raising GBP1.26 million (approximately GBP0.66
million net of expenses) through the conditional placing of
4,200,000 New Ordinary Shares at the Placing Price. The Placing
Shares will represent approximately 8.7 per cent. of the Enlarged
Issued Share Capital on Admission.
The Placing, which is not underwritten, is conditional, inter
alia, upon the passing of the Resolutions and Admission.
The Directors had considered whether the Company would be able
to extend the ability to subscribe for the Placing Shares to all
existing Shareholders but, having discussed this with its
professional advisers, decided that the expense of doing so and the
time it would take could not be justified and would not be in the
best interests of all Shareholders.
7. USE OF THE PLACING PROCEEDS
The net proceeds of the Placing after legal and professional
costs, amounting to GBP0.66 million, will be used as follows:
GBP'm
Purchase of content for BRICKLIVE
events 0.60
Working capital 0.06
0.66
8. CONVERSION OF EXISTING DEBT
In recent years David Ciclitira has continued to support the
working capital requirements of Parallel Media. In June 2017 David
Ciclitira, Parallel Contemporary Art Limited ("PCA") and Luna
Trading Limited ("Luna") (each being entities controlled by David
Ciclitira) entered into formal loan agreements with the Company in
relation to amounts owed by the Company. On 29 November 2017 the
sums owed pursuant to the agreements with PCA and Luna, together
with interest accrued, were assigned to David Ciclitira and at the
date of this document the total sum due to him pursuant to the
formal loan agreements amounted to GBP1.95 million. In addition, a
further GBP0.23 million is due to David Ciclitira in relation to
loans not subject to formal agreements. As part of the Proposals,
the Company has agreed to repay to David Ciclitira the Existing
Debt, which will immediately be applied in subscribing for
6,766,667 New Ordinary Shares at the Placing Price, equivalent to
14.0 per cent. of the Enlarged Issued Share Capital. At Admission
the amounts due to David Ciclitira from the Company will be
approximately GBP0.15 million, which are interest free and
repayable on demand, subject to the Enlarged Group's working
capital requirements at that time. Further details of this
agreement are set out in paragraph 12.1.6 of Part VIII.
9. DAVID CICLITIRA COMMISSION ARRANGEMENTS WITH BRICK LIVE
In December 2016 Brick Live agreed an arrangement with David
Ciclitira, whereby David Ciclitira would be paid a commission on
all sales generated by him for and on behalf of Brick Live. It has
been agreed that these arrangements will be terminated on Admission
in consideration of a payment of GBP1 million by Brick Live to
David Ciclitira and that David Ciclitira will immediately apply in
subscribing for 3,333,333 New Ordinary Shares at the Placing Price,
equivalent to 6.9 per cent. of the Enlarged Issued Share Capital.
As at the date of this document the amounts owing to David
Ciclitira pursuant to the existing contractual arrangements entered
into by Brick Live Group are approximately GBP230,000, which will
be settled in cash. In addition, up to a further GBP200,000 will
become payable if certain contractual arrangements are entered into
by Brick Live Group with third party licensee partners prior to
Admission and settled by the licensee partner on or before 31 March
2018. Further details of this agreement are set out in paragraphs
12.1.5 and 12.2.2 of Part VIII.
10. SETTLEMENT OF NON-EXECUTIVE DIRECTOR'S FEES
As at 30 September 2017 I am owed a total of GBP149,950 by
Parallel Media for director's fees and associated costs that have
accrued, but not been paid, since 2013. Further, I have agreed with
the Company that my fees with regard to the Proposals set out in
this document will be GBP35,000, which will be payable at
Admission. The Company has agreed to pay the total amount which is
due to me of GBP184,950, which will immediately be applied in
subscribing for 616,500 New Ordinary Shares at the Placing Price,
equivalent to 1.3 per cent. of the Enlarged Issued Share
Capital.
11. PRO FORMA STATEMENT OF NET ASSETS
As a result of these Proposals, the consolidated balance sheet
will be considerably strengthened and the net assets of the
Enlarged Group will improve from a deficit of GBP3.12 million at 30
June 2017 to pro forma net assets of GBP2.74 million which is
equivalent to net assets per share of 5.7 pence. Further details of
the Pro Forma Statement of Net Assets can be found in Appendix VII
of this document.
12. DIRECTORS AND SENIOR MANAGEMENT
The Board of the Company immediately following Admission will
consist of three non-executive directors and two executive
directors, details of whom are set out below along with details of
senior management.
Existing Directors
David Ciclitira, aged 60, Executive Chairman
David holds a LLB law degree from King's College, London and was
called to the Bar as a Barrister in 1980, prior to joining the
merchant bank Guinness, Mahon & Co. He was one of the four
original shareholders of Europe's first satellite television
station, Satellite Television plc ("SATV"), Europe's first ever
cable and satellite channel, which later became Sky PLC ("Sky"),
following the sale of a majority stake in SATV to Rupert Murdoch's
News Corporation in 1983. David remained at Sky as a Deputy
Managing Director where he was involved with the day to day running
of the television studio, establishing Sky's own programme
production company and setting up Eurosport.
David left Sky in 1987 and founded Parallel Media Group, where
today he is the Executive Chairman. David is well known in the
global sports marketing industry and has been pivotal in taking the
European Golf Tour out of Europe and into both the Far East
(including introducing the first ever professional golf tournament
to China in 1995, with the World Cup of Golf at Mission Hills) and
South Africa.
In 1998 David created a joint venture with the National
Broadcasting Company ("NBC"), one of the largest commercial
broadcasting networks in the US, for the formation of the
international sports broadcasting arm of NBC, CNBC Sports
International. In 2004, Parallel Media successfully sold its share
of the joint venture company to NBC.
David was also instrumental in introducing the first
professional golf tournament to China, the Heineken World Cup of
Golf at Mission Hills and launching the Ballentines Championship in
Korea for Pernod Riccard in Korea in 2008.
In May 2016, David became an investor in Brick Live and is the
Chairman and majority shareholder.
David is passionate about art and together with his long term
partner, Serenella Ciclitira in 2009 established the Global Eye
Programme. He is also an Honorary Fellow of the Royal College of
Art and a director of a number of other private businesses.
Maria Serena ("Serenella") Ciclitira, aged 69, Non-Executive
Director
Serenella, also known as Maria Serena Papi, joined the Board of
Parallel Media in 2010 and is the long term partner of David
Ciclitira.
Between 1992 and 2000 Serenella was Group managing Director of
the pan-European satellite broadcaster Super Channel (which later
became NBC Europe). Since then, she has worked extensively with art
galleries and artists around the world. She has an Honours Degree
in Art History from Trinity College, Dublin and since 1990 has been
an Honorary Fellow at the Royal College of Art in London. With
David Ciclitira she founded the Global Eye Programme, which aims to
develop the art infrastructure for budding artists in Asia, where
events have been held in Korea (2009 to 2012), Indonesia (2011),
Hong Kong (2013), Malaysia (2014), Singapore (2015), Thailand
(2016) and Vietnam (2017).
Serenella is a Non-Executive Director of Brick Live and a number
of other private companies.
Ranjit Murugason, aged 52, Non-Executive Director
Ranjit joined the Board of Parallel Media in 2010. He has a
degree in law and history from SOAS, University of London, the only
higher education institution in Europe dedicated to the study of
Asia, Africa and the Middle East and a masters degree in law from
Corpus Christi College, Oxford.
Ranjit has over 20 years' experience in strategic advisory,
corporate finance and investment banking and capital markets in
Europe, Asia, the Middle East and the USA. He is the founder and
Managing Director of Urban Strategic established in London in 2003
and currently headquartered in Singapore.
Previously Ranjit served as a Managing Director of the
investment banking division of ABN Amro, having previously worked
in London for both Nomura Securities and UBS. More recently he was
a senior advisor to GMR Group, one of India's largest multinational
infrastructure businesses and chief executive officer of the
international division with assets under management of over US$5
billion.
Proposed Directors
Simon Bennett, aged 59, Non-Executive Director
Simon will become a Non-Executive Director of the Company
conditional upon and with effect from Admission.
Simon qualified as a Chartered Accountant in 1981 and has over
30 years' experience in investment banking and the capital markets
in the City. He has held senior positions with a number of leading
international banks including Citibank, Credit Agricole and Sanlam.
Simon was formerly the Head of Corporate Finance and Head of the
Mid and Small Caps team at Credit Lyonnais Securities (part of
Credit Agricole) and has a wealth of experience in advising growing
companies in both the equity and debt markets, both internationally
and domestically, including takeovers and mergers, fund raisings,
acquisitions, disposals and public to private transactions.
Simon has many years' experience working with a wide range of
growing companies from a number of different industries including
banking and financial services, housebuilding and construction,
technology, food and software. In 2004 he established Incremental
Capital LLP to provide corporate finance and other advice to mid
and small cap companies.
Simon is a non-executive director of Inland Homes Plc, where he
is Chairman of the Audit Committee and is Chairman of the fast
growing Grown Up Chocolate Company, the UK manufacturer of quality
handmade chocolates. In addition, he is a partner of Glenmill
Partners, which provides objective advice to growth companies and
entrepreneurs.
Andrew Smith, aged 31, Executive Director and Managing Director
of Brick Live Group
Andy will become an executive director of the Company upon and
with effect from Admission. He joined Brick Live as Managing
Director with effect from 1 November 2017.
Andrew was previously Director of Events at Multiplay (UK)
Limited ("Multiplay"), the gaming services company specialising in
online hosting, events management and esports, which is part of
Game Digital plc. Multiplay are one of one of Brick Live's
commercial partners and run the Insomnia Gaming Festival
("Insomnia"), the UK's largest games event.
Andy joined Multiplay in 2015 as Director of The Insomnia Gaming
Festival and soon became Event Director running a team of 60 full
time staff in the events and esports division. During his time with
Multiplay, the annual footfall to Insomnia events in the UK has
more than doubled and it now attracts over 130,000 visitors
annually. Andy negotiated the commercial agreements, on behalf of
Multiplay, as a licensee partner, with Brick Live and successfully
hosted the four BRICKLIVE events held in the UK in London,
Birmingham, Glasgow and Belfast during 2017. Andy has also been
responsible for running a number of well-known international events
on behalf of companies such as Microsoft, Island records (Universal
Music), Nintendo and Mojang, including Minecon, the largest single
video game convention in the world.
Prior to joining Multiplay, Andy spent 8 years with the FTSE100
listed Compass Group PLC, where he was latterly a regional/ general
manager with considerable experience in events and commercial
operations, spearheading the sales and management of conferences,
events, catering, hotels and match day experiences for clients such
as the Ricoh Arena (home of Wasps Rugby Football Club and Coventry
Football Club), Leicester City Football Club, Warwickshire County
Cricket Club, Edgbaston Priory (Private members sports club) and
Sheffield United Football Club.
Senior Management of Brick Live
Clive Morton, aged 51, Founder and Chief Creative Officer
Clive is well known and respected in the live events industry
with over 25 years' experience and is the founder and a director of
Brick Live.
In 1990 Clive's first role in the live events industry was with
Music Maker where he established a number of music events in
national venues across the UK. In 1996 he established his own
company and launched a national event for the music making industry
called "Music Live" at the National Exhibition Centre ("NEC") in
Birmingham. Clive also created the "Toys for Boys" show at Wembley,
London working with brands such as Mercedes, Harley Davidson and
McLaren Formula 1.
In 2001 the Music Live event was sold and Clive set up a
publishing company and his portfolio of magazines included Guitar
Buyer, Drummer, Music Trade News and Motorcycle Racer each of which
was distributed internationally. In 2002 the London Guitar Show and
Drummer Live show was launched at Wembley, followed
in 2007 with his most successful event to date, The London
International Music show at London's ExCel which attracted over
30,000 visitors and more than 250 exhibitors.
In conjunction with the FTSE 100 international content provider
Informa PLC ("Informa"), Clive created the Live Production Network
and promoted events such as The Sundance Film Festival and the
Country 2 Country Festival.
As a long term fan of LEGO(R) , Clive developed the concept and
devised an event for the UK based around LEGO(R) 's interlocking
plastic bricks, called "BRICK". The first show was held in 2012 at
the O2 arena in London and due to its success was subsequently
moved to the bigger facilities at ExCel.
In 2014 Informa were looking to extend their activities in fan
based events, and in 2015 agreed to buy the business from him and
events were held at both ExCel and the NEC. As a result of a change
of strategy at Informa, in 2016, Clive formed an investment group,
which included David Ciclitira, to buy certain assets, including
the rights to the BRICK event, back from Informa. A new company
called Brick Live was formed to make the acquisition and the first
BRICKLIVE event was held at the NEC in October 2016.
Clive is employed as a consultant to Brick Live as well as being
a statutory director of Brick Live and Brick Live
International.
Katherine Sarah Hardy, aged 51, Consultant Chief Financial
Officer, part-time
Sarah is the part time Chief Financial Officer of Brick Live.
Sarah qualified at Touche Ross in 1990 and then worked for Lovells
(now Hogan Lovells), the large London based legal practice based in
London as a Financial Accountant.
Sarah has over 15 years' experience of working for a portfolio
of clients and is employed as a consultant to Brick Live.
Sonia Hong, aged 60, Consultant Director of Asia
Sonia was educated at the University of California, Berkley, USA
and the Soon Chunhyang University in Seoul. Sonia has considerable
experience in launching international brands in Korea and
represented the New Zealand Tourist Board there from 1993 to
2006.
In addition, from 1999 to 2007 Sonia was President of the
International Tourism Network in Korea, representing clients such
as the Las Vegas and San Francisco Tourist Boards and Dallas Fort
Worth airport. In 2007 Sonia became the Secretary General for the
Visit Korea Committee and as part of this role managed relations
with various government agencies including the Ministry of Culture,
Ministry of Sports and Tourism, Ministry of Land Transport and
Maritime Affairs and the Korean Tourism Organisation.
In 2010 Sonia joined Parallel Media and procured local sponsors
for events such as the Ballantines Championship, K-Pop concerts,
the Championship at Laguna Golf & Resort Singapore and the Blue
and White Festival Jazz Festival. Sonia joined Brick Live as
Director of Asia in 2016 and has recently overseen the BRICKLIVE
inaugural exhibition in Seoul, Korea and has been responsible for
the much of the development of Brick Live's activities in Asia.
Betty Waypa, aged 46, Consultant Account Director - the Americas
and Group Compliance Officer
Betty joined Brick Live in 2017 and has over 9 years' experience
of event management with large consumer shows having previously
worked for Lego Systems Inc in the USA and Canada, where she was
responsible for producing the company's travelling event throughout
North America.
Prior to this Betty spent ten years in marketing working with
world class brands such as the LEGO Group, Cartoon Network,
Nintendo and WB Games. Her combined marketing and event management
experience allows her to successfully manage the entire event
process from origination to execution with an emphasis on
delivering an excellent experience for the consumer.
Betty is certified in Event and Exhibition Management by the
International Association of Exhibitions and Events and is the
Brick Live Global Compliance Officer.
Nina Day, aged 43, Consultant Head of Business and Legal
Affairs, part time
Nina is Brick Live's in-house legal and business affairs advisor
and has over 14 years' experience of working in this role, with
particular expertise in commercial contracts, licensing and
intellectual property rights. She works for the company on a part
time basis as a consultant.
Prior to working for Brick Live, Nina was the assistant company
secretary and legal business manager at Future plc, one of the UK's
largest media publishing businesses, and has worked for a number of
other businesses as a freelance consultant.
Paul Esson, aged 33, Commercial Director
Paul has joined the company from Compass Group. He is an
experienced Business Development Manager with strong operational
experience within management, sports events, catering hospitality
and outdoor youth education. At Compass Group he has built
profitable and sustainable commercial models and value propositions
based on a sound understanding of the full business cycle.
13. PRINCIPAL TERMS OF THE PROPOSED ACQUISITIONS AND THE BLFE
ACQUISITION The Brick Live Acquisition Agreement
The Company has entered into a conditional agreement dated 29
November 2017 with David Ciclitira and Clive Morton whereby upon
satisfaction of the conditions, being Admission and the passing of
the Resolutions, the Company will acquire all the issued shares in
the capital of Brick Live from David Ciclitira and Clive Morton in
consideration of the allotment of 12,500,000 Consideration Shares
and 4,166,667 Consideration Shares, to each of them, respectively.
The Brick Live Acquisition Agreement contains covenants and
warranties on the part of David Ciclitira and Clive Morton in
favour of the Company in relation to the business, assets and
taxation of the Brick Live Group. Further details of this agreement
are set out in paragraph 12.1.1 of Part VIII.
The Parallel Live Acquisition Agreement
The Company has entered into a conditional agreement dated 29
November 2017 with David Ciclitira whereby upon satisfaction of the
conditions, being Admission and the passing of the Resolutions, the
Company will acquire all the issued shares in the capital of
Parallel Live from David Ciclitira in consideration of the
allotment of 3,333,333 Consideration Shares to him. The Parallel
Live Acquisition Agreement contains covenants and warranties on the
part of David Ciclitira in relation to the business, assets and
taxation of Parallel Live and its subsidiaries. Further details of
this agreement are set out in paragraph 12.1.2 of Part VIII.
The BLFE Acquisition Agreement
The Company has entered into a conditional agreement dated 29
November 2017 with Brick Live International and Brick Live Lab
whereby upon satisfaction of the conditions, being Admission and
the passing of the Resolutions, the Company agrees to allot
9,832,060 Consideration Shares at the Placing Price to Brick Live
Lab in consideration for Brick Live Lab agreeing to transfer its
61.1 per cent. holding, being its entire holding, in BLFE to the
Company. Further details of this agreement are set out in paragraph
12.1.3 of Part VIII.
14. MERCHANDISING RIGHTS
In conjunction with the BLFE Acquisition described above, CIDEA,
a Korean company controlled by Mr Hyun Seok Kim, was granted
certain merchandising rights for the aforementioned territory. On
29 November 2017, the Company, Brick Live International and CIDEA
entered into a conditional agreement, whereby CIDEA has agreed to
relinquish these rights and will as a result be issued with 333,333
New Ordinary Shares, which at the Placing Price have a value of
GBP100,000. Further details of this agreement are set out in
paragraph 12.1.4 of Part VIII.
15. PRINCIPAL TERMS OF THE DISPOSALS
In order to rationalise and consolidate the Group's business,
the Directors have resolved to dispose of all the existing
subsidiary companies of Parallel Media, save for Parallel Media
Group Asia Pte and The Championship (Singapore) Ltd, collectively
referred to as the Disposal Subsidiaries to James Golf Limited, a
company controlled by David Ciclitira. James Golf Limited will be
responsible for the settling of any creditors, and the Company will
reimburse James Golf Limited the costs, capped at GBP65,571. The
Company shall also reimburse James Golf Limited in connection with
any costs relating to the winding up or dissolution of the Disposal
Subsidiaries which are settled by James Golf Limited, subject to a
maximum aggregate of GBP70,000. Further details of this conditional
agreement are set out in paragraph 12.1.7 of Part VIII.
16. LOCK-INS AND ORDERLY MARKET PROVISIONS
The Locked-in Shareholders (being the Directors, the Proposed
Directors, Clive Norgaard Morton, Hyun Seok Kim, Brick Live Lab and
CIDEA), who on Admission will be the holders of 42,192,577 Ordinary
Shares, which in aggregate represents 87.5 per cent. of the
Enlarged Issued Share Capital, have undertaken not to dispose of
any of their interests in Ordinary Shares for a period of 12 months
from Admission. Furthermore, in order to ensure an orderly market
in Ordinary Shares, the Locked-in Shareholders have further
undertaken, in respect of themselves and each of their connected
persons, that for a further period of 12 months thereafter they
will not, except in certain limited circumstances, deal or
otherwise dispose of any such interests other than through
Stockdale (or such other broker appointed by the Company from time
to time). Further details of these arrangements are set out in
paragraph 12.1.13 of Part VIII of this document.
17. RELATIONSHIP AGREEMENT
David Ciclitira has entered into a relationship agreement with
the Company and Stockdale pursuant to which he has agreed that
while he and persons connected with him hold at least 25 per cent.
of the Ordinary Shares, he will exercise the voting rights
attaching to his shares to, inter alia, maintain the balance of the
independent directors on the board and to procure that certain
matters may only be approved with the consent of the Company's
independent directors. These restrictions seek to ensure that the
Group is capable of carrying on its business and making decisions
independently and in the best interests of the Group and that any
transaction between the Group and David Ciclitira or any connected
persons are made on an arm's length basis and are subject to
approval by the independent directors of the Company. Further
details of the Relationship Agreement are set out in paragraph
12.1.12 of Part VIII.
18. RELATED PARTY TRANSACTIONS
The Brick Live Acquisition, the Parallel Live Acquisition, the
settlement of commission arrangements with David Ciclitira, the
Disposal and the Loan Conversion (together, the "David Ciclitira
Transactions"), the BLFE Acquisition and the conversion of my
director's fees into equity, details of which are set out above,
will constitute related party transactions for the purposes of Rule
13 of the AIM Rules for Companies.
I, as the independent Director for the purposes of the AIM Rules
for Companies, having consulted with the Company's nominated
adviser, Stockdale, consider that the terms of the David Ciclitira
Transactions and the BLFE Acquisition are fair and reasonable in so
far as Shareholders are concerned.
The Company's nominated adviser, Stockdale, considers that the
terms of the Director's Fees Settlement are fair and reasonable in
so far as Shareholders are concerned.
19. INFORMATION ON THE CONCERT PARTY
Background to the Concert Party
For the purposes of the City Code, all of the members of the
Concert Party are deemed to be acting in concert and their
interests are to be aggregated.
The Concert Party consists of (i) David Ciclitira and his long
term partner Serenella Ciclitira and includes Zedra Wealth Trustees
(Jersey) Ltd, trustees of a discretionary trust of which David
Ciclitira is a potential beneficiary and Luna Trading Ltd, a
company held by a discretionary trust, of which David Ciclitira is
a potential beneficiary and (ii) Clive Morton, the founder and
Chief Creative Officer of Brick Live. David Ciclitira owns 75 per
cent. of the share capital of Brick Live and all of the share
capital of Parallel Live, companies that Parallel Media has
conditionally agreed to acquire, subject to the approval of the
shareholders of Parallel Media (save for the Concert Party and
Ranjit Murugason). At completion, David Ciclitira will be issued
with respectively 12,500,000 and 3,333,333 New Ordinary Shares.
Further, as part of the Proposals, David Ciclitira has agreed to
convert the Existing Debt (being GBP2.03 million of the total
amount owed to him by Parallel Media) which will immediately be
applied in subscribing for 6.766,666 New Ordinary Shares at the
Placing Price.
In December 2016, Brick Live agreed an arrangement with David
Ciclitira, whereby David Ciclitira would be paid a commission on
all sales generated by David Ciclitira for and on behalf of the
Brick Live Group. It has been agreed that these arrangements will
be terminated, in consideration of a payment of GBP1 million by
Brick Live to David Ciclitira and that David Ciclitira will
immediately apply in subscribing for 3,333,333 New Ordinary Shares
at the Placing Price.
Clive Morton owns 25 per cent. of Brick Live that Parallel Media
is proposing to acquire. Should the Proposals be approved by
Parallel Media shareholders, Clive Morton will be issued with
4,166,667 New Ordinary Shares. Clive Morton does not currently have
a shareholding in Parallel Media.
Existing holdings and maximum controlling position of the
Concert Party
Immediately following Admission and the issue of New Ordinary
Shares to the members of the Concert Party in connection with the
Proposals, the Concert Party will hold in aggregate 31,113,275
Ordinary Shares, representing 64.54 per cent. of the voting rights
of the Enlarged Group.
Consideration
Shares
Shares Percentage
Percentage issued Total of Fully
Number of Existing re Existing Number Diluted
of Ordinary Ordinary Brick Parallel Commissions of Ordinary Share
Concert Party Shares Shares Live Live Debt forfeited Shares Capital
David Ciclitira 688,747 22.89% 12,500,000 3,333,333 6,766,667 3,333,333 26,622,080 55.22%
Zedra Wealth
(Jersey) Ltd 206,532 206,532 0.43%
Luna Trading
Ltd 116,434 116,434 0.24%
1,011,713 33.62% 26,945,046 55.89%
Serenella
Ciclitira 1,562 0.05% 1,562 0.00%
Clive Morton - 4,166,667 4,166,667 8.64%
TOTAL 1,013,275 33.67% 16,666,667 3,333,333 6,766,667 3,333,333 31,113,275 64.54%
20. INTENTIONS OF THE CONCERT PARTY FOLLOWING COMPLETION
The Relationship Agreement described at paragraph 17 above,
imposes certain restrictions on David Ciclitira, seeking to ensure
that the Group is capable of carrying on its business and making
decisions independently and in the best interests of the Group.
The Concert Party has confirmed that it does not intend to
implement any changes in respect of any of the following matters
following Completion: (i) the continued employment of the employees
and management of the Company and its subsidiaries; (ii) the
strategic plans for the Company; (iii) the locations of the
Company's place of business; (iv) the redeployment of the Company's
fixed assets; (v) contributions into the Company's pension
scheme(s), the accrual of benefits to existing members and the
admission of new members; and (vi) the Company's existing trading
facilities for the Ordinary Shares.
21. THE CITY CODE
The City Code applies to all companies who have their registered
office in the UK, Channel Islands or Isle of Man and whose
securities are traded on a regulated market in the UK or a stock
exchange in the Channel Islands or Isle of Man or a multilateral
trading facility. Accordingly, the City Code applies to the
Company.
Under Rule 9 of the City Code, where any person acquires,
whether by a series of transactions over a period of time or not,
an interest in securities which (taken together with securities
already held by him and securities held or acquired by persons
acting in concert with him) carry 30 per cent. or more of the
voting rights of a company which is subject to the City Code, that
person is normally required to make a general offer to all the
holders of any class of equity share capital.
Rule 9 of the City Code also provides that where any person who,
together with persons acting in concert with him, is interested in
securities which in aggregate carry not less than 30 per cent. but
does not hold securities carrying more than 50 per cent. of the
voting rights of a company which is subject to the City Code, and
such person, or any person acting in concert with him, acquires an
interest in any other securities which increases the percentage of
securities carrying voting rights in which he is interested, then
such person is normally required to make a general offer to all
holders of any class of equity share capital.
An offer under Rule 9 must be in cash and at the highest price
paid within the preceding 12 months for any interest in shares of
the company by the person required to make the offer or any person
acting in concert with him.
The City Code requires independent Directors to obtain competent
independent advice regarding the merits of the transaction which is
the subject of the Waiver Resolution, the controlling position
which it will create and the effect which it will have on Existing
Shareholders generally. I have a vested interest in the Proposals,
and therefore, while giving my recommendation, I am not independent
for the purposes of the Whitewash Resolution. Stockdale, in its
capacity as the Company's financial adviser, has provided formal
advice to me, Ranjit Murugason, regarding the Proposals and the
Waiver. Stockdale confirms that it is independent of the Concert
Party and has no commercial relationship with any member of the
Concert Party.
As noted above, immediately following Admission, the Concert
Party will hold more than 50 per cent. of the voting rights of the
Company. Rule 9 of the City Code further provides that where any
person who, together with persons acting in concert with him, holds
over 50 per cent. of the voting rights of a company, acquires an
interest in shares which carry additional voting rights, then they
will not generally be required to make a general offer to the other
shareholders to acquire the balance of their shares, although
individual members of the Concert Party will not be able to
increase their percentage interests in shares through or between a
Rule 9 threshold without the Takeover Panel's consent.
Further information on the City Code is set out in Part VI of
this document.
22. WAIVER OF RULE 9 OF THE CITY CODE
Immediately following Admission, the Concert Party will own
64.54 per cent. of the Enlarged Issued Share Capital.
The issue of the Consideration Shares in connection with the
Brick Live Acquisition and the Parallel Live Acquisition, together
with the further New Ordinary Shares to be issued to the Concert
Party in connection with the Proposals would normally result in the
Concert Party having to make a general offer to Shareholders
pursuant to Rule 9 of the City Code. Under Note 1 on the Notes on
the Dispensations from Rule 9 of the City Code, the Takeover Panel
will normally waive the requirement for a general offer to be made
in accordance with Rule 9 of the City Code if Independent
Shareholders pass an ordinary resolution on a poll at a general
meeting approving such a waiver.
The Takeover Panel has agreed, subject to the approval of
Independent Shareholders on a poll at the General Meeting, to waive
the obligation for the Concert Party to make a general offer that
would otherwise arise as a result of the issue of the 30,100,000
New Ordinary Shares to the Concert Party comprising the
Consideration Shares in connection with the Brick Live Acquisition
and the Parallel Live Acquisition, together with the further New
Ordinary Shares to be issued to the Concert Party in connection
with the Proposals.
Accordingly, the Whitewash Resolution (Resolution 1) is being
proposed at the General Meeting and will be taken on a poll by
Independent Shareholders. The members of the Concert Party who are
Existing Shareholders and I will not vote in relation to Resolution
1.
Shareholders should also be aware that if the Resolutions are
passed, including the Waiver Resolution by the Independent
Shareholders in General Meeting, the Concert Party will not be
restricted from making an offer for the Company.
Further information on the Waiver is set out in Part VI of this
document.
23. WORKING CAPITAL
The Directors are of the opinion, having made due and careful
enquiry, that, taking into account the cash resources available to
the Enlarged Group following the implementation of the Proposals
(including the Placing), the working capital available to the
Enlarged Group will be sufficient for its present requirements,
that is at least for 12 months from the date of Admission.
24. DIVID POLICY AND CAPITAL REORGANISATION
The Enlarged Group will primarily seek to achieve capital growth
for its Shareholders. In addition, it is the Board's current
intention to adopt, at an appropriate time, a progressive dividend
policy as and when the Enlarged Group has generated sufficient
profits which can be distributed.
Shareholders should be aware that dividends are paid out of
distributable reserves and that as at 31 December 2016 Parallel
Media had a deficit on its distributable reserves of GBP23.472m.
Following Admission, it is the Board's intention that the Enlarged
Group should undertake a capital reconstruction to eliminate this
deficit on distributable reserves to put the Enlarged Group in a
position to pay dividends at a future date. A capital
reconstruction of this nature will require the approval of
creditors and Shareholders should be aware that there can be no
certainty that this capital reconstruction will be consummated as
currently envisioned.
25. CORPORATE GOVERNANCE
The Board recognises the value and importance of high standards
of corporate governance. Accordingly, whilst the UK Corporate
Governance Code does not apply to companies admitted to trading on
AIM, the Board intends to continue to observe the requirements of
the UK Corporate Governance Code to the extent they consider
appropriate in the light of the Enlarged Group's size, stage of
development and resources. The Board also proposes to fully comply
with the recommendations set out in the QCA Corporate Governance
Code for small and mid-sized quoted Companies published by the
Quoted Companies Alliance ("QCA Guidelines"), which sets out a
standard of minimum best practice for AIM companies and
recommendations for reporting corporate governance matters.
At Admission, the Board will comprise five directors, of whom
two are executive directors and three are non-executives. The Board
considers that Ranjit Murugason and Simon Bennett are independent
(within the meaning of the QCA Guidelines). The Directors believe
that the size and composition of the Board is appropriate given the
stage and development of the Enlarged Group at Admission, although
the Company intends to appoint a Finance Director and a further
non-executive Director to the Board by 30 June 2018 or earlier, if
suitable candidates have been identified.
Board
The Board will continue to be responsible for the overall
management of the Enlarged Group including the formulation and
approval of the Enlarged Group's long term objectives and strategy,
the approval of budgets, the oversight of Enlarged Group
operations, the maintenance of sound internal control and risk
management systems and the implementation of the Enlarged Group's
strategy, policies and plans. Whilst the Board may delegate
specific responsibilities, there will be a formal schedule of
matters specifically reserved for decision by the Board; such
reserved matters will include, amongst other things, approval of
significant capital expenditure, material business contracts and
major corporate transactions. The Board will formally meet four
times per year to review performance.
The Company has an established audit committee, remuneration and
nomination committees with formally delegated duties and
responsibilities, and has adopted a share dealing code and an
anti-corruption policy, as described below.
Audit committee
The audit committee will continue to be responsible for
monitoring the integrity of the Company's financial statements,
reviewing significant financial reporting issues, reviewing the
effectiveness of the Company's internal control and risk management
systems, monitoring the effectiveness of the internal audit
function and overseeing the relationship with the external auditors
(including advising on their appointment, agreeing the scope of the
audit and reviewing the audit findings).
The audit committee comprises of Simon Bennett and myself and is
chaired by Simon Bennett. The audit committee meets at least three
times a year at appropriate times in the reporting and audit cycle
and otherwise as required. The audit committee comprises members
with the appropriate financial and business expertise to act
efficiently as a member of the committee. The audit committee also
meets regularly with the Company's external auditors.
Remuneration and Nomination committees
The remuneration committee is responsible for determining and
reviewing the terms and conditions of service, termination and
remuneration of the chairman, the Board and other designated senior
executives and, within the terms of the agreed framework,
determining the total individual remuneration packages of such
persons including, where appropriate, bonuses, incentive payments
and share options or other share awards. The remuneration of
non-executive Directors will be a matter for the Executive Chairman
and the other non-executive members of the Board. No Board member
will be involved in any decision as to his or her own
remuneration.
The remuneration committee comprises Simon Bennett, and I and is
chaired by myself. The remuneration committee meets at least twice
a year and otherwise as required
The nomination committee is responsible for reviewing and making
proposals to the Board on the appointment of directors, determining
successor plans and for assessing directors on an ongoing basis.
The committee meets as necessary and consists of David Ciclitira,
Simon Bennett and I.
Share dealing code
The Company has adopted a share dealing code ("Code") for
persons discharging managerial responsibility, which will apply to
Directors, any persons closely associated, and applicable employees
of the Enlarged Group (as defined in the Code) for the purpose of
ensuring compliance by such persons with the provisions of the AIM
Rules for Companies, FSMA, the Market Abuse Regulation (EU) 596/14
("MAR"), and other relevant legislation. The Code addresses share
dealing restrictions as required by the AIM Rules and MAR. The
purpose of the Code is to ensure that Directors and other relevant
persons do not abuse, or place themselves under suspicion of
abusing, inside information they may have or be thought to have,
and sets out a dealing authorisation and notification procedure to
be followed prior to and following any dealing in Ordinary Shares.
The Board consider that this share dealing code is appropriate for
a company whose shares are admitted to trading on AIM.
The Company will continue to take proper steps to ensure
compliance by relevant persons with the terms of the share dealing
code and the relevant provisions of the AIM Rules for
Companies.
Anti-corruption policy
The Company has adopted an anti-corruption and bribery policy
which applies to the Board, employees of all its subsidiaries and
associated persons of the Group. It sets out their responsibility
to observe and uphold a zero tolerance position on bribery and
corruption in the jurisdictions in which the Group operates, as
well as providing guidance to those working for the Group on how to
recognise and deal with bribery and corruption issues and the
potential consequences. The Company expects all employees, agency
workers, suppliers, contractors, agents, sponsors and consultants
to conduct their day-to-day business activities in a fair, honest
and ethical manner, be aware of and refer to this policy in all of
their business activities worldwide and to conduct business on the
Company's behalf in compliance with it. Management at all levels
are responsible for ensuring that those reporting to them,
internally and externally, are made aware of and understand this
policy.
26. CHANGE OF NAME
On Completion it is proposed that the Company's name be changed
to Live Company Group Plc to reflect the Enlarged Group's new
business.
27. NEW ARTICLES OF ASSOCIATION
The Company proposes to adopt new articles of association to
modernise its constitution and reflect other recent changes in the
law.
The material differences between the Existing Articles and the
New Articles are summarised below. Changes of a minor, conforming
or purely technical nature have not been mentioned
specifically.
Enabling the Company to communicate with Shareholders by
electronic and/or website communications
The Act contains provisions relating to electronic
communications between companies and their shareholders enabling
companies to use electronic communications with shareholders as the
default position by placing documents on a website unless
shareholders specifically elect to receive hard copies.
Shareholders may elect for all or any communications to be sent to
them via email rather than receiving documents in hard copy form
and shareholders may communicate with the Company by electronic
means where the company has given an electronic address in a notice
calling a meeting or in an instrument of proxy. The New Articles
will clarify how the Company can use these provisions and permit
notice of general meetings, proxies and documents to be delivered
using modern electronic means. The New Articles will also allow
Directors' meetings to make use of electronic communications.
Director appointment rights
The New Articles will preserve rights of David Ciclitira and his
connected persons to appoint Directors to the Board of the Company
(and to remove and replace the same). However, the rights will be
modified so that they have the right to appoint up to two directors
for so long as they hold or are interested in more than 25 per
cent. of the Ordinary Shares of the Company in issue, and one
director for so long as they hold or are interested in more than 15
per cent. of the Ordinary Shares of the Company in issue. For the
avoidance of doubt, the New Articles will clarify that at the date
of their adoption the nominated directors are David and Serenella
Ciclitira.
Reducing the notice period for caling an extraordinary general
meeting from 21 clear days to 14 clear days
The Act permits a company to call an extraordinary general
meeting on 14 clear days' notice unless required otherwise by its
articles of association. All shareholder meetings other than the
annual general meeting will now be called general meetings.
Alowing the directors to authorise conflicts or potential
conflicts of interest, where appropriate
The Act sets out directors' general duties which largely codify
the existing law but with some changes. Under the Act, a director
must avoid a situation where he has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict, with
the company's interests. The requirement is very broad and could
apply, for example, if a director becomes a director of another
company or a trustee of another organisation. The Act allows
directors of public companies to authorise conflicts and potential
conflicts, where appropriate, where the articles of association
contain a provision to this effect. The Act also allows the
articles to contain other provisions for dealing with directors'
conflicts of interest to avoid a breach of duty. The New Articles
will give the Directors authority to approve such situations and to
include other provisions to allow conflicts of interest to be dealt
with in a similar way to the current position.
There are safeguards that will apply when directors decide
whether to authorise a conflict or potential conflict. First, only
Directors who have no interest in the matter being considered will
be able to take the relevant decision, and secondly, in taking the
decision the directors must act in a way they consider, in good
faith, will be most likely to promote the company's success. The
Directors will be able to impose limits or conditions when giving
authorisation if they think this is appropriate.
It is the Board's intention to report annually on the Company's
procedures for ensuring that the Board's powers of authorisation of
conflicts are operated effectively and that the required procedures
have been followed.
Disclosing of interests in shares
The provisions relating to the disclosure of interests in shares
contained in the Companies Act 1985, including Section 212 on
company investigation powers, were repealed in January 2007.
Section 793 and related sections in Part 22 of the 2006 Act, which
contain the corresponding company investigation powers previously
contained in Section 212, have been brought into force and
accordingly the New Articles reflect these changes.
28. GENERAL MEETING
A notice of General Meeting is set out in Part IX at the end of
this document. A General Meeting has been convened for 11.00 a.m.
on 22 December 2017 to be held at the offices of Fieldfisher LLP,
Riverbank House, 2 Swan Lane, London EC4R 3TT for the purpose of
considering and, if thought fit, passing the resolutions summarised
below. Resolutions 2 to 6 will be conditional upon the passing of
Resolution 1.
Ordinary Resolutions:
1. To approve the Waiver;
2. To approve the Proposed Acquisitions, the Placing, the Loan
Conversion, the Disposal, the settlement of David Ciclitira's
commission arrangements, and the issue of new ordinary shares for
merchandising rights, Director's fees and adviser fees;
3. To authorise the Directors to allot relevant equity
securities under section 551 of the Companies Act.
Special Resolutions:
4. To disapply statutory pre-emption rights;
5. To change the name of the Company to Live Company Group Plc; and
6. To adopt new Articles of Association
To be passed, Resolutions 1 to 3 require a majority of more than
50 per cent. of votes entitled to be cast by Shareholders voting in
person or by proxy in favour of each Resolution, and Resolutions 4
to 6 will require a majority of not less than 75 per cent. of the
Shareholders voting in person or by proxy in favour of each
Resolution.
In accordance with the requirements of the Takeover Code,
Resolution 1 shall be taken on a poll of Independent Shareholders.
No member of the Concert Party nor Ranjit Murugason may vote on the
Whitewash Resolution (Resolution 1) at the General Meeting.
29. ADMISSION, DEALINGS AND CREST SETTLEMENT
Application will be made for the Enlarged Share Capital to be
admitted to trading on AIM, conditional on Completion.
Consequently, if the Resolutions are duly passed at the General
Meeting, it is expected that Admission will become effective and
the Enlarged Issued Share Capital will be admitted to trading on
AIM. Admission is expected to take place at 8.00 a.m. on 27
December 2017, although these dates and times are subject to
variation.
CREST is a paperless settlement procedure enabling securities to
be evidenced otherwise than by a certificate and transferred
otherwise than by a written instrument in accordance with the
requirements of CREST. The Articles permit the holding and transfer
of Ordinary Shares to be evidenced in uncertificated form in
accordance with the requirement of CREST. The New Ordinary Shares
are eligible for CREST settlement. Accordingly, following
Admission, settlement of transactions in Ordinary Shares may take
place within the CREST system if the relevant Shareholder so
wishes. CREST is a voluntary system and Shareholders who wish to
receive and retain share certificates will be able to do so.
30. TAXATION
Information regarding United Kingdom taxation is set out in
paragraph 15 of Part VIII of this document. If you are in any doubt
as to your tax position, you should consult an appropriate
professional adviser immediately.
31. ADDITIONAL INFORMATION
Your attention is drawn to the additional information set out in
Part VIII of this document which contains, among other things,
further information on the Enlarged Group.
32. RISK FACTORS
Prior to making an investment decision in relation to the
Ordinary Shares, Shareholders and prospective investors should read
the whole of this document and in particular carefully consider the
Risk Factors set out in Part II and the information contained in
Parts I to VIII of this document.
33. ACTION TO BE TAKEN
You will find accompanying this document a Form of Proxy for use
in connection with the General Meeting. Whether or not you intend
to be present at the General Meeting, you are asked to complete the
Form of Proxy in accordance with the instructions printed on it so
as to be received by the Company's registrars, Link Asset Services,
The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, as soon
as possible but in any event not later than 11.00 a.m. on 20
December 2017. Completion of the Form of Proxy will not preclude
you from attending and voting at the General Meeting should you so
wish.
In the event that the Company is unable to implement the
Proposals outlined in this document or that Shareholders do not
approve the Resolutions, there can be no certainty that David
Ciclitira will continue to provide financial support for the
Company. Under those circumstances, one of the options available to
the Board would be to seek a cancellation of the Company's listing
on AIM, in accordance with Rule 41 of the AIM Rules for
Companies.
34. RECOMMATION
I, having been so advised by Stockdale, the independent
financial adviser to the Company, for the purposes of Rule 3 of the
City Code, consider the Proposals (including the Waiver) to be fair
and reasonable and in the best interests of the Independent
Shareholders and the Company as a whole. In advising me, Stockdale
has taken into account my commercial assessments. I recommend that
you vote in favour of the Resolutions as I intend to, save as set
out below, in respect of my beneficial holding of 180,742 Ordinary
Shares, equivalent to 6.0 per cent. of the Existing Ordinary
Shares. Shareholders should note that I have a vested interest in
the Proposals, and therefore in giving my recommendation I am not
independent for the purposes of the Whitewash Resolution and am
therefore not permitted to vote on Resolution 1.
If you are in any doubt as to the action you should take, you
are recommended to seek your own independent advice.
Yours faithfully,
Ranjit Murugason
Non-Executive Director
EXPECTED TIMETABLE OF PRINCIPAL EVENTS*
Publication and posting of Admission Document, 29 November
2017
Notice of General Meeting and Form of Proxy
Latest time and date for receipt of Forms of Proxy and receipt
11.00 a.m. on 20 December 2017
of electronic proxy appointments via the CREST system
General Meeting 11.00 a.m. on 22 December 2017
Completion of the Proposals and Admission of the Enlarged 8.00
a.m. on 27 December 2017
Issued Share Capital to AIM
Certificates for New Ordinary Shares despatched by week
commencing 2 January 2018
(where applicable)
* Each of the dates in the above timetable is subject to change
at the absolute discretion of the Company, with the agreement
of
Stockdale, in which case details of the new times and/or dates
will be notified by an announcement through a Regulatory
Information Service.
PLACING AND ADMISSION STATISTICS
Placing Price per New Ordinary Share 30p
Number of Existing Ordinary Shares in issue at the
date of this document 3,009,233
Number of New Ordinary Shares to be issued pursuant
to the Loan Conversion 6,766,667
Number of New Ordinary Shares to be issued for the
acquisition of Brick Live 16,666,667
Number of New Ordinary Shares to be issued for the
acquisition of Parallel Live 3,333,333
Number of Placing Shares to be issued pursuant to
the Placing 4,200,000
Number of New Ordinary Shares to be issued pursuant
to the BLFE Acquisition 9,832,060
Number of New Ordinary Shares to be issued in connection
with the termination of existing merchandise rights 333,333
Number of New Ordinary Shares to be issued pursuant
to the settlement of outstanding Director's fees
and other advisory fees 733,167
Settlement of commission arrangements with David
Ciclitira 3,333,333
Number of Ordinary Shares in issue following Admission 48,207,793
Percentage of Enlarged Issued Share Capital represented
by the Placing Shares 8.7%
Gross proceeds of the Placing receivable by the GBP1.26 million
Company
Estimated net proceeds of the Placing receivable GBP0.66 million
by the Company
Market capitalisation of the Company at the Placing GBP14.5 million
Price at Admission
ISIN GB00BGSGT481
Website (up to Admission) www.parallelmediagroup.com
Website (on Admission) www.livecompanygroup.com
ISIN Code GB00BGSGT481
SEDOL Code BGSGT48
TIDM PAA
New TIDM (following
Admission and change of name) LVCG
DEFINITIONS
The following definitions apply throughout this document, unless
the context otherwise requires:
"Acquisition Agreements" the Brick Live Acquisition Agreement,
the Parallel Live Acquisition Agreement and the BLFE Acquisition
Agreement
"acting in concert" shall bear the meaning ascribed thereto in
the City Code;
"Admission" admission of the Enlarged Issued Share Capital to
trading on AIM and such admission becoming effective in accordance
with Rule 6 of the AIM Rules for Companies
"AIM" the market of that name operated by the London Stock
Exchange
"AIM Rules for Companies" the rules for companies whose
securities are admitted to trading on AIM, as published by the
London Stock Exchange from time to time
"AIM Rules for Nominated the rules setting out the eligibility
requirements, ongoing obligations
Advisers" and certain disciplinary matters in relation to
nominated advisers, as published by the London Stock Exchange from
time to time
"BLFE" Brick Live Far East Ltd, a company incorporated in Hong
Kong with company number 2460460, currently owned 38.9 per cent. by
Brick Live International
"BLFE Acquisition" the acquisition of the 61.1 per cent.
interest in BLFE by the Company, details of which are set out in
paragraph 12.1.3 of
Part VIII of this document
"BLFE Acquisition Agreement" the conditional agreement between
the Company, Brick Live Lab and Brick Live International relating
to the BLFE Acquisition, details of which are set out in paragraph
12.1.3 of Part VIII of this document
"Board" or "Directors" The board of directors of the Company
from time to time appointed in accordance with the Articles or New
Articles and where the context requires, the existing directors of
the Company as at the date of this document, whose names are set
out on page 6 of this document
"Brick Live" Brick Live Group Ltd, a company incorporated in
England and Wales with company number 10151705
"Brick Live Acquisition" the acquisition of the entire issued
share capital of Brick Live, details of which are set out in
paragraph 12.1.1 of Part VIII of this document
"Brick Live Acquisition the conditional agreement between the
Company, David Ciclitira
Agreement" and Clive Morton relating to the Brick Live
Acquisition, details of which are set out in paragraph 12.1.1 of
Part VIII of this document
"Brick Live Hong Kong" Brick Live Hong Kong Ltd, a company
incorporated in Hong Kong with company number 2460469, a subsidiary
of Brick Live
"Brick Live Group" Brick Live and its subsidiary companies
"Brick Live International" Brick Live International Ltd, a
company incorporated in England and Wales with company number
10257756 and a wholly owned subsidiary of Brick Live
"Brick Live Lab" Brick Live Lab Limited, a company incorporated
in Korea, and controlled by Mr Hyun Seok Kim
"BRICKLIVE" the events run by Brick Live or its licensee
partners
"BRICKLIVETM" a trademark owned by Brick Live
"BRICKLIVE China" Brick Live Centre Education Technology
(Beijing) Co. Ltd, a joint venture company incorporated in China in
accordance with the Foreign Capital Enterprises Law of the People's
Republic of China and owned as to 49 per cent. by BLFE and 51 per
cent. by Fortune Access
"business day" a day (other than Saturdays or Sundays or public
holidays) on which banks are open in London for normal banking
business
"certificated" or in relation to an Ordinary Share, recorded on
the Company's
"in certificated form" Register as being held in certificated
form (that is not in CREST)
"Change of Name" the change of the Company's name from Parallel
Media Group plc to Live Company Group Plc
"City Code" the City Code on Takeovers and Mergers
"Companies Act" or "Act" the Companies Act 2006, as amended
"Company" or "Parallel Media" Parallel Media Group plc, a
company incorporated in England and Wales with registered number
00630968
"Completion" completion of the Proposals including Admission and
completion of the Proposed Acquisitions in accordance with the
terms of the Acquisition Agreements
"Concert Party" David Ciclitira and Serenella Ciclitira and
their connected entities and Clive Morton as set out in more detail
in paragraph 1.2 of Part VI of this document
"Consideration Shares" the 29,832,060 New Ordinary Shares to be
issued in connection with the Brick Live Acquisition, the Parallel
Live Acquisition and the BLFE Acquisition
"Corporate Governance Code" the UK Corporate Governance Code
issued by the Financial Reporting Council, as in force from time to
time
"CREST" the system for the paperless settlement of trades in
securities and the holding of uncertificated securities operated by
Euroclear in accordance with the CREST Regulations
"CREST Manual" the rules governing the operation of CREST,
consisting of the CREST Reference Manual, the CREST International
Manual, the CREST Central Counterparty Service Manual, the CREST
Rules, Registrars Service Standards, Settlement Discipline Rules,
CCSS Operations Manual, Daily Timetable, CREST application
procedure and CREST Glossary of Terms (all as defined in the CREST
Glossary of Terms promulgated by Euroclear on 15 July 1996 and as
amended since)
"CREST Regulations" or the Uncertified Securities Regulations
2001 (SI 2001 No. 3755), as
"Regulations" amended from time to time
"Director's Fees Settlement" the settlement of outstanding fees
to Ranjit Murugason, to be applied in subscription for 616,500 New
Ordinary Shares
"Disposal" the proposed sale of the Disposal Subsidiaries to
James Golf
"Disposal Subsidiaries" all of the Existing Subsidiaries of
Parallel Media other than Parallel Media Group Asia PTE Ltd and The
Championship (Singapore) Pte Ltd
"DTRs" the disclosure guidance and transparency rules made by
the FCA under Part VI of FSMA
"Enlarged Group" the Company and its subsidiaries (including
Brick Live and its subsidiary companies, and Parallel Live and its
subsidiary companies) following the Proposed Acquisitions
"Enlarged Issued Share Capital" the entire issued ordinary share
capital of the Company immediately following Admission comprising
the Existing Ordinary Shares and
the New Ordinary Shares
"EU" the European Union
"Euroclear" Euroclear UK & Ireland Limited
"Existing Articles of Association" the articles of association
of the Company as at the date of
or "Existing Articles" this document
"Existing Debt" GBP2.03 million of the amount owed by Parallel
Media to David Ciclitira immediately prior to Admission
"Existing Ordinary Shares" the 3,009,233 Ordinary Shares that
are in issue at the date of this document
"Existing Subsidiaries" all of the subsidiaries of Parallel
Media as at the date of this document as summarised in paragraph
3.1 of Part VIII of this document
"FCA" the Financial Conduct Authority of the United Kingdom
acting in its capacity as the competent authority for the purposes
of Part VI of FSMA
"Fortune Access" Fortune Access Ltd, a company incorporated in
Hong Kong with registration certificate number
35672591-000-04-17-1
"Form of Proxy" the form of proxy accompanying this document for
use by Shareholders at the General Meeting
"FSMA" the Financial Services and Markets Act 2000, as
amended
"General Meeting" the general meeting of the Company to be held
at the offices of Fieldfisher LLP, Riverbank House, 2 Swan Lane,
London, EC4R 3TT at 11.00 a.m. on 22 December 2017, notice of which
is set out in Part IX of this document
"Group" the Company and the Existing Subsidiaries
"HMRC" Her Majesty's Revenue & Customs
"IFRS" International Financial Reporting Standards
"IHT" inheritance tax
"Independent Shareholders" Shareholders other than the members
of the Concert Party and Ranjit Murugason
"ISIN" International Securities Identification Number
"James Golf" James Golf Limited, a company incorporated in
England & Wales with registered number 09932664
"LEGO Group" a privately owned Danish group of companies, that
manufactures colourful interlocking plastic bricks
"Loan Conversion" the settlement of the Existing Debt by its
repayment by the Company to David Ciclitira and his subscription
for 6,766,667 New Ordinary Shares at the Placing Price
"Lock-in Agreements" the lock-in and orderly marketing
agreements dated 29 November 2017 entered into between (1) the
Company, (2) Stockdale and (3) the Locked-in Shareholders, details
of which are set out in paragraph 12.1.13 of Part VIII of this
document
"Locked-in Shareholders" all of the members of the Concert
Party, the Directors, the Proposed Directors, Mr Hyun Seok Kim,
Brick Live Lab and CIDEA
"London Stock Exchange" London Stock Exchange plc
"New Articles of Association" or the proposed new articles of association of the Company to be
"New Articles" adopted as part of the Proposals, a summary of
certain provisions of which is set out in paragraph 6 of Part VIII
of this document
"New Ordinary Shares" the 45,198,160 New Ordinary Shares to be
issued in connection with the settlement of the consideration for
the Proposed Acquisitions, the Placing, the Loan Conversion and the
other matters set out in this document
"Nomad and Broker Agreement" the agreement dated 29 November
2017 made between the Company, the Existing Directors, the Proposed
Directors and Stockdale relating to Admission, which is summarised
in paragraph 12.1.8 of Part VIII of this document
"Notice of General Meeting" the notice convening the General
Meeting set out at the end of this document
"Official List" the Official List of the UK Listing Authority
"Ordinary Shares" or "Shares" ordinary shares with a nominal
value of 1 penny each in the capital of the Company
"Parallel Live" Parallel Live Group Ltd, a company incorporated
in England and Wales with company number 09932658
"Parallel Live Acquisition" the acquisition of the entire issued
share capital of Parallel Live, details of which are set out in
paragraph 12.1.2 of Part VIII of this document
"Parallel Live Acquisition the conditional agreement between the
Company and David Ciclitira
Agreement" relating to the Parallel Live Acquisition, details of
which are set out in paragraph 12.1.2 of Part VIII of this
document
"Placees" Tsang's & Co Limited, Luxcite Portfolio Limited
and Fortune Access
"Placing" the placing of the Placing Shares with the Placees at
the Placing Price
"Placing Price" 30 pence per New Ordinary Share
"Placing Shares" the 4,200,000 New Ordinary Shares to be
allotted and issued by the Company pursuant to the Placing
"Proposals" the Placing, the Proposed Acquisitions, the
settlement of David Ciclitira's commission arrangements, the Loan
Conversion, the Director's Fees Settlement, the Waiver, the
Disposal, Change of Name of the Company, the adoption of the New
Articles and Admission and the other matters set out in this
document
"Proposed Acquisitions" the Brick Live Acquisition, the Parallel
Live Acquisition and the BLFE Acquisition, and "Acquisition" shall
mean any one of them, as appropriate.
"Prospectus Directive" EU Prospectus Directive 2003/71/EC
including any relevant measure in each member state of the European
Economic Area that has implemented Directive 2003/71/EC
"Prospectus Rules" the prospectus rules made by the FCA under
Part VI of FSMA
"Register" the Company's register of members
"Registrars" or "Link" Link Asset Services
"Relationship Agreement" the relationship agreement dated 29
November 2017 between (1) the Company, (2) Stockdale and (3) David
Ciclitira, further details of which are set out in paragraph
12.1.12 of Part VIII of this document
"Resolutions" the resolutions set out in the Notice of General
Meeting
"SDRT" stamp duty reserve tax
"Shareholders" holders of Ordinary Shares
"Stockdale" Stockdale Securities Limited, a company incorporated
in England and Wales with registered number 762818
"Takeover Panel" the Panel on Takeovers and Mergers
"UK Listing Authority" the FCA acting in its capacity as the
competent authority for the purposes of Part VI of FSMA
"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland
"uncertificated" or in relation to an Ordinary Share, recorded
on the Company's
"in uncertificated form" uncertificated form" Register as being
held in uncertificated form in CREST and title to which may be
transferred by means of CREST
"United States" or "US" or "USA" the United States of
America
"VAT" value added tax
"Waiver" the waiver by the Takeover Panel conditional upon the
approval of the Whitewash Resolution of the obligation that would
otherwise arise on the Concert Party to make a general offer for
the Company pursuant to Rule 9 of the City Code as a result of the
allotment and issue of New Ordinary Shares to the Concert Party
pursuant to the Proposals, further details of which are set out in
Part VI of this document
"Whitewash Resolution" the resolution numbered 1 as set out in
the Notice of General Meeting to be voted on by the Independent
Shareholders by way of poll at the General Meeting to approve the
Waiver
"$" or "dollars" US dollars, the lawful currency of the United
States
"GBP" or "sterling" UK pounds sterling, the lawful currency of
the United Kingdom
"RMB" Chinese renminbi, the lawful currency of the People's
Republic of China
Note: Any reference to any provision of any legislation includes
any amendment, modification, re-enactment or extension of it. Words
importing the singular include the plural and vice versa and words
importing any gender shall include all other genders.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY, IS NOT INTED
TO AND DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER OR INVITATION
TO PURCHASE OR SUBSCRIBE FOR, UNDERWRITE, SELL OR ISSUE OR THE
SOLICITATION OF AN OFFER TO PURCHASE OR SUBSCRIBE, SELL, ACQUIRE,
DISPOSE OF THE ORDINARY SHARES OR ANY OTHER SECURITY IN THE UNITED
STATES OF AMERICA, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA,
JAPAN OR IN ANY JURISDICTION IN WHICH, OR TO ANY PERSONS TO WHOM,
SUCH OFFERING, SOLICITATION OR SALE WOULD BE UNLAWFUL.
THE SECURITIES DESCRIBED HEREIN MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES, UNLESS REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMED (THE "SECURITIES ACT"), OR PURSUANT
TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENT. NO PUBLIC
OFFERING OF THE SECURITIES DISCUSSED HEREIN IS BEING MADE IN THE
UNITED STATES, AND THE INFORMATION CONTAINED HEREIN DOES NOT
CONSTITUTE AN OFFERING OF SECURITIES FOR SALE IN THE UNITED STATES.
THE COMPANY DOES NOT CURRENTLY INT TO REGISTER ANY SECURITIES UNDER
THE SECURITIES ACT. THIS ANNOUNCEMENT IS NOT FOR RELEASE,
PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN OR INTO THE UNITED STATES.
THE CONTENT OF THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY AN
AUTHORISED PERSON WITHIN THE MEANING OF THE FINANCIAL SERVICES AND
MARKETS ACT 2000 (AS AMED) ("FSMA"). RELIANCE ON THIS ANNOUNCEMENT
FOR THE PURPOSE OF ENGAGING IN ANY INVESTMENT ACTIVITY MAY EXPOSE
AN INDIVIDUAL TO A SIGNIFICANT RISK OF LOSING ALL OF THE PROPERTY
OR OTHER ASSETS INVESTED.
Stockdale Securities Limited is authorised and regulated in the
United Kingdom by the Financial Conduct Authority ("FCA") and is
acting exclusively for the Company in connection with the Proposals
and Admission and no one else and will not be responsible to anyone
other than the Company for providing the protections afforded to
its clients nor for providing advice to any other person in
relation to the Proposals and Admission and/or any other matter
referred to in this Announcement.
No representation or warranty, express or implied, is or will be
made as to, or in relation to, and no responsibility or liability
is or will be accepted by Stockdale or any of its affiliates or any
of its respective directors, officers, employees, advisers or
representatives (collectively, "Representatives") as to or in
relation to the accuracy or completeness of this Announcement or
any other written or oral information made available to or publicly
available to any interested party or its advisers, and any
liability therefor is expressly disclaimed.
This Announcement contains certain forward-looking statements,
beliefs or opinions, with respect to certain of the Company's
current expectations and projections about future prospects,
developments, strategies, performance, anticipated events or trends
and other matters that are not historical facts. These
forward-looking statements, which sometimes use words such as
"aim", "anticipate", "believe", "intend", "plan" "estimate",
"expect" and words of similar meaning, include all matters that are
not historical facts and reflect the Directors' beliefs and
expectations and involve a number of risks, uncertainties and
assumptions that could cause actual results and performance to
differ materially from any expected future results or performance
expressed or implied by the forward-looking statement. Statements
contained in this Announcement regarding past trends or activities
should not be taken as a representation that such trends or
activities will continue in the future. The information contained
in this Announcement is subject to change without notice and,
except as required by applicable law, none of the Company,
Stockdale, nor any of their respective affiliates nor any of their
respective Representatives assumes any responsibility or obligation
to update, amend or revise publicly or review any of the
forward-looking statements contained in this Announcement. You
should not place undue reliance on forward-looking statements,
which speak only as of the date of this Announcement. No statement
in this Announcement is or is intended to be a profit forecast or
profit estimate or to imply that the earnings of the Company for
the current or future financial years will necessarily match or
exceed the historical or published earnings of the Company. Past
performance of the Company cannot be relied on as a guide to future
performance and persons reading this Announcement are cautioned not
to place undue reliance on such forward-looking statements.
The price of Ordinary Shares and any income from them may go
down as well as up and investors may not get back the full amount
invested on disposal of the Ordinary Shares.
Neither the content of the Company's website nor any website
accessible by hyperlinks on the Company's website is incorporated
in, or forms part of, this Announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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