TIDMSPSM
RNS Number : 6382U
Sports Stars Media plc
02 January 2013
2 January 2013
Sports Stars Media plc
("SSM" or "the Group")
Ronaldo Project & Issue of Equity
SSM signs Cristiano Ronaldo to promote new football venture
SSM, the AIM-quoted sports personality media business, is
pleased to announce that it has entered into an agreement with
Cristiano Ronaldo, one of football's most popular and valuable
players, to promote a new business concept for a worldwide,
crowd-sourced football tournament for adult amateur players.
The Ronaldo project will comprise a worldwide amateur football
league, endorsed and promoted by Cristiano Ronaldo and based on a
new social media network. The project will focus on the notion of
"fair play" and is expected to be launched in October 2013.
Highlights
-- Pioneering a new concept of a crowd sourced football championship.
-- A new social network platform will be the basis for the
administration and interconnection of the real life football
matches.
-- Cristiano Ronaldo and his agent, Polaris, are strategic shareholders in the project.
-- In order to fund the Ronaldo project, SSM announces that it
has today raised an additional GBP711,375 at 1p per new ordinary
share.
-- The Ronaldo project has several revenue opportunities, including:
- global product sponsorship
- monthly subscriptions from participating players
- licensing and franchising rights of the final stage playoff games.
- social network portal and app advertising revenue
- sponsorship of events and teams
- online gamification
-- Ronaldo is currently the most popular sports personality on
Facebook, the world's most popular social network. He has over 52
million Facebook fans and 13 million Twitter followers.
CEO of Sports Stars Media, Ruben Dias, commented:
"I am delighted that Cristiano Ronaldo has endorsed our
crowd-sourced football championship for amateur players. This
unique, worldwide competition, which will harness the power of
football and social media, will commence during 2013 and allow
adults to participate in football at a grassroots level for
prizes."
For further information, please contact:
Sports Stars Media plc +1604 902 2214
Ruben Dias, CEO + 351 932 436 501
www.sportsstarsmedia.com
Nominated Adviser, Cairn Financial Advisers LLP +44 207 148
7900
James Caithie/Avi Robinson
Broker, Dowgate Capital Stockbrokers Limited +44 129 351
7744
Neil Badger
Financial PR, Bishopsgate Communications
Nick Rome/Sam Allen/Matt Low +44 20 7562 3350
sportsstars@bishopsgatecommunications.com
Introduction
The Board of SSM, the AIM-quoted sports personality animation
business, is pleased to announce the establishment of a new concept
involving one of football's most popular and valuable players,
Cristiano Ronaldo (the "Project").
The Project concept of a worldwide amateur football championship
based on a new social media network was conceived shortly before
SSM was admitted to AIM, but could not be implemented until, inter
alia, the necessary image rights could be acquired. The Directors
believe that the Project will be a valuable addition to SSM's
existing animation and digital media activities. The Company has,
therefore, agreed to acquire all intellectual property rights in
the Project from its developers, who are also directors or
shareholders of SSM. The consideration for the acquisition is to be
satisfied by the issue of warrants over new ordinary shares in the
Company ("Warrants") which can only be exercised if future
performance-related conditions are met.
In order to fund the Project, SSM announces that it has today
raised an additional EUR875,000 (GBP711,375) at 1p per new ordinary
share.
Details of the Project
The Project will be incorporated in SSM, pioneering a new
concept of a crowd sourced football championship.
Crowdsourcing, which can occur both online and offline, is a
process that involves outsourcing tasks to a distributed group of
people, in this instance amateur footballers. The difference
between crowdsourcing and ordinary outsourcing is that a task or
problem is outsourced to an undefined public rather than a specific
body.
The Project will establish a worldwide amateur football league,
which is endorsed and promoted by Cristiano Ronaldo and is based on
a new social media network. Ronaldo and his agent, Polaris Sports
Limited ("Polaris"), will be strategic shareholders in the
Project.
It is anticipated that the Project will use Ronaldo's popularity
and social reach to communicate and gain momentum. Ronaldo is
currently the most popular sports personality on Facebook, the
world's most popular social network, and thirteenth most popular of
all Facebook fan pages. He has over 52 million Facebook fans and 13
million Twitter followers. This massive reach will be the key
marketing element to announce and promote the project. A new social
network platform will be developed to support the Project which
will be the basis for the administration and interconnection of the
real life football matches.
The Project will comprise an annual five-a-side championship
where teams of 10 amateur players from anywhere in the world will
compete for cash prizes. Players will be required to sign up to the
social network and it is anticipated they will pay a monthly
participation fee.
Based on geographic location, the network will match teams to
play against each other. Teams will agree on the schedule and
location of each game, play the match and submit the result.
Results and videos of the games will be shared by each team in
real-time on the social platform, enabling a unique social
interaction.
The Project has several revenue opportunities, including:
- global product sponsorship
- monthly subscription from participating players
- licensing and franchising rights of the final stage playoff games
- social network portal and app advertising revenue
- sponsorship of events and teams
- online gamification
A funding requirement of EUR875,000 has been calculated to fund
the following:
- social network web development (portal)
- professional staffing for product management, sales and marketing
- development of mobile applications
- Ronaldo's minimum guaranteed royalty payment in respect of the
first year from launch for the use of his image rights
Terms of theProject
The Company has entered into a promissory contract with Ronaldo
and his agent, Polaris, to incorporate a new subsidiary of SSM
("Newco") to develop and operate the Project. Ronaldo and Polaris
will initially hold, in aggregate, 2 per cent. of the issued shares
but have options to acquire at par value an additional 13 per cent.
shareholding of Newco. These options will be subject to the same
performance conditions as the Warrants described below. If the
Project is successful, therefore, SSM will hold an 85 per cent.
interest in Newco. Polaris will be entitled to nominate one
director to Newco's board. SSM will have pre-emption rights over
the shares in Newco held by Ronaldo and by Polaris and "drag along"
rights in the event of a future third party offer for Newco.
The Company has also entered into an agreement with Multisport
& Image Management (M.I.M.) Limited for the use of Cristiano
Ronaldo's image rights to promote and advertise the Project. For
these rights, SSM will pay a fee of 5% of Newco's earnings before
interest, tax, depreciation and amortisation to the licensor, with
a guaranteed minimum fee payable one year after the project has
been launched to the public. The image rights licence is for a term
expiring on 31 December 2018.
The individuals named in the table below, being founders and
promoters of the Project, have agreed to assign all intellectual
property rights in relation to the Project to SSM in consideration
of the issue of a total of 243,670,090 Warrants over new ordinary
shares of 0.03p each ("Ordinary Shares") in SSM. These Warrants are
exercisable at 1p per new Ordinary Share, being the subscription
price at the time of SSM's admission to AIM, conditional on one or
more of the following criteria being met:
- Signing up of 500,000 bona fide current users to the Ronaldo
project portal; or
- Newco's revenues exceeding EUR2m in any calendar year; or
- Newco's EBITDA exceeding EUR700,000 in any calendar year;
or
- Newco or its business being sold for a price in excess of
EUR4m; or
- SSM's share price being above 2.5p for any consecutive period
of 21 dealing days.
Name Current Holding Current Holding Number of Warrants
(Shares) (%) granted
Ruben Dias* 140,000,000 38.87 124,959,020
Carlos Amaro* 24,000,000 6.66 61,855,535
Pedro Maria* 40,000,000 11.11 14,991,804
Luis Freire* - - 6,247,951
Pedro Belchior 12,000,000 3.33 16,557,890
Jose Maria da
Cunha 12,000,000 3.33 14,057,890
Paulo Catarino
Ribeiro - - 5,000,000
Total 228,000,000 243,670,090
*Director of the Company
In addition to one of the criteria above being satisfied, the
exercise of the Warrants is conditional upon sufficient authorities
to allot shares for cash being in place at the time that the
Warrants are exercised.
Issue of Equity
The Project, as noted above, has an estimated funding
requirement of EUR875,000. The Board of SSM is pleased to announce
that it has completed a placing of 71,137,500 new Ordinary Shares
at 1p per share to raise EUR875,000 (GBP711,375) from new and
existing investors. It is the intention of the Board to utilise
these funds in the development of the Project.
The 71,137,500 new Ordinary Shares will rank pari passu in all
respects with the Ordinary Shares currently in issue. Application
has been made for the 71,137,500 new Ordinary Shares to be admitted
to trading on AIM and it is expected that admission will become
effective and dealings will commence on 8 January 2013.
While the Board of SSM has sufficient authority to allot the
71,137,500 new Ordinary Shares for cash, it will be sending a
circular to shareholders shortly to seek approval for an increase
in the Directors' authority to allot Ordinary Shares for cash
without applying statutory pre-emption rights to cover the exercise
of Warrants described above, and to give the Board the ability to
raise additional working capital by the issue of equity, if
opportunities to do so arise and the Directors consider this to be
in the interests of shareholders.
Related party transaction
The acquisition of the rights in relation to the Project in
consideration of the grant of Warrants to certain of the Directors,
as described above, is a related party transaction to which AIM
Rule 13 applies. Ian Buckley, as the Director independent of the
transaction, considers, having consulted with Cairn Financial
Advisers LLP, SSM's nominated adviser, that the terms of the
transaction are fair and reasonable insofar as the Group's
shareholders are concerned.
Current trading of the existing business
Production of the first series of "Mourinho and the Special
Ones" is on track and the distribution of the Gombby series
continues. Recent contract gains already announced with Al Jazeera
Children's Channel, the Pan-Arab edutainment television station,
and BHRT, the public broadcaster of Bosnia, illustrate the
increasing sales of Gombby around the world but the market for
children's broadcasting generally is weaker than expected at the
time of the IPO in February 2012.
As announced on 20 July 2012, the Company believes that there is
a considerable opportunity in exploiting the digital versions of
its IP as opposed to merely using that IP to create animations to
be shown by traditional broadcasters. To realise this potential, an
online version of the MSO project is already in development and the
Ronaldo project will also exploit this opportunity.
Variation of the vesting terms of the directors' existing
options
At the time of admission to AIM in February 2012, the Directors
were granted a total of 46,800,000 options exercisable at a
subscription price of 1p per new Ordinary Share under the Group's
share option scheme. Half of these options vest if, prior to 1
January 2014, the consolidated accumulated EBITDA of the Group
(before share option charges) derived from audited accounts exceeds
EUR1.5 million and the remainder of these options vest if, prior to
1 January 2014, the consolidated accumulated EBITDA of the Group
(before share option charges) derived from audited accounts reaches
EUR3.5 million. Once vested, the options will be exercisable for
three years, after which time they will lapse.
Given the move into digital media and the development of the
business into new projects, the Directors believe that the vesting
conditions of the existing options are no longer appropriate on
their own and provide a materially less effective incentive to
holders than they did at the date of grant. The Directors have,
therefore, added an alternative vesting condition, being that the
SSM share price closes above 2.5p for a period of 21 consecutive
dealing days. This reflects the fact that SSM is widening its media
exposure to include digital as well as broadcast and, in the
Board's view, effectively aligns option holders' interests with
those of shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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