ResponzeTV PLC
Acquisition of Famous Discoveries
ResponzeTV PLC (the `Company'), announces that it has acquired the entire issued
and outstanding share capital of EXI International Corp (a Florida, USA company)
comprising a Florida-based TV home shopping business which trades under the name
of Famous Discoveries (`Famous Discoveries'). The consideration will be the
payment of up to US$5,100,000 to be satisfied wholly by the issue to the vendors
of Famous Discoveries (the `Vendors') of new ordinary shares of 16p each in the
Company (`Consideration Shares').
Completion of the acquisition took place on 30 March 2007. The Company has
agreed to pay to the Vendors by 31 August 2007 the sum of US$2,500,000, which
will be satisfied by the issue of 3,144,594 Consideration Shares at an issue
price of 40.5p per share, representing 4.41% of the current issued share capital
of the Company as enlarged by such issue. Payment of the balance of up to
US$2,600,000, which will be satisfied by Consideration Shares issued at the
market price as at the dates of each such issue, will be by way of earn-out and
is dependant on the financial performance of the business of Famous Discoveries
for the two years ending 28 February 2009 (`Earn-Out Period').
Famous Discoveries, with a stable of over 100 products and brands, complements
the business of Reliant International Media LLC (`Reliant'), which was acquired
by the Company on 11 January 2007. It is anticipated that the Famous Discoveries
business will be merged with that of Reliant to produce cost savings and
enhanced benefits for both businesses from economies of scale. The directors of
the Company believe that this acquisition will also complement the existing
international supply business of the Company, which sources wholesale products
for sale to TV direct response (`DRTV') and TV home shopping operators, with a
focus on customers in Europe, the USA and North Asia.
The Vendors of Famous Discoveries are Akos Jankura and Bill Barlow, who each
have over 12 years experience in the TV home shopping business and in consumer
product development. They will each remain with the Famous Discoveries business,
and be employed by Reliant, after the acquisition.
Akos Jankura, President of Famous Discoveries, said: `Joining with ResponzeTV
and being part of the Reliant business brings to the Famous Discoveries' brands
and products the opportunity for enhanced growth from combining the infomercial
production strengths of Reliant with the branding skills of Famous Discoveries,
to provide end-to-end market penetration.'
Steven Goodman, Executive Chairman of ResponzeTV PLC, said: `This acquisition,
adding to the recent acquisition of Reliant, provides additional strength to our
home shopping business in the US. It also represents the next step in our stated
strategy of expansion by acquisition in the Company's core geographic and
business areas. The Company will continue to look at appropriate further
opportunities. Akos Jankura and Bill Barlow are well known to the Company and
have an impressive track record in the home shopping business.'
For further enquiries contact:
Steven Goodman,
Executive Chairman, ResponzeTV PLC
+852 2295 1161
Paul Lockstone,
Edelman Financial, London
+44 (0)20 7344 1325
Introduction
The Company today announces that it has acquired the entire issued and
outstanding share capital of EXI International Corp, a Florida, USA based TV
home shopping company which trades under the name Famous Discoveries (`Famous
Discoveries'). The consideration will be the payment of up to US$5,100,000, to
be satisfied wholly by the issue to the Vendors of new ordinary shares of 16p
each in the Company.
Completion of the acquisition took place on 30 March 2007, with an effective
date of 1 March 2007. The Company will, by 31 August 2007, pay to the Vendors
the sum of US$2,500,000, to be satisfied by the issue of 3,144,594 Consideration
Shares at an issue price of 40.5p, representing 4.41% of the current issued
share capital of the Company as enlarged by such issue. Payment of the balance
of up to US$2,600,000, which will be satisfied by Consideration Shares at the
market price as at the date of such issue, will be by way of earn-out and is
dependant on the financial performance of the business of Famous Discoveries for
the two years ending 28 February 2008 and 28 February 2009. The full amount of
the earn-out will be paid if the average pre-tax profits attributable to the
Famous Discoveries business for each of those two years are not less than
US$1,000,000 and if certain cash balance and other targets are met.
The Consideration Shares will be subject to a lock-in until 30 September 2009,
subject to certain exceptions.
No shareholder approval is required for the acquisition. The directors of the
Company intend, at the Company's next Annual General Meeting, to seek
shareholder approval for certain additional authorities required for the issue
of the Consideration Shares which were not issued at completion.
Overview of Famous Discoveries
Famous Discoveries commenced operations in November 2005. It was formed to act
as a DRTV operator in the US market, developing products for home shopping
channels around the world. It uses television air-time to initiate home shopping
revenues and later to drive retail sales. It also sells products on TV home
shopping channels in the US, including on The Home Shopping Network, and in
Germany, Japan and the UK on QVC. It operates through the website
`www.famousdiscoveries.com'.
Famous Discoveries currently operates from a single office in St Petersburg,
Florida, close to Reliant's operations and has a satellite office in London, UK.
It has 10 members of staff, including the Vendors. It is anticipated that the
business of Famous Discoveries will be combined with that of Reliant to provide
cost savings and to give the benefit of economies of scale. Famous Discoveries
has not produced audited accounts since it commenced operations.
Principal Terms of the Acquisition
The consideration will be the payment to the Vendors of an aggregate maximum of
US$5,100,000, to be satisfied by the issue of Consideration Shares.
The Company will, by 31 August 2007, pay to the Vendors the sum of US$2,500,000,
to be satisfied by the issue of 3,144,594 Consideration Shares at an issue price
of 40.5p, representing 4.41% of the current issued share capital of the Company
as enlarged by such issue.
The balance of up to US$2,600,000, to be satisfied by the issue of
Consideration Shares at the market price as at the date of each issue, will be
by way of earn-out and is dependant on the financial performance of the Famous
Discoveries business for the Earn-Out Period, as follows:
(a) in relation to the year ending 28 February 2008, an earn-out payment of
US$1,300,000, to be satisfied by the issue of Consideration Shares at the
then current market price, will be made if the pre-tax profits attributable
to the Famous Discoveries business for that year are not less than
US$1,000,000 (`2008 Profit Target') and if the cash balance attributable to
the Famous Discoveries business at the end of that year is not less than 25
per cent of the pre-tax profit for that year, or such lesser percentage as
the Vendors and the Company may agree (`2008 Cash Target'). Any shortfall
in the 2008 Profit Target will reduce the payment for that year on a pro
rata basis and any shortfall in the 2008 Cash Target will reduce 50% of
such payment on a pro rata basis; and
(b) in relation to the year ending 28 February 2009, provided the pre-tax
profit attributable to the Famous Discoveries business are greater than the
pre-tax profits for the previous year, an earn-out payment of US$2,600,000,
to be satisfied by the issue of Consideration Shares at the then current
market price, will be made if the average pre-tax profits attributable to
the Famous Discoveries business for each year of the Earn-Out Period are
not less than US$1,000,000 (`Earn-Out Period Profit Target') and if the
cash balance attributable to the Famous Discoveries business at 28 February
2009 is not less than 25 per cent of the pre-tax profits for that year, or
such lesser percentage as the Vendors and the Company may agree (`2009 Cash
Target'). Any shortfall in the Earn-Out Period Profit Target will reduce
the payment for the Earn-Out Period on a pro rata basis and any shortfall
in the 2009 Cash Target will reduce 50% of such payment on a pro rata
basis. The payment made in respect of the year ending 28 February 2008 will
be deducted from the payment to be made in respect of the full Earn-Out
Period.
The Consideration Shares will be subject to a lock-in until 30 September 2009
and the Vendors have agreed that thereafter they will not dispose of more than
one-third of the Consideration Shares in any period of six-months. The lock-in
is subject to certain exceptions, including:
(a) in respect of disposals required to raise cash to fund tax liabilities of
the Vendors arising from the acquisition; and
(b) if at any time prior to 30 September 2009 MediaXposure Limited (Cayman)
which, prior to the acquisition, owned approximately 73% of the Company's
issued share capital, transfers a proportion of its holding of shares in
the Company, the Vendors may transfer up to the same proportion of their
Consideration Shares.
Under the terms of the acquisition agreement, the Vendors have given warranties
and representations in respect of certain business, taxation and other matters,
subject to agreed limitations on liability.
The Vendors have each entered into new employment agreements with Reliant under
which Akos Jankura and Bill Barlow have been appointed as Senior Vice
Presidents. The employment agreements are terminable by either party on 6 months
notice expiring not earlier than 28 February 2009. The terms of engagement also
contain provisions for early termination, inter alia, in the event of a breach
of duties. There are no provisions for benefits upon termination of employment.
The remuneration payable under each agreement is US$200,000 per annum plus
bonus.
2 April 2007
For further enquiries contact:
Steven Goodman,
Executive Chairman, ResponzeTV PLC
+852 2295 1161
Paul Lockstone,
Edelman Financial, London
+44 (0)20 7344 1325