Placing
04 October 2005 - 5:00PM
UK Regulatory
RNS Number:1363S
Screen FX PLC
04 October 2005
4 October 2005
Screen FX PLC
("Screen FX" or the "Company")
Proposed Placing by Teather and Greenwood
of 22,666,672 new Ordinary Shares at 4.5 pence per share
Notice of Extraordinary General Meeting
Screen FX announces that Teather & Greenwood has conditionally placed 22,666,672
new Ordinary Shares, at 4.5 pence per share to raise approximately #1 million,
before expenses. The funds raised will be used to satisfy the general working
capital requirements of the Group, particularly the roll out of the network into
the Westfield and Trafford Centre shopping malls.
The Placing
The Placing, equivalent to approximately 15.45 per cent. of the Existing
Ordinary Shares, is being priced at a discount of approximately 25 per cent. to
the closing mid-market price of 6 pence per Ordinary Share on 3 October 2005,
the latest practicable date prior to the announcement of the Placing.
The Placing Shares have been conditionally placed with institutional investors
on a non-pre-emptive basis. The Directors believe that the additional costs that
would be incurred if the Placing Shares were offered to Shareholders on a
pre-emptive basis by way of a rights issue or open offer would not be in the
best interests of the Company.
The Placing is conditional, inter alia, on the passing of the Resolutions at the
EGM and Admission becoming effective. Application will be made to the London
Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It
is expected that such Admission will occur on 4 November 2005.
Background to and reasons for the Placing
2005 was a milestone year for ScreenFX in terms of the Group's development since
its flotation in March 2004. The Company has delivered all the initial key
milestones which it views as important to the first phase of its business
development. The Company now has a fully operational network offering big
screen advertising to circa 200 million consumers. This should increase on an
annualised basis to a potential 330 million potential viewers following the
signing of a long term agreement with Westfield Shoppingtowns Limited, the
largest shopping centre owner in the world, which was announced on 6 May 2005,
and the Trafford Centre, Manchester, announced on 3 June 2005.
ScreenFX's initial strategy was to install a digital flat screen network of
advertising displays into leading UK shopping centres, delivering major brand
advertising and customer information and establish the leading screen network in
the UK shopping mall environment. At the beginning of 2004, a ten year
agreement with Liberty International was secured to be the exclusive provider of
digital screen media in nine leading Capital Shopping Centres, including the
Metro Centre Gateshead and Lakeside Thurrock.
The installation of the network for these malls was completed in July 2004 and
the system is now fully operational. The Directors believe that this has
established ScreenFX's leadership position in the "out of home" digital
advertising mall market. The Group has made progress since then in expanding
the network, through its agreements with Westfield and the Trafford Centre, and
has signed a letter of intent to proceed to contract with another major property
group covering a number of other leading malls, while negotiations are ongoing
with many other owners of top 100 shopping centres. This progress in terms of
expanding the network and the potential audience is vital in strengthening
ScreenFX's leadership position and delivering the critical mass required by
national brand advertisers.
As announced on 28 July the Group signed a concession agreement with Central
Trains Ltd, part of the National Express network of commuter trains, to exploit
the audio visual advertising on their fleet of commuter trains. ScreenFX
continues to explore the opportunity to develop a business in the valuable
transport sector via this agreement and is reviewing the best route to
developing long term value from this new sector whilst maintaining its primary
focus on the mall business.
ScreenFX's partnership agreement with BT Media and Broadcast, announced on 17
November 2004, continues to provide the Group and its network with a very secure
technological platform, an efficient financial structure to support the rollout,
and access to emerging products and technologies.
The Directors believe ScreenFX has now achieved a strong lead in its sector and
is well-positioned to maintain and build the Group's share of this exciting
market.
Current Trading and Prospects
The Directors believe the potential for out of home digital screen networks is
now being widely acknowledged by the media industry.
The Group is now starting to see the early signs of adoption by major
advertisers with around 30 brand advertisers having trialled the network over
the last six months. The advertising agreement with Warner Bros to advertise a
number of the major film releases in the second half of this year was an
important milestone. As part of the Warner Brothers agreement ScreenFX has
tested one of the unique parts of its product proposition via the touchscreens
incorporated in the Group's Infopods. This has demonstrated the power of
interactive content in the malls and has generated significant interest from
other potential advertisers.
The final quarter of 2005 should see further revenue build as advertisers
appreciate the access ScreenFX's increased audience gives them in the critical
pre-Christmas trading period.
The Group's development strategy for longer term growth is focused on those
sectors, particularly retail and transport, which the Directors believe offer
the greatest revenue and profit potential for media owners in the long term.
Use of Proceeds
The net proceeds of the Placing of approximately #0.9 million will be used to
satisfy the general working capital requirements of the Group, particularly the
roll out of the network into the Westfield and Trafford Centre shopping malls.
Extraordinary General Meeting
A circular is being posted to shareholders today containing notice of the EGM to
be held at Halliwells LLP, St James's Court, Brown Street, Manchester M2 2JF at
11 a.m. on 31 October 2005. At that meeting, a Resolution will be proposed to
empower the Directors to allot equity securities for cash otherwise than in
accordance with the Shareholders' statutory pre-emption provisions.
Further information is contained in the circular and notice of EGM, copies of
which are available free of charge at the Company's offices at Mill House, Mill
Lane, Cheadle, Cheshire SK8 2NT and may also be requested directly from the
Company.
Board recommendation and voting intentions
The Directors consider the Placing to be in the best interests of the Company
and its Shareholders as a whole. Certain members of the board are subscribing
for a total of 444,444 New Ordinary Shares representing 0.3 per cent. of the
Company's current issued share capital.
The completion of the Placing is important for the future growth of the Company
and accordingly, your Directors unanimously recommend that you vote in favour of
all the Resolutions, to be proposed at the EGM, as they intend to do in respect
of their own beneficial holdings amounting in aggregate to 35,266,667 Existing
Shares representing approximately 24.0 per cent. of the existing issued ordinary
share capital of the Company.
Enquiries:
Screen FX PLC 0161 428 5544
David Clark, Chief Executive Officer
Teather & Greenwood 020 7426 9000
Mark Dickenson/Jon Drage
Citigate Dewe Rogerson 020 7638 9571
Patrick Toyne-Sewell/Fiona Bradshaw
This information is provided by RNS
The company news service from the London Stock Exchange
END
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