First Day of Dealings (2171J)

TIDMMFP

RNS Number : 2171J

Music Festivals PLC

28 June 2011

AIM: MFP

28 June 2011

Music Festivals plc

("Music Festivals" or the "Company")

First day of dealings and Admission to trading on AIM

Placing to raise GBP6.5 million and exercise of call options to acquire five festivals

Music Festivals, a company focused on the ownership, development and production of music festivals, is pleased to announce its admission to trading on AIM.

-- Raised GBP6.5 million (gross) through a placing of Ordinary Shares and Convertible Loan Notes;

-- Company will acquire the rights to five festivals the day after commencement of trading;

-- Two established festivals being acquired - Benicassim and Hop Farm - with top global artists headlining;

-- Variety of festivals being acquired to appeal to a wide demographic;

-- Strategy of organic growth and acquisition, both UK and international, to take advantage of the fragmented festivals market; and

-- Experienced management team with proven track record of success with Mean Fiddler Music Group plc.

Vince Power, Chief Executive Officer of the Company, said:

"We are delighted to bring Music Festivals to AIM, with it being the first quoted pure music festivals business, and would like to thank investors for their support. This listing will give everyone the chance to own a part of the thriving live music industry."

Enquires:

 
 Music Festivals plc 
 Vince Power                                      Tel: [phone] 
                                                                 1420 
 
 Merchant Securities Limited (Nominated Adviser 
  and Broker) 
 John East/Virginia Bull                          Tel: [phone] 
                                                                 2200 
 
 Mission Public Relations 
 Andrew Murray-Watson                             Tel: [phone] 
                                                                 7800 
 

Copies of the Admission Document are available on the Company's website (www.musicfestivalsplc.co.uk) and from the offices of Merchant Securities Limited at 51-55 Gresham Street, London EC2V 7HQ.

If, for any reason, the acquisitions of the festivals are not completed by the close of business on the date of the Second Admission, the Company will be treated as an Investing Company under Rule 8 of the AIM Rules.

Placing Statistics

 
 Placing Price                                                          65p 
 Number of Ordinary Shares in issue on First Admission            4,287,413 
 Number of Ordinary Shares in issue on Second Admission          14,689,641 
 Nominal amount of Convertible Loan Notes in issue            GBP5,340,707* 
  following Second Admission 
 Amount being raised under the Placing (before expenses)     GBP6.5 million 
 Market capitalisation at the Placing Price following       GBP9.55 million 
  Second Admission 
 

* assuming a EUR:GBP exchange rate of 1.13

Background

Music festivals have been an integral part of the music industry for many decades, from the Woodstock Festival held in New York State in 1969, which attracted close to 500,000 visitors, to Glastonbury Festival in the UK which was established in 1970 and attracted 1,500 visitors that year. In 2010, 177,500 people attended Glastonbury Festival and tickets for the 2011 festival sold out in hours. It is estimated that approximately 700 music festivals, covering many genres and sizes, are held annually in the UK, with countless more held around the world. Music festivals are firmly established as an integral part of the music scene.

Information on the Group

Music Festivals is focused on the ownership, development, and production of music festivals. Immediately following exercise of the call options, which the Directors have given undertakings to Merchant Securities and certain institutions to exercise, the Group will wholly own two established music festivals, the Festival Internacional de Benicassim in Spain, and the Hop Farm Music Festival in Kent, England. The Group intends to expand its festival portfolio and the Company, together with Vince Power, has entered into call option agreements which will be exercised immediately following First Admission, to acquire companies operating additional music festivals in the UK.

The Benicassim festival is an annual music festival which takes place in the port town of Benicassim, Spain, with a focus on live indie rock, pop and electronic music acts. The first festival took place in 1995, since when it has been held annually. Many world renowned artists have played at the festival including Paul Weller, Kings of Leon, The Chemical Brothers, Blur, Franz Ferdinand, Morrissey, Scissor Sisters, Oasis and The Killers. The 2011 festival is scheduled to take place between 14-17 July 2011, with Arcade Fire and the Strokes as the headline acts.

The Directors are committed to exercising the call options to complete the acquisitions referred to in this announcement. The Company and the Directors have each provided undertakings to Merchant Securities (under the Placing Agreement) and to certain institutions (under the Placing Convertible Loan Note instrument) to do so. If, for any reason, the acquisitions are not completed by the close of business on the date of the Second Admission, the Company will be treated as an Investing Company under Rule 8 of the AIM Rules.

The Placing has been structured into two tranches; the First Placing and the Second Placing. The shares to be issued under the First Placing will be, along with the Existing Ordinary Shares, the subject of the First Admission. The shares to be issued under the Second Placing, together with the Consideration Shares, will be the subject of the Second Admission. Accordingly, the Company will have raised sufficient capital to exercise the call options prior to their exercise, completion of the Acquisitions and completion of the Second Placing. The Company has received advice that this structure is necessary in order to maximise investment from qualifying EIS and VCT investors. Following Second Admission, Vince Power and his associated parties, including Jon Hale, will be interested in 49.51 per cent of the Enlarged Issued Share Capital.

Festival Internacional de Benicassim ("FIB")

History

FIB was launched in 1995 by venue operators Miguel and Jose Moran and magazine editors Luis Calvo and Joako Ezpeleta. The incumbent mayor of Benicassim, Francesc Colomer, welcomed their vision and the economic benefits that hosting a festival in the resort could create. The first festival was held in August 1995 over three nights at the Benicassim Velodrome and attracted a total of 8,000 people.

By 1998, FIB had expanded significantly, with a new location and the launch of additional onsite activities, such as the FIB Fashion Show and the FIB-Act theatre festival. In 1999, an average of 38,000 people attended the festival each day.

In 2005, Vince Power became involved in FIB and took the decision to bring the 2006 festival forward by a month to July, so as to ensure that the growing event did not clash with the peak tourist season - a decision that was backed by the Spanish government and local authorities. This proved a popular decision, with the 2007 festival selling out for the first time in its history by attracting in excess of 150,000 people over four days.

In 2008, FIB's popularity continued, with artists including My Bloody Valentine, Morrissey, The Raconteurs, Siouxsie, and Morente Omega (with Lagartija Nick and Leonard Cohen) all performing. The following year, a new attendance record was set with a total number of attendees in excess of 170,000 over the four days of the festival. The 2009 festival had what the management deemed to be the most important headline acts of FIB's history to date, with Oasis, Kings of Leon, Franz Ferdinand and The Killers.

In 2010, the line-up included one of the few exclusive concerts given by Gorillaz (and their first such concert in Spain) along with Vampire Weekend, The Prodigy, Kasabian, Dizzee Rascal, Hot Chip, Mumford & Sons and The Temper Trap, amongst others.

Artists

Over 100 bands and DJ's performed at FIB in 2009 and over 70 in 2010. The following acts have headlined the festival in recent years:

2006: The Strokes, Scissor Sisters, Morrissey, Depeche Mode, 2ManyDJs

2007: Iggy and the Stooges, Arctic Monkeys, Amy Winehouse, Muse

2008: My Bloody Valentine, Mika, Babyshambles, Gnarls Barkley, The Kills, Morrissey

2009: Oasis, Kings of Leon, Franz Ferdinand, The Killers, Lily Allen

2010: The Prodigy, Dizzee Rascal, Kasabian, Hot Chip, Timo Maas, Gorillaz, Leftfield, DJ Shadow

Artists confirmed for the 2011 festival include Arcade Fire, The Strokes, Arctic Monkeys, Tinie Tempah, Portishead, The Streets, Mumford & Sons and Elbow.

The Hop Farm Music Festival

History

The Hop Farm Music Festival was launched in 2008, initially as a one-day event. The maiden festival was attended by 30,000 people and was headlined by Neil Young. The festival has expanded into a two-day event, with capacity for up to 53,000 people per day and in 2010 approximately 80 artists performed. In 2011, the festival has been expanded to a three day event scheduled to take place on 1-3 July, with Prince headlining the third day.

The Hop Farm Music Festival is distinct among festivals in that it markets itself as a family-oriented event, with an ethos of no sponsorship, no branding and no VIP tickets. The festival is located within 45 minutes from London by train, taking place in the Kent countryside at the Hop Farm Country Park, Paddock Wood.

With so many festivals being prominently sponsored, and featuring a significant element of corporate and VIP entertaining, Vince Power launched the Hop Farm Music Festival in response to festival-goer feedback, as a family-friendly, sponsorship-free event. Festival-goers had indicated that they were growing tired of overly commercial festivals where corporate branding and prominent sponsors' messages seemed to detract from the music.

In addition to musical artists, the Hop Farm Music Festival hosts other attractions. In 2010, the festival hosted a "Late Night Comedy Show" featuring a line-up of well-known comedians including Bob Mills, Keith Platt, Christian Riley and Lee Nelson. Fairground attractions and "Celebrity Football" were other successful components of the festival.

Artists

The Hop Farm Music Festival is unusual in that the headline acts are deliberately selected to appeal across generations and genres. The following acts have performed at the festival since its inception:

2008: Neil Young, Primal Scream, Supergrass

2009: Fratellis, Paul Weller, Florence and the Machine

2010: Bob Dylan, Ray Davies, Pete Doherty, Blondie, Van Morrison, Seasick Steve

Artists currently confirmed for the 2011 festival include Prince, Eagles, Bryan Ferry, Brandon Flowers, Death Cab For Cutie, Morrissey, Lou Reed, and Iggy and the Stooges.

New Festivals

The Group has entered into call option agreements with Vince Power to acquire the rights to three new festivals and is intending to promote these festivals during 2011 and beyond; The Feis Festival, a classical music festival and a pop music festival.

The Feis Festival

The Feis Festival is a new two-day Irish-focused music festival which was held on 18-19 June 2011 in London's Finsbury Park. The Feis Festival follows in a long tradition of music festivals held in this location with an Irish bias. Previous festivals of this nature operated by companies associated with Vince Power have featured performances from The Pogues, Bob Dylan, The Wonderstuff, Neil Young, Counting Crows and the Charlatans. The first Feis Festival performed in line with the Directors' expectations.

Classical music festival

Historically hosted in the Royal Horticultural Society's Gardens at Wisley, near Woking in Surrey, this three-day music festival was first held in 2002 and is next scheduled to take place in June 2012. The open-air picnic event focuses on classical music, with previous line-ups including The National Symphony, The Royal Philharmonic Concert Orchestra, BBC Big Band, Katherine Jenkins, Dame Kiri Te Kanawa, Russell Watson, and Julian Lloyd Webber.

Pop music festival

This new festival is intended to be a two-day pop focused event and is expected to be held at Eridge Park, a county estate near Tunbridge Wells in Kent, in August 2012 over the bank holiday weekend. The Directors have confirmed that the Company is currently in discussions with acts for the 2012 festival.

Key Strengths of the Group

The Directors believe that the Group has the following key strengths:

Revenue visibility and quality of earnings

The Group sells advance "Early Bird" tickets for both the Hop Farm and FIB festivals several months in advance of the festivals being held, providing it with an early visibility of earnings. In addition, the Group is not reliant on one single major customer, due to its consumer base comprising thousands of festival attendees.

Established festival brands

FIB has been established for over 16 years and the Directors believe that this longevity, and the high standards maintained at the festival, has enabled it to cement its position as Europe's premier festival outside the UK. The Hop Farm will hold its fourth annual festival in 2011 and the Directors believe that it has already firmly established itself as one of the leading festivals in the UK.

Strong management team

The Group has a creative and commercially proven management team with a strong track record of developing successful music festivals. Chief Executive, Vince Power, in 2006 was appointed honorary CBE for his promotion of the live music industry in the UK. In addition, Jon Hale, Finance Director, has considerable experience of working within the finance function of publicly listed companies, specifically in the music and entertainment arenas, having previously been a director of the Mean Fiddler Music Group plc (a company at which he worked closely with Vince Power) and The Old Monk Company plc, a managed pub group which was traded on AIM until 2002.

Proven Track Record with Mean Fiddler Music Group plc

Vince Power is the founder and former Chairman of Mean Fiddler Music Group plc, which became the largest live music venue company in the UK, owning the Astoria, the Garage, the Forum, the Jazz Cafe, the Stratford Rex, Subterania and Powerhaus. The Mean Fiddler Music Group then expanded to acquire festivals including Reading, Leeds and Glastonbury. Under Vince's direction, the Mean Fiddler Music Group developed from one venue into an established brand overseeing eight music festivals, 14 live music venues, and numerous clubs, restaurants and bars.

In 2004, a company owned by Clear Channel Entertainment (Music) UK Limited and Gaiety Investments acquired the Mean Fiddler Music Group for GBP37.9 million.

Strategy

Festival growth

The Group's strategy is to achieve strong organic growth by maximising revenue opportunities at its established FIB and Hop Farm festivals. The Directors believe that such opportunities will include extending the duration of the two festivals, together with expanding the capacity and number of tickets that can be sold.

Acquisition and development of further festivals

In addition to driving the organic growth of its two main festivals, the Directors intend to expand the Company's festival portfolio through acquisition. Vince Power has a proven track record of creating value through a buy-and-build strategy with the Mean Fiddler Music Group plc and intends to adopt a similar strategy with Music Festivals. The acquisition of new music festivals will help the Company to diversify risk and reduce the reliance upon any one event. In addition, there are opportunities to utilise the existing infrastructure when establishing new festivals and acquiring existing festivals, thereby creating cost efficiencies. Furthermore, the increased scale from the addition of new festivals will improve the Company's ability to negotiate with artists and/or their managers and booking agents.

Market Opportunity

The festival industry is very fragmented. In Britain alone there were over 700 festivals in 2010, which in the Board's opinion, provides an opportunity for consolidation of the sector. The Guardian newspaper reported that the top 200 events in 2010 were estimated to have contributed over GBP450 million to the UK economy in terms of ticket sales, travel, accommodation and food, which highlights the huge earning potential that the festival industry presents.

In addition to the opportunity to expand its UK festival portfolio, the Directors also believe that there is an opportunity to expand the Company's presence in Europe, having established detailed knowledge of the European festival industry through FIB.

Directors

David James Mansfield (Non-executive Chairman), aged 57, has spent his entire career in the media industry and was the chief executive of Capital Radio plc from 1997 to 2005. Following Capital's merger with GWR Group plc he was chief executive officer of GCap Media plc. Prior to joining Capital, he was at Thames Television plc and Scottish Television plc. David Mansfield is a non-executive director of Ingenious Media Holdings plc, executive director of The Drive Partnership and chairman of Radio Joint Audience Research (RAJAR), Student Aid Limited, LoveLive TV Limited and 1801 Group Limited.

John Vincent "Vince" Power (Chief Executive Officer), aged 64, founded The Mean Fiddler music venue in Harlesden and The Mean Fiddler Organisation in 1982. The company became Mean Fiddler Music Group Plc in 2001, where Vince Power acted as chairman until the sale of the group in 2005. In addition, he was operational manager of the Glastonbury Festival from 2002 to 2005. In 2006, Vince Power was appointed honorary CBE for services to the music industry and in 2008, he launched the Hop Farm Music Festival, now an annual event. Vince Power has been greatly involved in a number of charitable organisations, particularly Cradle, a Bosnian children's charity, as well as the Phillip Hall Memorial Fund, UNICEF, Human Rights Watch and the Depression Alliance.

Jonathan "Jon" James Hale (Finance Director), aged 43, is an experienced Chartered Management Accountant and the former Group Finance Director and acting Group Chief Operating Officer of Mean Fiddler Music Group plc. Jon Hale orchestrated and managed the sale of Mean Fiddler to Clear Channel Entertainment UK Limited (now known as Live Nation) and Gaiety Investments Limited in 2005. Prior to that he was finance director for pub group The Old Monk Company plc, another AIM quoted company. Jon Hale is a non-executive director of Cash Point Machines Limited, a Trustee of Wessex Archaeology Limited and graduated from the University of Westminster with a BA (Hons) in Business Studies.

Noel Lyons (Non-executive Director), aged 45, started his career in accounting and progressed from there to management and director level. He has worked for such companies as BP Amoco, Coca Cola, Kentz Corporation plc and Oilinvest International NV and has worked in diverse locations such as Africa and the Middle East. Noel Lyons has been involved in several listings on AIM in both a management and advisory capacity and is currently a director and chief executive officer of Circle Opportunities plc, a PLUS-quoted company. He has an MBA and a Masters degree in Accounting and Finance from DIT Ireland.

Andrew Nicholas Sutton ACA (Non-executive Director), aged 57, is a chartered accountant and has worked in the financial services sector and public markets with both private and corporate clients for over 30 years. After qualifying as a chartered accountant with Price Waterhouse, he spent seven years with Citigroup before joining The Man Group in 1991, where he was corporate finance director responsible for its successful flotation on The London Stock Exchange in 1995. Subsequently, in that year, he was appointed to The Man Group plc board as group finance director until his retirement from the company in 2000. Since 2000, Andrew Sutton has concentrated on promotion and production of live entertainment and management of performing artists and has produced a number of live music and cabaret and variety shows. In 2009, he was executive producer of the acclaimed EMI film "Burlesque Undressed" which has been screened worldwide.

Michael Arthur Christopher Gelardi (Non-executive Director), aged 61, started his professional life as a musician, following which, having taken a business studies course, he founded an international music and entertainment consultancy to the hotel and leisure industries, servicing such companies as Sheraton, Marriott, Southern Sun and Forte Hotels. His consultancy business was acquired by the Forte Hotel and Leisure Group in 1978 and for 18 years he headed Grosvenor Productions, the music, entertainment and production division of the Forte Group, which he developed into one of the largest entertainment buying companies in Europe. In his career he has produced countless shows and live events throughout the world, including corporate events, concerts, cabaret shows and festivals, and he has worked with numerous major artists.

 
                Expected timetable of principal events 
 
 First Admission effective and dealings commence in            28 June 
  the Existing Ordinary Shares and the First Placing              2011 
  Shares on AIM 
 
 CREST accounts credited with the First Placing Shares         28 June 
                                                                  2011 
 
 Second Admission effective and dealings commence in           29 June 
  the remaining New Shares on AIM                                 2011 
 
 CREST accounts credited with the Second Placing Shares,       29 June 
  the Consideration Shares and the Ordinary Shares being          2011 
  issued following conversion of the Pre-IPO Convertible 
  Loan Notes 
 
 Expected completion of the Acquisitions                       29 June 
                                                                  2011 
 
 Despatch of definitive certificates, where applicable,    6 July 2011 
  in respect of the Convertible Loan Notes and the New 
  Shares by 
--------------------------------------------------------  ------------ 
 
 
                                  Definitions 
          The following definitions apply throughout this announcement 
                     unless the context requires otherwise: 
 
 "Acquisitions"            the acquisitions by the Company of the entire 
                            issued share capital of Benicassim, Kent Festival, 
                            Finsbury Park, EP Events and SP Events 
 "Admission"               the First Admission and the Second Admission 
 "AIM"                     the AIM market of the London Stock Exchange 
 "AIM Rules                the AIM Rules for Companies issued by the London 
                            Stock Exchange as amended from time to time 
 "Benicassim"              Benicassim Limited, a company registered in 
                            England and Wales with company number 05679084 
 "Board" or "Directors"    the directors of the Company 
 "Business Days            a day (excluding Saturdays, Sundays and public 
                            holidays in England and Wales) on which clearing 
                            banks generally open in London for transactions 
                            of normal banking business 
 "City Code"               the City Code on Takeovers and Mergers 
 "Company" or "Music       Music Festivals plc, a company registered in 
  Festivals"                England and Wales with company number 07389861 
 "Concert Party"           Vince Power, Brigid Power Ryce, Patrick Power 
                            Ryce, Maurice Power, Sharon Power and Jon Hale 
 "Connected Persons"       has the meaning given by Section 839 Income 
                            and Corporation Taxes Act 1988 
 "Consideration            the EUR2,645,000 8 per cent. convertible loan 
  Convertible Loan          notes 2016 
  Notes" 
 "Consideration            the Ordinary Shares to be issued on completion 
  Shares"                   of the call options the Company has entered 
                            into to acquire Benicassim, Kent Festival, 
                            Finsbury Park, EP Events and SP Events 
 "Convertible Loan         together, the Consideration Convertible Loan 
  Notes" or "CLNs"          Notes and the Placing Convertible Loan Notes 
 "CREST"                   the computerised settlement system to facilitate 
                            the transfer of title of shares in uncertificated 
                            form, operated by CRESTCo Limited 
 "EIS"                     the Enterprise Investment Scheme and related 
                            reliefs as detailed in Income Tax Act 2007, 
                            Part V and in sections 150A to 150C and Schedule 
                            5B and 5BA of the Taxation of Chargeable Gains 
                            Act 1992 (as amended) 
 "Enlarged Issued          the 14,689,641 Ordinary Shares in issue immediately 
  Share Capital"            following Admission 
 "EP Events"               EP Events Limited, a company registered in 
                            England and Wales with company number 07483554 
 "Existing Ordinary        the 500,001 Ordinary Shares in issue at the 
  Shares"                   date of this announcement 
 "FIB"                     Festival Internaticional de Benicassim 
 "Finsbury Park"           Finsbury Park Events Limited, a company registered 
                            in England and Wales with company number 07483471 
 "First Admission"         the effective admission of the Existing Ordinary 
                            Shares and the First Placing Shares to trading 
                            on AIM, in accordance with the AIM Rules 
 "First Placing"           the placing of the First Placing Shares and 
                            GBP660,000 nominal of Placing Convertible Loan 
                            Notes pursuant to the Placing Agreement 
 "First Placing            the 3,787,412 Ordinary Shares to be issued 
  Shares"                   pursuant to the Placing Agreement 
 "Group"                   the Company and its subsidiary undertakings 
                            after Admission and from time to time 
 "Kent Festival"           Kent Festival Limited, a company registered 
                            in England and Wales with company number 07196543 
 "London Stock Exchange"   London Stock Exchange plc 
 "Merchant Securities"     Merchant Securities Limited 
 "New Shares"              the Placing Shares, the Consideration Shares 
                            and the Ordinary Shares to be issued following 
                            the conversion of the Pre-IPO Convertible Loan 
                            Notes, all to be issued conditional on First 
                            Admission or Second Admission, as relevant 
 "Ordinary Shares"         ordinary shares of 10p per share in the Company 
 "Placing"                 the conditional placing of the Placing Shares 
                            at the Placing Price and the Placing Convertible 
                            Loan Notes pursuant to the Placing Agreement 
 "Placing Agreement"       the conditional agreement dated 22 June 2011 
                            between the Company, the Directors and Merchant 
                            Securities 
 "Placing Convertible      the GBP3,000,000 8 per cent. convertible loan 
  Loan Notes"               notes 2016 
 "Placing Price"           65p per Placing Share 
 "Placing Shares"          the 5,421,259 Ordinary Shares to be issued 
                            by the Company pursuant to the Placing 
 "Pre-IPO Convertible      the GBP250,000 convertible loan note issued 
  Loan Notes"               on 6 December 2010 
 "Second Admission"        the effective admission to trading on AIM of the 
                           Second Placing Shares, the Consideration Shares and 
                           the Ordinary Shares to be issued following the 
                           conversion of the Pre-IPO Convertible Loan Notes 
 "Second Placing           the 1,633,847 Ordinary Shares to be issued 
  Shares"                   pursuant to the Placing Agreement 
 "Shareholders"            the holders of Ordinary Shares 
 "SP Events"               SP Events Limited, a company registered in 
                            England and Wales with company number 07489676 
 "UK"                      the United Kingdom 
 "VCT"                     a venture capital trust for the purposes of 
                            Income Tax Act 2007, Part VI 
 

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCFRMRTMBTTBRB