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Share Name | Share Symbol | Market | Type |
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Conafi SpA | BIT:CNF | Italy | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.0015 | 0.77% | 0.197 | 0.193 | 0.198 | 0.198 | 0.193 | 0.194 | 44,513 | 02:01:12 |
RNS Number:0301J Stonesthrow Media Limited 21 March 2003 FOR IMMEDIATE RELEASE 21 March 2003 RECOMMENDED CASH OFFER BY BEAUMONT CORNISH LIMITED ("BEAUMONT CORNISH ") ON BEHALF OF STONESTHROW MEDIA LIMITED ("STM") TO ACQUIRE CHANNELFLY PLC ("CHANNELFLY") This announcement is not for release, publication or distribution in whole or in part, in or into the United States, Canada, Australia, Japan or Ireland. Introduction The board of STM and the Independent Director of Channelfly announce that they have agreed terms for a recommended cash offer to be made by Beaumont Cornish on behalf of STM for the entire issued share capital of Channelfly. STM is a vehicle established for the sole purpose of providing the necessary funds to effect the management buy out of Channelfly, and to ensure working capital for the ongoing business. As James Wyllie is the only Director of Channelfly who is not participating in the management buy out he, as the Independent Director, has considered the Offer for the purposes of recommending to the Channelfly Shareholders whether or not to accept the Offer. The Independent Director, having been so advised by Grant Thornton Corporate Finance, considers the terms of the Offer to be fair and reasonable and recommends that Channelfly Shareholders accept the Offer. In providing advice to the Independent Director, Grant Thornton Corporate Finance has taken into account the commercial assessments of the Independent Director. STM has received from certain Channelfly Shareholders undertakings to accept the Offer, in respect of 27,687,059 Channelfly Shares, representing approximately 57.7 per cent. of the existing Channelfly Shares. Further details of the Committed Shareholders of Channelfly and these undertakings, including details of the circumstances in which they cease to be binding, are set out in Appendix 2 to this announcement. The Offer On behalf of STM, Beaumont Cornish will offer to acquire, on the terms and subject to the conditions set out in Appendix 1 of this announcement and the formal offer document to be sent to Channelfly Shareholders and the Form of Acceptance the whole of the issued and to be issued share capital of Channelfly on the following basis: for each Channelfly Share 2.175 pence in cash The Offer will value the whole of the issued share capital of Channelfly at approximately #1,044,089 and represents a premium of 24.29 per cent. over the Closing Price of 1.75 pence per Channelfly Share on 20 March 2003, being the last business day prior to the announcement of the Offer. The Offer will extend to all Channelfly Shares unconditionally allotted or issued on the date on which the Offer is made and to any further Channelfly Shares unconditionally allotted or issued while the Offer remains open for acceptance (or by such earlier date as STM may, subject to the City Code, decide). The Channelfly Shares will be acquired by STM fully paid and free from all liens, equities, charges, encumbrances, pre-emption rights and other third party interests of whatever nature and together with all rights now or hereafter attaching to them, including the right to receive and retain all dividends and other distributions (if any) declared, made or paid after the date of the announcement of the Offer. The Share Alternative It is a requirement of STM that certain members of Channelfly's management should commit to receive new STM Shares in lieu of the cash consideration to which they will otherwise be entitled under the Offer. In order to comply with the provisions of the City Code which requires that all shareholders should be treated alike, STM will be making this Share Alternative available to all Channelfly Shareholders, irrespective of whether this is likely to be attractive to them. Pursuant to the Share Alternative, Channelfly Shareholders (other than certain Overseas Shareholders including those resident in the United States) who validly accept the Offer may (subject to the terms to be set out in the formal offer document to be sent to Channelfly Shareholders) elect to receive STM Shares in exchange for their Channelfly Shares instead of all of the cash consideration to which they would otherwise be entitled under the Offer on the following basis: for each Channelfly Share 0.02175 STM Shares The Share Alternative may only be accepted in respect of each Channelfly Shareholder's entire holding. The STM Shares issued under the Share Alternative will be issued credited as fully paid and entitlements to STM Shares will be rounded down to the nearest share and the balance will be satisfied in cash. The STM Shares issued under the Share Alternative will rank for dividends and other distributions declared made or paid pari passu with all other STM Shares in issue. STM Shares are not and will not be transferable, except in accordance with the articles of association of STM. As detailed in Appendix 2 to this announcement, the Committed Channelfly Shareholders have given undertakings to elect to take up 602,185 STM Shares under the Share Alternative. If no other Channelfly Shareholders elect for the Share Alternative, the Committed Channelfly Shareholders will own approximately 50 per cent. of the STM Shares in issue following completion of the Offer. If all other Channelfly Shareholders elect for the Share Alternative in full, the Committed Channelfly Shareholders will own approximately 36.6 per cent. of the STM Shares in issue following completion of the Offer. An estimate of the value of the STM Shares will be provided in the formal offer document to be sent to Channelfly Shareholders. The price which STM investors have paid for each STM Share now in issue is #1 being the par value of such shares. Before electing for the Share Alternative, Channelfly Shareholders are advised to consider the following factors: i. STM is a newly formed, unlisted company which currently has no market in its shares and, consequently, the STM Shares may be difficult to sell; ii. STM has no plans to pursue a public quotation or dealing facility for the STM Shares on a recognised investment exchange or other market; iii. STM will not be subject to the disclosure and corporate governance requirements of AIM or any recognised investment exchange; iv. STM has articles of association which contain no minority protection rights (other than statutory rights); v. The STM Shares will be subject to pre-emption rights on transfer and to "drag along/tag along" rights; and vi. although the Share Alternative enables Channelfly Shareholders to participate indirectly in the future of Channelfly as a private company, there is no certainty in respect of future distributions on, or realisations of any investment in STM. Any shareholder considering electing for the Share Alternative should note that the Independent Director, having been so advised by Grant Thornton Corporate Finance, is making no recommendation to Channelfly Shareholders in respect of the Share Alternative. The Share Alternative will be conditional on the Offer becoming or being declared unconditional in all respects. Background to and reasons for the Offer Over the past three years, Channelfly has followed a strategy of building an integrated group of businesses focussed on the independent music sector in the UK. The Group has had some success in achieving this aim; however the Group continues to face deteriorating market conditions in the music industry as well as a decline in media spending by advertisers. For the year ended 31 July 2002, Channelfly reported a retained loss on ordinary activities before and after taxation of #(5,040,000). The financial statements for the period noted a "fundamental uncertainty" in respect of the application of the "going concern basis" and made reference to the need to raise additional working capital. The board of STM understands that Channelfly has not been able to secure any such funding from sources other than as proposed by STM. It is in this environment that the board of STM believe that they can bring both management and financial expertise to assist the Group. In addition, the directors of STM have stated that on the basis that the Offer becomes or is declared unconditional in all respects, STM would be able to provide funding of up to #300,000 to support the Group's working capital and other requirements. The directors of STM believe that the Channelfly Share price has not adequately reflected the underlying potential of Channelfly's assets and this, coupled with Channelfly's cash constraints and funding requirements has resulted in the board of Channelfly reconsidering how best to achieve its strategy of delivering shareholder returns. In common with a number of other listed companies, the conclusion reached by the board was that Channelfly Shareholders' interests would be best served by securing an attractive cash bid for Channelfly. The STM Directors believe that, as a private company, Channelfly will be able to develop its business utilising debt funding without the costs, obligations and constraints of listed company status. Following the Offer becoming or being declared unconditional in all respects, STM intends to build upon the progress made to date by Channelfly. The Offer therefore represents an opportunity for Channelfly Shareholders to realise cash for their Channelfly Shares. Information on Channelfly Channelfly is a multi-media music group focussed primarily on a youth audience. The company was founded in April 1999 and raised #3.2 million in November 1999 when it floated on AIM. The Group has, in the period since that date, acquired and developed a number of complementary businesses in the UK music market. The business strategy of Channelfly has been to bring together under one roof the key elements required to launch new bands in the independent ("indie") music sector. These elements being: access to audience; management; promotion; and media exposure. In each of these areas Channelfly has developed stand-alone business units capable of serving bands in which the Group has an economic interest as well as being able to service the music industry at large. The directors of STM believe that a new business model is emerging. The digital age means that merely representing artists in relation to their recordings is unlikely to bring commercial success. Involvement in all areas of activity, with the opportunity to generate multiple revenue streams is essential. Channelfly represents an integrated approach at the grass-roots of the music business. Information on STM STM is a newly incorporated private limited company incorporated on 30 August 2002 and registered in England and Wales with registered number 4522388. STM was formed for the purpose of making the Offer and has raised #940,000. Apart from entering into the arrangements necessary to raise this finance and regulate the relationship between existing STM shareholders and to enable STM to make the Offer, STM has not traded since its incorporation. The directors of STM are Adam Driscoll, Philip Murphy, Charles McIntyre and Alistair Mackenzie. Adam Driscoll began his career in business publishing and in 1994 led the management buy-out of A4 Publications Limited, a Midlands-based trade press publisher, from Storm Group Plc. He became Chief Executive of A4 Publications (which specialises in reporting developments in the intellectual property/ licensing markets) and built it into one of the most successful in its field. A4 Publications was floated on OFEX in July 1997. In May 1999, he co-founded Channelfly and floated it on the AIM stock market in November 1999. Adam Driscoll resigned as A4's Chief Executive in October 1999, becoming a non-executive chairman, in order to concentrate his time on the development of Channelfly. In addition to his role as Chief Executive of Channelfly, Adam Driscoll is the Deputy Chairman of Campus Media plc, a specialist student media and marketing business. Philip Murphy qualified as a solicitor with Wragge & Co in 1992. In 1996 he left to become legal director of Entertainment Online Limited, a computer games related online entertainment company. From May 1998 until March 1999 he was commercial director and company secretary of Midland Software Limited, a supplier of human resources software. Philip co-founded Channelfly with Adam Driscoll in May 1999, and, as Group Managing Director, is responsible for the day-to-day running of the Group's operations and finance function. Charles McIntyre began his career in the publishing industry before joining the investment banking arm of Apax Partners in 1991. Over the following years, Charles helped build Apax Partners media franchise with such transactions as the high profile buy-out of Virgin Radio, a national commercial radio station in the UK, by Chris Evans. In 1999, along with other senior management of the firm, Charles participated in the buy-out of the investment banking division under the new name of Altium Capital. Alistair Mackenzie was formerly the finance director of Jazz FM plc, the radio and music business that was sold to the Guardian Media Group in July 2002. He was instrumental in overseeing the extension of the company's revenue from traditional radio advertising income to new areas including compact disk sales, music events, corporate entertainment and on-line media. Parties who have founded STM are a number of private individuals, including Charles McIntyre details of whom are set out above and Richard Thompson, details of whom are set out below. Richard Thompson has been a director, investor and shareholder in a number of companies involved in a range of sectors including media and leisure. He was Chairman of Queens Park Rangers, a director of Leeds Sporting plc, the owner of Leeds United FC, a director of Civilian Content Plc, an AIM listed company dealing in film production and distribution and most recently has been a shareholder of Macintosh Limited and Riverhawk Investments Limited. STM holds no Channelfly Shares. However, the directors of STM are acting, and the other parties set out in Appendix 2 to this announcement may be considered to be acting, for the purposes of the City Code in concert with STM and those who hold Channelfly Shares are Committed Channelfly Shareholders, details of whom are included in Appendix 2 to this announcement. Further information on STM will be set out in the formal offer document to be sent to Channelfly Shareholders. Compulsory acquisition and de-listing Subject to the Offer becoming or being declared unconditional in all respects, and if sufficient acceptances of the Offer are received and/or Channelfly Shares are otherwise acquired, STM intends to apply the provisions of sections 428 to 430F of the Companies Act to acquire compulsorily any outstanding Channelfly Shares. STM also intends to procure that Channelfly applies to the London Stock Exchange for the cancellation of trading of Channelfly Shares from the Alternative Investment Market. Financing of the Offer Full acceptance of the Offer (assuming valid elections for the Share Alternative from only the Committed Channelfly Shareholders) would require a cash payment of approximately #441,896 by STM, which will be funded out of resources raised by STM by way of subscription for new STM Shares and the issue of STM loan notes. Beaumont Cornish is satisfied that the necessary financial resources are available to STM to satisfy full acceptance of the Offer. Undertakings to accept the Offers As set out in Appendix 2 to this announcement STM has received undertakings to accept the Offer from the Committed Channelfly Shareholders, who together hold 27,687,059 Channelfly Shares, representing approximately 57.7 per cent. of the existing issued ordinary share capital of Channelfly, of which approximately 24.7 per cent. is held by Management. Pursuant to these undertakings, the Committed Channelfly Shareholders have undertaken to elect under the Share Alternative to receive STM Shares to such an extent that they will thereby receive, in aggregate, 602,185 STM Shares representing approximately 50 per cent. of the total issued share capital of STM as enlarged by the issue of such shares. These undertakings will continue to be binding in the event of any competing offer for Channelfly. Management & Employees The Independent Director has agreed to resign from the board of Channelfly if the Offer becomes or is declared unconditional in all respects. The board of STM has given assurances to the Independent Director that, following the Offer becoming or being declared unconditional in all respects, the existing employment rights, including pension rights, of the employees of the Channelfly Group will be fully safeguarded. Management will continue to be remunerated through their existing service contracts with Channelfly. The Channelfly Share Option Scheme The Offer will extend to any Channelfly Shares unconditionally allotted or issued pursuant to the exercise of options granted under the Channelfly share option scheme. If the Offer becomes or is declared unconditional in all respects, appropriate proposals will be made to Channelfly option holders. Offer Document The formal offer document will be despatched to Channelfly Shareholders shortly. Enquiries: Beaumont Cornish Limited Roland Cornish 020 7628 3396 for Stonesthrow Media Limited Felicity Geidt Grant Thornton Corporate Finance Philip Secrett 0870 991 2578 for Channelfly Appendix 3 contains definitions of certain terms used in this announcement. Appendix 4 contains the basis of calculation and sources of information. The Offer will be made on the terms and subject, inter alia, to the conditions which are set out in Appendix 1 and to be set out in the formal offer document and the Form of Acceptance to be sent to Channelfly Shareholders and such further terms as may be required to comply with the provisions of the City Code. The availability of the Offer to persons not resident in the UK may be affected by the laws of the relevant jurisdiction. Persons who are not resident in the UK should inform themselves about and observe any applicable requirements before taking any action in relation to the Offer. This announcement does not constitute an offer or invitation to purchase any securities. The Offer will not be made directly or indirectly, in or into, or by use of the mails of, or by any other means or instrumentality (including, without limitation, facsimile transmission or telephone) of interstate or foreign commerce of, or any facilities of a national securities exchange of the United States, Canada, Australia, Japan or Ireland and will not be capable of acceptance by any such use, means instrumentality or facilities or within the United States, Canada, Australia, Japan or Ireland. Accordingly, copies of this announcement are not being, and must not be, mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia, Japan or Ireland. The STM Directors accept responsibility for the information contained in this announcement other than the information relating to the recommendation of the Offer by the Independent Director and that relating to the Channelfly Group, the directors of Channelfly and members of their immediate families and persons connected with them. Subject as aforesaid, to the best of the knowledge and belief of the STM Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. The Channelfly Directors accept responsibility for the information contained in this announcement relating to the Channelfly Group, the directors of Channelfly and members of their immediate families and persons connected with them other than that relating to the recommendation of the Offer by the Independent Director. To the best of the knowledge and belief of the Channelfly Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. The Independent Director, being James Wyllie, accepts responsibility for the information contained in this announcement relating to the recommendation of the Offer by the Independent Director. To the best of the knowledge and belief of the Independent Director (who has taken all reasonable care to ensure that such is the case), the information contained in this announcement for which he is responsible is in accordance with the facts and does not omit anything likely to affect the import of such information. Beaumont Cornish Limited, which is regulated by the Financial Services Authority, is acting exclusively for STM and no one else in connection with the Offer and will not be responsible to anyone other than STM for providing the protections afforded to customers of Beaumont Cornish Limited for providing advice in relation to the Offer. This announcement has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 by Beaumont Cornish Limited of Georgian House, 63 Coleman Street, London EC2R 5BB. Grant Thornton Corporate Finance, which is regulated by the Financial Services Authority, is acting exclusively for Channelfly and no one else in connection with the Offer and will not be responsible to anyone other than Channelfly for providing the protections afforded to customers of Grant Thornton Corporate Finance for providing advice in relation to the Offer. Appendix 1 Conditions of the Offer 1. Conditions The Offer will be subject to the following conditions: (a) valid acceptances of the Offer being received (and not, where permitted, withdrawn) by 3.00 p.m. on the first closing date of the Offer (or such later time(s) and/or date(s) as STM may, with the consent of the Panel or in accordance with the rules of the City Code decide) in respect of not less than 75 per cent in nominal value (or such lesser percentage as STM may decide) of Channelfly Shares to which the Offer relates, provided that this condition will not be satisfied unless STM shall have acquired, or agreed to acquire, whether pursuant to the Offer or otherwise, Channelfly Shares carrying in aggregate more than 75 per cent of the voting rights normally exercisable at general meetings of Channelfly, including for this purpose (except to the extent otherwise agreed with the Panel) any such voting rights attaching to any Channelfly Shares that are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances and whether pursuant to the exercise of any outstanding subscription or conversion rights or options or otherwise and for the purposes of this condition: (A) the expression "Channelfly Shares to which the Offer relates" shall be construed in accordance with sections 428 to 430F of the Act; (B) Channelfly Shares which have been unconditionally allotted shall be deemed to carry the voting rights which they will carry upon issue. (b) No government or governmental, quasi-governmental authority (whether supranational, national, regional, local or otherwise) or statutory or regulatory body or investigative body or other authority (including any anti-trust or merger control authority), court, trade, agency, professional association, institution or environmental body or (without prejudice to the generality of all the foregoing) any other similar person or body in any relevant jurisdiction (each a "Relevant Authority") having decided to take, institute or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, order or decision or taken any other steps which would or might: (i) make the Offer or its implementation, or the proposed acquisition of any Channelfly Shares by STM, void, illegal or unenforceable under the laws of any relevant jurisdiction or otherwise, directly or indirectly materially restrain, prohibit, restrict or delay the Offer, its implementation or such proposed acquisition by STM, or impose additional conditions or obligations with respect thereto, or otherwise materially challenge or adversely interfere therewith; (ii) result in a material delay in the ability of STM or render STM unable to acquire all or some of the Channelfly Shares or other securities in Channelfly or require, prevent or delay a divestiture by STM of any such shares or securities to an extent which is material in the context of STM or any member of the Channelfly Group as a whole; (iii) require, prevent or delay the divestiture by STM or by Channelfly or any of its subsidiaries or subsidiary undertakings or any joint venture, partnership, firm or company in which any of them has a substantial interest (together the "Channelfly Group") of all or any material portion of their respective businesses, assets or properties or impose any material limitation on the ability of any of them to conduct all or any material portion of their respective businesses and to own all or any material portion of their respective assets or properties; (iv) impose any material limitation on the ability of STM or any member of the Channelfly Group to acquire, or hold or to exercise effectively, directly or indirectly, any rights of ownership in respect of shares or other securities (or the equivalent) in any member of the Channelfly Group or to exercise management control over Channelfly or any other member of the Channelfly Group to an extent which is material in the context of STM or any member of the Channelfly Group as a whole; (v) otherwise adversely affect the business, assets, or profits of the Channelfly Group, taken as a whole to an extent that is material in the context of the Channelfly Group taken as a whole; (vi) require any member of STM or the Channelfly Group to acquire or offer to acquire any Channelfly Shares or other securities (or the equivalent) in any member of the Channelfly Group owned by any third party to an extent which is material in the context of STM or any member of the Channelfly Group as a whole; (vii) result in STM having to dispose of any shares or other securities (or the equivalent) in any member of the Channelfly Group; and all applicable waiting and other time periods during which any such Relevant Authority could decide to take, institute or threaten any such action, proceeding, suit, investigation, enquiry or reference or otherwise intervene having expired, lapsed or been terminated; (c) all necessary filings and applications in connection with the Offer or its implementation having been made, all appropriate waiting periods (including any extensions thereof) in respect of the Offer or its implementations under any applicable legislation or regulations of any relevant jurisdiction having expired, lapsed or been terminated and all authorisations, orders, recognitions, grants, consents, licences, confirmations, clearances, permissions and approvals ("Authorisations") which in the reasonable opinion of STM are necessary or reasonably considered appropriate for or in respect of the Offer and the proposed acquisition of any Channelfly Shares or other securities in, or control of, Channelfly by STM or which are necessary for any member of the Channelfly Group to carry on its business having been obtained in terms and in a form satisfactory to STM (acting reasonably) from all appropriate Relevant Authorities or other bodies with whom the Channelfly Group has entered into contractual arrangements and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise unconditional and no intimation or notice of an intention to revoke or not to renew any of the same having been received. (d) save as publicly announced by Channelfly (by delivery of an announcement to a Regulatory Information Service) or save as disclosed in writing by or on behalf of Channelfly to STM or its advisers prior to 21 March 2003, there being no provision of any arrangement, agreement, authorisation, lease, licence, consent, permit, franchise, or other instrument to which any member of the wider Channelfly Group is a party or by or to which any such member or any of its assets may be bound, entitled or be subject, and of which STM is not aware on the date the Offer is made and which, in each case, in consequence of the Offer, the proposed acquisition of any Channelfly Shares or control of Channelfly by STM will result in: i. any monies borrowed by, or any other indebtedness or liabilities (actual or contingent) of any member of Channelfly being or becoming repayable or capable of being declared repayable immediately or prior to their stated maturity or the ability of such member to borrow monies or incur any indebtedness being withdrawn or inhibited; ii. the creation of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of Channelfly or any such security (whenever arising or having arisen) becoming enforceable or being enforced; iii. any such arrangement, agreement, authorisation, lease, licence, consent, permit, franchise or instrument being terminated or adversely modified, adversely affected, amended or varied or any adverse action being taken or arising or any onerous obligation or liability arising thereunder; iv. any assets or interests of any member of Channelfly being disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged other than in the ordinary course of business; v. the interests of any member of Channelfly in any firm or body, or any arrangements relating to such interests, being terminated, adversely modified, affected, amended or varied; vi. the business of any member of Channelfly with any firm, body or person, or any arrangements relating to such business, being terminated, adversely modified, affected, amended or varied; vii. any member of Channelfly ceasing to be able to carry on business under any name under which it presently does so; viii. the financial or trading position or prospects of any member of the wider Channelfly Group being prejudiced or adversely affected and in any such case the result being material and adverse in the context of the wider Channelfly Group taken as a whole; (e) since 31 July 2002 save as disclosed in the audited report and accounts of Channelfly for the year ended 31 July 2002 (the "Channelfly Accounts") or otherwise publicly announced by Channelfly (by delivery of an announcement to a Regulatory Information Service) or disclosed in writing by or on behalf of Channelfly to STM or its advisers prior to 21 March 2003), no member of the wider Channelfly Group having: i. issued or agreed to issue or authorised or proposed the issue of additional shares of any class, securities convertible into any such shares or rights, warrants, or options to subscribe for or acquire, any such shares or convertible securities; ii. recommended, declared, paid, made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution otherwise than intra-group; iii. authorised or proposed or announced its intention to propose any merger or demerger or acquisition or disposal of assets, save in the ordinary course of business or intra-group in each case to an extent which is material in the context of the wider Channelfly Group; iv. issued or authorised or proposed the issue of any debentures or, save in the ordinary course of business, incurred or increased any indebtedness or become subject to any contingent liability, in any such case, which is material in the context of the wider Channelfly Group taken as a whole; v. purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or redeemed or reduced or made any other change to any part of its share capital, in any such case, to an extent which is material in the context of the wider Channelfly Group; vi. disposed of or transferred, mortgaged or encumbered otherwise than in the ordinary course of its business any asset or any right, title or interest in any asset which, in any such case, is material in the context of the wider Channelfly Group taken as a whole; vii. entered into any contract, commitment or arrangement (otherwise than in the ordinary course of business and whether in respect of capital expenditure or otherwise) which is of a long-term or unusual nature or which involves or could reasonably be expected to involve an obligation of a nature and magnitude which, in any such case, is material in the context of the wider Channelfly Group taken as a whole or which is otherwise than in the ordinary course of business; viii. entered into or varied, or authorised, proposed or announced its intention to enter into or vary any contract, reconstruction, amalgamation, commitment, transaction or arrangement or waived or compromised any claim otherwise than in the ordinary course of business which, in any such case, is material in the context of the wider Channelfly Group taken as a whole; ix. entered into any agreement, contract, commitment or arrangement which consents to or results in the restriction of the scope of the business of any member of the wider Channelfly Group which, in any case, is material in the context of the wider Channelfly Group taken as a whole or which is otherwise than in the ordinary course of business; x. entered into or varied in any material respect the terms of any services or consultancy with any of the directors of the Channelfly Group; xi. taken any corporate action or had any legal proceedings started or threatened against it for its winding up (whether voluntary or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any substantial part of its assets and revenues or had any such person appointed; xii. waived or compromised any claim otherwise than in the ordinary course of business which, in any such case, is material in the context of the wider Channelfly Group taken as a whole; xiii. made or authorised or proposed or announced an intention to propose any change in its loan capital; xiv. made any material alteration to its memorandum or articles of association or other incorporation documents; xv. entered into or made an offer (which remains open for acceptance) to enter into an agreement or commitment or passed any resolution or announced or made any legally binding proposal with respect to any of the transactions or events referred to in this paragraph (e); or xvi. been unable, or admitted in writing that it is unable, to pay its debts generally or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a material part of its business, except, in any such case, with the prior written consent of STM; (f) since 31 July 2002 (save as disclosed in the Channelfly Accounts or otherwise publicly announced by Channelfly (by delivery of an announcement to a Regulatory Information Service) or disclosed in writing by or on behalf of Channelfly to STM or its advisers prior to 21 March 2003): i. there having been no adverse change or deterioration in the business, financial or trading position or profits or prospects of the wider Channelfly Group, in each case which is material in the context of the Channelfly Group taken as a whole; ii. there having been no material litigation, arbitration proceedings, prosecution, investigation or other legal proceedings to which any member of the wider Channelfly Group is a party (whether as claimant or respondent or otherwise) which is material in the context of the wider Channelfly Group taken as a whole and no such proceeding having been threatened by or against or remaining outstanding in respect of the wider Channelfly Group; iii. no contingent or other liability having arisen which might reasonably be likely materially and adversely to affect the wider Channelfly Group; iv. no investigation by any Relevant Authority against or in respect of any member of the wider Channelfly Group having been threatened, announced or instituted or remaining outstanding by, against, or in respect of any member of the wider Channelfly Group; (g) STM not having discovered (save as publicly announced by Channelfly (by delivery of an announcement to a Regulatory Information Service) or disclosed in writing by or on behalf of Channelfly to STM or its advisers prior to 21 March 2003) that: i. the financial or business or other information concerning the wider Channelfly Group as contained in the information publicly disclosed at any time by any member of the wider Channelfly Group either contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading which misrepresentation or omission is material in the context of the wider Channelfly Group taken as a whole; ii. any member of the wider Channelfly Group is subject to any liability incurred otherwise than in the ordinary course of business, contingent or otherwise, which is not disclosed in the Channelfly Accounts which is material in the context of the wider Channelfly Group taken as a whole; iii. any past or present member of the wider Channelfly Group has not complied with all applicable legislation or regulations of any jurisdiction with regard to the disposal, discharge, spillage, leakage or emission of any waste or hazardous or harmful substance or any substance likely to impair the environment or harm human health or environmental matters which non-compliance would be likely to give rise to any liability (whether actual or contingent) on the part of any member of the wider Channelfly Group which is material in the context of the wider Channelfly Group taken as a whole; or iv. there is or will be any liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the wider Channelfly Group under any environmental legislation, regulation, notice, circular or order of any government, quasi-government, governmental, state or local government, supranational, statutory or regulatory body, court, agency, association or any other person or body in any jurisdiction which is material in the context of the wider Channelfly Group taken as a whole. For the purpose of these conditions: a. "wider Channelfly Group" means Channelfly, its subsidiaries, subsidiary undertakings and associated undertakings and any other body corporate, partnership, joint venture or person in which Channelfly and such undertakings (aggregating their interests) have an interest in 20 per cent or more of the voting or equity capital (or the equivalent); b. "subsidiary", "subsidiary undertaking", "associated undertaking" and "undertaking" shall be construed in accordance with the Act (but for this purpose ignoring paragraph 20(l)(b) of Schedule 4A of the Act). STM reserves the right to waive, in whole or in part, all or any of conditions (b) to (g) inclusive. Conditions (b) to (g) inclusive must be satisfied as at, or waived (where possible) on or before midnight on the 21st day after the later of the first closing date of the Offer and the date on which condition (a) is fulfilled (or in each case such later date as the Panel may agree) failing which the Offer will lapse. STM shall be under no obligation to waive or treat as satisfied any of conditions (b) to (g) inclusive by a date earlier than the latest date specified above for the satisfaction thereof, notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such condition may not be capable of fulfillment. If STM is required by the Panel to make an offer for Channelfly Shares under the provisions of Rule 9 of the City Code STM may make such alteration to the above conditions, including condition (a) above, as are necessary to comply with the provisions of that rule. Certain further terms of the Offer Except with the consent of the Panel, the Offer will lapse unless Conditions (b) to (g) are fulfilled, or if capable of waiver, waived or, where appropriate, have been determined by STM in its opinion to be or to remain satisfied by midnight on whichever is the later of the date which is 21 days after first closing date of the Offer and the date on which condition (a) is satisfied. If the Offer lapses, the Offer will cease to be capable of further acceptance and STM, Beaumont Cornish and holders of Channelfly shares shall thereupon cease to be bound by prior acceptances. STM shall be under no obligation to waive or treat as fulfilled or satisfied any of the conditions (b) to (g) by a date earlier than the latest date specified above for the fulfilment or satisfaction thereof notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled or satisfied and that there are at such earlier date no circumstances indicating that any such conditions may not be capable of fulfilment or satisfaction. Appendix 2 Irrevocable Undertakings The following are the Committed Channelfly Shareholders. They have signed irrevocable undertakings to accept, or to procure the acceptance of, the Offer and elect for the Share Alternative in respect of the following Channelfly Shares: Name Number of Channelfly Shares % of issued share capital Philip Murphy 1,633,433 3.4 Adam Driscoll 9,094,957 18.9 Rosalind Driscoll 4,028,319 8.4 Jeremy Ledlin 1,206,345 2.5 Be Rozzo 1,114,037 2.3 Galleon Holdings plc 466,667 1.0 Laser Quest (Stourbridge) Limited 1,133,332 2.4 Holly Driscoll 30,769 0.1 Margaret Field 12,625 - Stephen Budd 772,058 1.6 James Wyllie 76,667 0.2 Paul Craig 275,735 0.6 Paul Clarke 17,284 - Nick Moore 1,114,037 2.3 Nick Dryden 500,000 1.0 Lemasco Nominees (White Spark) 1,100,000 2.3 White Spark Ltd 1,004,420 2.1 Lemasco Nominees 900,000 1.9 Morgan Nominees Limited 1,095,580 2.3 (Nominee for White Spark) Saffron Hickman 35,711 0.1 Graham Silk 1,076,923 2.2 Sanctuary Records Group Limited 666,667 1.4 Keith Williams 331,493 0.7 TOTAL 27,687,059 57.7 ======== ==== The Irrevocable Undertakings will under their terms lapse if: i) the formal offer document is not posted to shareholders of Channelfly within 28 days (or such longer period as the Panel may agree, being not more than six weeks) after the date of the announcement of the Offer; or i. the Offer lapses or is withdrawn. APPENDIX 3 Definitions The following definitions apply throughout this document, unless the context requires otherwise: "Act" or "the Companies Act" the Companies Act 1985, as amended "AIM" the Alternative Investment Market of the London Stock Exchange "Australia" the Commonwealth of Australia, its states, territories and possessions "Beaumont Cornish" Beaumont Cornish Limited, regulated by the Financial Services Authority "Board" or "Directors" the board of directors of Channelfly "business day" a day (other than a Saturday, Sunday or public holiday) on which banks are generally open for business in the City of London "Channelfly" Channelfly plc "Channelfly Group" or "Group" Channelfly and its subsidiaries and subsidiary undertakings, as those respective terms are defined in the Act "Channelfly Shareholders" or "Shareholders" holders of Channelfly Shares "Channelfly Shares" or "Shares" the ordinary shares of 1p each in Channelfly and any further ordinary shares in the capital of Channelfly which are unconditionally allotted or issued before the Offer closes "City Code" the City Code on Takeovers and Mergers "Closing Price" the middle-market price of a Channelfly Share at the close of business on the day to which such price relates, derived from the London Stock Exchange Daily Official List for that day "Committed Channelfly Shareholders" the persons listed in Appendix 2 of this announcement "Form of Acceptance" The form of acceptance and authority relating to the Offer accompanying the Offer Document "Independent Director" James Wyllie being a director of Channelfly who is independent in relation to the Offer, which for the avoidance of doubt does not include Philip Murphy, Adam Driscoll, Jeremy Ledlin and Stephen Budd, none of whom have taken part in the consideration by the board of Channelfly of the terms of the Offer "Japan" Japan, its possessions and territories and all areas subject to its jurisdiction and any political sub-division thereof London Stock Exchange London Stock Exchange plc "Management" Adam Driscoll and Philip Murphy "Offer" the recommended cash offer to be made by Beaumont Cornish on behalf of STM to acquire the entire issued and to be issued ordinary share capital of Channelfly not already owned by STM on the terms and conditions set out in this announcement and, where the context admits, any subsequent revision, variation, extension or renewal thereof "Overseas Shareholders" Channelfly Shareholders resident in or national or citizens of, jurisdictions outside the UK or who are nominees of, or custodians, trustees or guardians for, citizens or nationals of such other jurisdictions "Panel" the Panel on Takeovers and Mergers "Regulatory Information Service" any of the services set out in Schedule 12 of the Listing Rules published by the Financial Services Authority "Share Alternative" the right of Channelfly Shareholders who accept the Offer to elect to receive as the Offer consideration STM Shares instead of cash in respect of their entire holdings of Channelfly Shares "STM" Stonesthrow Media Limited of 5 Deansway, Worcester WR1 2JG "STM Shares" ordinary shares of #1 each in the capital of STM "UK" United Kingdom United States or US the United States of America, its territories and possessions, any State of the United States of America and the District of Colombia and all other areas subject to its jurisdiction Appendix 4 Basis of Calculation and Sources of Information Unless otherwise stated, financial information concerning Channelfly has been derived from the published annual report and accounts and the interim results of Channelfly for the relevant periods. The value of the Offer is based on 48,004,114 Shares in issue based on the Channelfly share register as at 19 March 2003. The closing prices of Shares are derived from the AIM Appendix to the Daily Official List of the London Stock Exchange for the relevant date. This information is provided by RNS The company news service from the London Stock Exchange END OFFIFFLFVSIIFIV
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