MSQ Media Square

 

TIDMMSQ 
 
RNS Number : 9132N 
Media Square PLC 
21 June 2010 
 

Media Square plc 
 
Renewal of Banking Facilities 
 
Media Square plc (AIM: MSQ), the international marketing communications group, 
is pleased to announce that the Group has entered into a conditional new banking 
facilities agreement with Bank of Scotland plc (BoS), part of Lloyds Banking 
Group (LBG). 
 
The new facility will become effective immediately following the upcoming Annual 
General Meeting (AGM), assuming certain resolutions are passed at the AGM as set 
out below. 
 
Media Square's current facility was established in 2005 to fund an ambitious 
acquisition program.  Since that time, the Board has repaid nearly GBP25m of 
this bank debt. The new three year facility will replace the current facility 
and provide management with the platform to further improve business 
performance. 
 
The new facility, which runs until June 2013, will have the following key terms: 
* Facility limit of GBP26.6m comprising: 
o  Senior term loan facility of GBP9.1m with an annual interest rate of 3% plus 
LIBOR; 
o  Property loan facility of GBP1.89m with an annual interest rate of 3% plus 
LIBOR (mortgaged on the Group's freehold commercial property); 
o  Mezzanine loan facility of GBP11.6m with an overall annual interest rate of 
7% plus LIBOR, of which 1.5% p.a. plus LIBOR is payable at the end of the 
relevant interest period and 5.5% p.a. plus LIBOR will be capitalised into the 
principal amount of the loan; and 
o  Revolving credit facility of GBP4m with an annual interest rate of 3% plus 
LIBOR. 
* Subject to shareholder approval at the AGM, LBG will be granted warrants 
(Warrants) pursuant to which LBG may subscribe for such ordinary shares (Shares) 
which represent 10%  of  Media Square's fully diluted issued Shares, such 
calculation to be performed on the basis of the fully diluted Shares in issue as 
at the date of exercise of the Warrants. The Warrants have an exercise price of 
10p per Share and will be capable of being exercised on or before 10 years from 
the date of grant of their grant 
* The new facility includes customary covenant obligations which, amongst other 
things, require the Group to maintain minimum ratios of EBITDA to interest 
payable, net debt to EBITDA and cash flow to funding costs 
* The property loan facility (and, if the property loan facility is repaid, the 
senior facility) requires a minimum quarterly repayment of GBP95,000, with the 
balance of the facility being repayable at the end of the term as a bullet 
repayment 
* The Group will be able to make voluntary prepayments against the facilities, 
100% of which can be applied against the mezzanine loan facility subject  to the 
property loan being repaid first, in the event of a future sale of Media 
Square's freehold commercial property. In addition, the facility will be subject 
to a cash sweep, with 75% of any excess cash flow less GBP0.25m (calculated 
annually) being applied to reduce the facility. 
* There is a 1% arrangement fee, payable on a phased schedule over the next 8 
months. 
The Group's existing security arrangements will be updated to ensure that BoS' 
security net represents at least 90% of Group EBITDA. 
 
At the same time, LBG has agreed to renegotiate Media Square's existing 
GBP18.75m interest rate hedge (fixed rate: 4.78%) with a new hedge, covering a 
minimum of GBP15m, at a reduced overall swap rate over the facility duration 
(the rate will increase annually, however the exact rates will be agreed as of 
the effective date subject to market interest rate movements in the intervening 
period). 
 
The granting of the new facility is conditional on (a) each of the Directors of 
Media Square remaining in place in their existing positions following the AGM, 
at which certain of the Directors will be required to retire and stand for 
re-election by the shareholders pursuant to the Articles of Association; and (b) 
shareholders approving the grant of the Warrants to LBG at the AGM.  Further 
details will be provided in the Notice of AGM and accompanying letter from Media 
Square to be sent to shareholders shortly. 
 
 
Roger Parry Chairman of Media Square comments: "I am delighted that we are able 
to report to shareholders that we have agreed with the bank a new three year 
facility which will run until July 2013 which will provide the company with a 
long term debt capacity of GBP22.6 million and a short term revolver of GBP4 
million. The facility provides the Group with the flexibility to rebuild 
operating results and key ratios over the next three years to acceptable 
industry levels." 
 
Lloyds Banking Group comments: "We are supportive of Management who in our 
opinion have done a great job in delivering the turnaround programme against the 
backdrop of difficult economic conditions. The provision of new facilities for a 
further 3 years demonstrates our support of Management's business plan and UK 
businesses through the cycle." 
 
 
 
Enquiries to: 
 
+-----------------------------+------------------------------+ 
| Media Square plc            | www.mediasquare.co.uk        | 
+-----------------------------+------------------------------+ 
| Roger Parry                 | 020 3026 6601                | 
+-----------------------------+------------------------------+ 
| Peter Reid                  | 020 3026 6607                | 
+-----------------------------+------------------------------+ 
|                             |                              | 
+-----------------------------+------------------------------+ 
| Collins Stewart Europe      |                              | 
| Limited                     |                              | 
+-----------------------------+------------------------------+ 
| Adrian Hadden/Stewart       | 020 7523 8350                | 
| Wallace                     |                              | 
+-----------------------------+------------------------------+ 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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