Scottish Media Group PLC
13 January 2000
Scottish Media Group plc ('SMG')
Acquisition of Ginger Media Group
Headlines
* Proposed acquisition of 100 per cent. of Ginger Media Group Limited
('Ginger Media'), for an aggregate consideration of £225 million
* Ginger Media represents an excellent opportunity to acquire a well-
branded, rapidly growing national media business containing:
- two highly profitable radio franchises;
- a growing TV programme production arm; and
- an integrated internet service
* The acquisition is expected to:
- deliver SMG critical mass in radio which remains the fastest growing
advertising medium in the UK;
- expand SMG's national media presence around well branded media assets;
- provide significant potential for cross-media benefits with SMG's
existing operations; and
- enhance SMG's earnings immediately
* Following assumption by SMG of Ginger Media's indebtedness of
£75 million, vendors to receive £150 million, of which £40 million will
be in SMG equity, issued to Chris Evans and Ginger Media's management
* Equity consideration will vest in three equal, separate annual tranches
to promote retention and incentivisation of key personnel
* 1 for 10 rights issue of up to 6,506,374 Stock Units at 910 pence per
unit to raise approximately £58.0 million, net of expenses
* Acquisition subject to SMG shareholder and Radio Authority approvals
* SMG's largest shareholder, Flextech, has irrevocably undertaken to
support acquisition and rights issue
Commenting on the proposed acquisition, Don Cruickshank, Chairman of SMG,
said:
'This is a transforming acquisition for SMG at an excellent price. Ginger
Media significantly strengthens our national presence and has outstanding
growth prospects. With this deal, SMG becomes a leading player in UK media.'
13th January, 2000
_____________________________________________________________________________
Press Enquiries
SMG 0171 404 5959 (on 13th January)
Andrew Flanagan, Chief Executive 0141 300 3300 (thereafter)
Gary Hughes, Group Finance Director
Callum Spreng, Corporate Affairs Director
Schroders 0171 658 6000
David Wormsley
Simon Gluckstein
Hoare Govett 0171 678 8000
Mark Astaire
Brunswick 0171 404 5959
James Hogan
A presentation to analysts and institutions will be held at 9.30 a.m. today
(13th January, 2000) at the offices of ABN AMRO Hoare Govett, 250
Bishopsgate, London EC2.
Schroders, which is regulated in the UK by The Securities and Futures
Authority Limited, is acting for SMG and SMG (Jersey) in relation to the
Acquisition and Rights Issue and for no-one else and will not be responsible
to any person other than SMG and SMG (Jersey) for providing the protections
afforded to customers of Schroders or for advising any other person in
relation to the Acquisition and Rights Issue.
Schroders has approved this announcement as an investment advertisement
solely for the purpose of section 57 of the Financial Services Act 1986.
Not for release, publication or distribution in or into the United States,
Canada or Australia. Neither the new Ordinary Shares or the Stock Units to
be issued under the Rights Issue nor the Provisional Allotment Letters have
been nor will they be registered under the United States Securities Act of
1933, as amended, or under the securities laws of any State of the United
States or any province or territory of Canada or Australia or under the
relevant securities laws of the Republic of Ireland and, subject to certain
exemptions, they may not be offered, sold, accepted, renounced or taken up or
delivered, directly or indirectly, in or into the United States, Canada,
Australia or the Republic of Ireland.
This summary should be read in conjunction with the full text of the
following announcement.
Scottish Media Group plc ('SMG')
Acquisition of Ginger Media Group
Introduction
Scottish Media Group plc ('SMG') announces today that it has, together with
its wholly-owned subsidiary, Scottish Media Group (Jersey) Limited ('SMG
(Jersey)'), entered into an agreement for SMG (Jersey) to acquire the entire
issued share capital of Ginger Media Group Limited ('Ginger Media').
SMG believes that Ginger Media represents an excellent opportunity to acquire
a rapidly-growing, national media business with critical mass in its core
market of commercial radio, together with a growing television production
arm. This acquisition represents a further step in SMG's stated strategy of
building its operations across complementary media sectors in the UK.
The consideration for the Acquisition is approximately £225 million which is
to be satisfied as to £185 million in cash (including the assumption of
Ginger Media Group's indebtedness, including preference shares, which is
expected to be approximately £75 million on completion of the Acquisition)
and £40 million in shares. Approximately £26 million of the equity
consideration described above constitutes deferred consideration.
In addition, the Group proposes to raise approximately £58.0 million, net of
expenses, through a 1 for 10 rights issue. The net proceeds of the Rights
Issue will be applied to fund the Acquisition, while existing and new banking
facilities will provide SMG with flexibility to continue its development on
an ongoing basis. The Rights Issue has been underwritten by Schroders. The
brokers to the Rights Issue are Hoare Govett.
In view of its size, the Acquisition is conditional upon the approval of
SMG's shareholders, which will be sought at an Extraordinary General Meeting
of the Company. The Acquisition is also conditional on The Radio Authority
indicating that it does not object to the Acquisition. The Radio Authority
is required, inter alia, to conduct a public interest test in accordance with
current cross-media regulations.
An irrevocable undertaking to vote its entire holding in favour of the
resolution to approve the Acquisition at the Extraordinary General Meeting
has been given by Flextech, SMG's largest shareholder, which controls 18.54
per cent. of SMG's existing share capital. In addition, Flextech has
irrevocably committed to subscribe for its full pro rata entitlement pursuant
to the Rights Issue, as a result of which Flextech's entitlement to Stock
Units under the Rights Issue will not be underwritten by Schroders.
In addition, SMG will propose at its next Annual General Meeting to establish
a new holding company for the Group, which will be called SMG plc, in order
to reflect the broader national presence of the Group. The new company will
encompass all of the Group's existing and proposed operations.
Background
Over the last five years, SMG has delivered substantial financial performance
from its businesses, with profit before tax growing by approximately 400 per
cent. from a combination of organic growth and acquisitions. Over the same
period, SMG has delivered strong returns for its shareholders, having grown
its reported earnings per share (excluding exceptional items and goodwill
amortisation) by over 300 per cent. while SMG's share price has increased by
134 per cent. since 1st January, 1994, representing an out-performance of the
FTSE-All Share index of 27 per cent. In addition, dividends per share have
increased over the last five years by a compound annual growth rate of 15 per
cent. This growth has been achieved by a management team with a proven track
record of delivering shareholder value.
The consolidation of SMG's television operations, following the acquisition
of Grampian Television plc, created significant operational and financial
synergies, which, together with the earlier acquisition of Caledonian
Publishing plc, led to SMG's development as the leading media group in
Scotland. From this strong platform, SMG has built its national presence
around well-branded media assets, with the acquisition of Primesight plc in
the fast growing outdoor advertising sector and the purchase of Pearl & Dean
Cinemas Limited, one of the best-known UK media brands and a major player in
national cinema advertising. During 1999, SMG also acquired a shareholding
in Heart of Midlothian plc, one of the leading football clubs in Scotland,
thereby reinforcing SMG's position as Scotland's leading media company.
On 4th January, 2000, SMG announced that it had increased its shareholding in
the national breakfast television station, GMTV, by 5 per cent. to 25 per
cent., strengthening SMG's position in a valuable national television
franchise.
SMG intends to develop its operations to generate further cross-media
benefits and economies of scale, which will provide a solid base for growth
both within and outside Scotland. The directors of SMG believe that Ginger
Media represents an excellent opportunity to acquire a rapidly growing, well-
branded, national media business with critical mass in its core market of
radio. In addition, the acquisition of a growing television production
operation strengthens one of SMG's existing core activities.
Information on Ginger Media
Ginger Media is one of the leading independently-owned media groups in the UK
and comprises three principal divisions:
* Virgin Radio
* Ginger Television
* Ginger Online
Virgin Radio was launched in 1993 following the award of a national AM radio
broadcasting licence (1215 AM). It is one of only three national commercial
radio stations broadcasting in the UK and the only one operating with a
mainstream popular music format. In 1995, Virgin Radio launched a commercial
FM station (105.8 FM) broadcasting in the lucrative London radio market.
Ginger Media is the only commercial radio operator which offers such a unique
balance of national and London licences. Its powerful branding and its
audience targeting for advertisers makes it a valuable national media
franchise in the relatively fragmented radio sector.
Virgin Radio has demonstrated substantial growth: between 1994 and 1999,
revenues have grown by a compound annual growth rate of approximately 46 per
cent. At the same time, Virgin Radio has built up a 2.7 per cent. share of
the total radio audience in the UK and, in any four week period, reaches an
audience of 6.2 million including 20 per cent. of all 20-44 year old adults
(Source: RAJAR Q3 1999).
Following the recent introduction of digital radio in the UK, Virgin Radio is
currently broadcasting on Digital One, the UK's only national commercial
digital radio multiplex, as a result of which Virgin Radio's existing
national AM licence will automatically be renewed for a further eight year
term. An application to renew Virgin Radio's London FM licence will be made
in due course (with the current licence due to expire in April 2003),
although this licence will be automatically renewed if the Switch Digital
consortium (with Virgin Radio as a member) secures either of the two
remaining London digital multiplexes. Virgin Radio is, therefore, well
placed to extend its brand and national presence into digital broadcasting.
Ginger Television was also founded in 1993 and has developed into one of the
leading independent TV production companies in the UK. From initial
successes such as Don't Forget Your Toothbrush, Ginger Television has further
expanded through the production of successful light entertainment programming
including TFI Friday (which continues to draw average weekly audiences of
some 2.7 million on Channel 4), Red Alert (the peak time National Lottery
programme on BBC1 with an average weekly audience of some 6.1 million) and
The Priory (a celebrity chat show and music format on Channel 4 with an
average weekly audience of some 1.8 million).
As with Virgin Radio, Ginger Television has also delivered substantial
growth, with revenues having grown to £14.1 million in the year to 31st July,
1999 and operating profit (before any allocation of central overheads) to
£4.1 million, making Ginger Television an independent television production
company which is both profitable and successful.
In 1997, Virgin Radio was acquired by Ginger Media in a venture capital and
vendor backed transaction which resulted in the combination of the radio and
television operations to form Ginger Media Group.
From being one of the first radio stations in the UK to have a web site,
which was launched in March 1996, Virgin Radio has continued to develop its
online presence. Virgin Radio was the first European radio station to
broadcast its output simultaneously over the Internet. Both the radio and
television operations are now complemented by an integrated Internet service,
Ginger Online, which was launched in June 1998. Most recently, Ginger Online
launched a real-time music, news and e-commerce service which further extends
the group's offering to its target audience.
In its audited results for the year ended 31st July, 1999, Ginger Media
reported group operating profit of £16.0 million from total revenues of
£46.4 million. In that period, Virgin Radio reported operating profit of
£13.6 million from total revenues of £32.0 million and Ginger Television
reported operating profit of £4.1 million from total revenues of
£14.1 million (with other income of £0.3 million reconciling group revenues
and central costs of £1.7 million reconciling group operating profit). As at
31st July, 1999, Ginger Media had aggregate net liabilities of £60.2 million
which included net indebtedness, including, inter alia, loans from Ginger
Media shareholders and preference shares, of £79.3 million.
Reasons for the Acquisition
SMG has consistently stated its intention to expand its operations across
complementary media sectors in the UK. It believes that the acquisition of
Ginger Media meets with this objective and fulfils its key investment
criteria. Specifically, SMG has stated that its strategy is to:
* extend the Group from its strong Scottish base across a range of
traditional and developing media
* build the Group around well-branded and complementary media assets
* develop the Group's national UK advertising presence, as well as
strengthen its offer to advertisers in its key market in Scotland
* acquire related media businesses to which SMG management can add value
including through the application of its proven management approach and
expertise
The directors of SMG believe that the acquisition of Ginger Media fully
satisfies these fundamental criteria.
Extend the Group from its strong Scottish base across a range of traditional
and developing media
* Having strengthened its position as the leading media company in Scotland
through its established television and publishing operations, SMG has
successfully pursued a strategy in the past 12 months of expanding into
developing and fast-growing media, such as outdoor and cinema
advertising, across the UK
* Radio has been the fastest growing advertising medium in the UK for five
of the past seven years (Source: Zenith Media) during which time the
market has grown at a rate of some 19 per cent. on average per annum.
Furthermore, this growth has been driven principally by national
advertising, the most substantial element of Virgin Radio's business
(Source: Radio Advertising Bureau/Radio Authority)
* Growth in radio advertising is forecast to continue to outpace that of
other media with Zenith Media forecasting advertising growth for the
radio industry of 10.0 per cent. in both 2000 and in 2001
* Radio's share of total UK advertising is forecast to increase from
4.4 per cent. in 1999 to 5.5 per cent. by 2002 (which compares to
13.0 per cent. in the US and 6.5 per cent. in France in 1999) (Source:
Zenith Media)
Build the Group around well-branded and complementary media assets
* Virgin Radio is one of the highest profile media brands in the UK. With
an established national presence and a high level of brand recognition,
Virgin Radio is specifically targeted at the valuable 20-44 year old
market which continues to be highly attractive to advertisers
* Radio directly complements SMG's existing media interests. With the
ability to offer promotional and packaging opportunities across
complementary media platforms, SMG will be well positioned to strengthen
its relationships with its principal advertisers and agencies for the
benefit of all its media operations
* Ginger Television has developed as a creative television production
operation which continues to be strengthened with new and innovative
commissions, particularly in live entertainment. SMG expects that Ginger
Television will directly complement its existing television production
operation, Scottish Television Enterprises, and that both businesses will
continue to benefit from its success in attracting and developing high
profile on-air talent
Develop the Group's national UK advertising presence, as well as strengthen
its offer to advertisers in its key market in Scotland
* The acquisition of Ginger Media will represent a significant advance in
the geographical coverage and national presence of SMG's operations
* Virgin Radio has a unique and valuable licence combination, with one of
only three national commercial radio licences and is the only national
commercial station to focus on mainstream popular music, targeting the
important 20-44 year old market. This position is further strengthened
with a dedicated London FM licence offering advertisers national coverage
with a London upweight
* Virgin Radio as a whole accounts for approximately 5.7 per cent. of the
total commercial radio audience in the UK (Source: RAJAR). Virgin Radio
has, however, consistently been able to secure a greater proportion of UK
radio advertising and currently captures some 8 per cent. of total gross
radio advertising revenue (Source: Radio Advertising Bureau)
Acquire related media businesses to which SMG management can add value
including through the application of its proven management approach and
expertise
* SMG believes that there is potential to improve the operational
efficiency of the Ginger Media Group through economies of scale and the
application of its proven management approach to both acquisitions and
investments to support organic growth
* In addition, SMG believes that the Acquisition will offer substantial
potential to leverage promotion and packaging across complementary media
platforms, in particular with Virgin Radio and SMG's national outdoor and
cinema advertising operations
* The acquisition of Ginger Television will materially strengthen SMG's UK
television production interests and will enable the combined operation to
access a greater number of broadcasters
* SMG also believes that Ginger Media represents an excellent base from
which further development and expansion opportunities will be created in
radio, TV production and the Internet
Management
Upon completion of the Acquisition, the operations of Virgin Radio and Ginger
Television will be separated and integrated within and alongside SMG's
existing operations. Virgin Radio will be managed alongside SMG's other
national media assets (outdoor and cinema advertising) in order to maximise
the promotional and advertising opportunities across these highly
complementary advertising platforms. It is proposed that David Campbell, the
current Chief Executive of Ginger Media, will assume responsibility for the
day-to-day management of this combined national media division, reporting
directly to Andrew Flanagan, the Chief Executive of SMG.
Having worked within the Virgin Group since 1986, David Campbell has been
responsible for the development of Ginger Media, first as Chief Executive of
Virgin Radio from 1993 to 1996 and latterly as Chief Executive of Ginger
Media following Virgin Radio's acquisition in 1997.
Ginger Television will be combined with SMG's existing television production
operations, Scottish Television Enterprises, the responsibility for which
will be assumed by Eileen Gallagher, Managing Director of Ginger Television,
who will report to Donald Emslie, the Managing Director of SMG's Television
Division. Whilst SMG believes that there will be significant benefits to be
gained from combining the two businesses, it also recognises the importance
of retaining the unique brand and culture which have been fundamental to the
success of Ginger Television in recent years.
In order to secure the ongoing participation of Chris Evans and Ginger
Media's management team in the continued success of the business, the
purchase consideration attributable to key members of the management team
includes a material amount payable in shares. The management team will
receive the benefit of this consideration in three equal, separate and annual
tranches, the first of which will be vested on completion of the Acquisition
with the remaining tranches vesting on the first and second anniversaries of
the completion date. If Chris Evans or any of the relevant Ginger Media
management team members leave Ginger Media, or the Enlarged Group, prior to
the full vesting of their share tranches, and without the express consent of
SMG, they will forfeit their right to receive any outstanding entitlement.
By way of example, of the aggregate consideration attributable to Chris Evans
under the terms of the Acquisition, £38.4 million (representing approximately
53 per cent. of his total consideration) will be paid in shares in three
equal instalments as described above.
In 1993, Chris Evans formed his own company, Ginger Television Productions
Limited, through which he has since devised and presented a number of major
programmes including Don't Forget Your Toothbrush and TFI Friday. After
joining the BBC in 1995 as the principal presenter of the BBC Radio One
Breakfast Show, Chris Evans moved to host the Virgin Radio Breakfast Show in
1997 and thereafter led the acquisition of Virgin Radio as a whole. Chris
Evans remains fully committed to the future development of Ginger Media.
Principal terms of the Acquisition
The terms of the Acquisition provide for the repayment of Ginger Media's
existing indebtedness, the complete exit of Ginger Media's existing financial
and corporate shareholders and for Chris Evans and the principal members of
the Ginger Media management team to receive a significant proportion of their
consideration in the form of shares in SMG (Jersey) and ultimately in SMG.
Specifically, of the aggregate consideration of £225 million, £185 million is
to be satisfied in cash (including the assumption of Ginger Media Group's
indebtedness, including preference shares, which is expected to be
approximately £75 million on completion of the Acquisition) and £40 million
in shares in the capital of SMG (Jersey) which will be exchanged for Ordinary
Shares, save in certain circumstances. If the maximum possible number of
shares in the capital in SMG (Jersey) are exchanged for Ordinary Shares under
this arrangement, this would result in the issue of 3,840,915 Ordinary Shares
(representing approximately 5.1 per cent. of SMG's diluted share capital,
after taking account of the maximum number of new SMG Ordinary Shares that
may be issued pursuant to the Acquisition and the Offer). The cash element
of the consideration will fall due for payment in full on completion of the
Acquisition. Of this cash consideration, £125 million will be satisfied from
existing and new SMG banking facilities while the balance will be satisfied
from the proceeds of the Rights Issue described in more detail below.
Principal terms of the Rights Issue
SMG proposes to raise approximately £58.0 million, net of expenses, by way of
a rights issue of Stock Units to Qualifying Shareholders.
Upon completion of the Acquisition, each Stock Unit will automatically be
converted into one new SMG Ordinary Share. This will be achieved by the
automatic conversion of each Stock Unit into one new SMG (Jersey) Preference
Share. Subject to conversion of the Stock Units occurring, SMG offers to
acquire all the SMG (Jersey) Preference Shares arising on conversion on the
basis of one new SMG Ordinary Share for each SMG (Jersey) Preference Share.
Under the terms of the Deed Poll, the Offer will remain open and will
automatically be accepted by Stockholders on conversion of the Stock Units.
Pursuant to the Rights Issue, Qualifying Shareholders will be offered Stock
Units at a price of 910p per unit on the following basis:
1 Stock Unit for every 10 existing Ordinary Shares
and so in proportion for any other number of Ordinary Shares held at the
close of business on 7th January, 2000, the Record Date. Fractions of Stock
Units will not be allotted to Shareholders (i.e. all fractions will be
rounded down) but will be aggregated and sold in the market for the benefit
of the SMG Group.
Other than Flextech's full pro rata entitlement pursuant to the Rights Issue
for which it has irrevocably committed to subscribe, the Rights Issue has
been fully underwritten by Schroders. The brokers to the Rights Issue are
Hoare Govett. The Rights Issue is conditional upon the Underwriting
Agreement having become unconditional and upon the admission of the Stock
Units to the Official List becoming effective. Listing of the Stock Units is
expected to become effective and dealings in them commence, nil paid, on 14th
January, 2000. Dealings in the new SMG Ordinary Shares to be issued on
completion of the Offer are expected to commence during March or April 2000.
SMG is mindful of the Competition Commission's recent recommendations with
regard to competitive tendering of sub-underwriting commissions. However,
after careful consideration in connection with the Rights Issue, it does not
believe that there would be material benefit to SMG and its shareholders from
such a process.
The latest time for acceptance and payment in full in respect of the Rights
Issue is 3.00p.m. on 3rd February, 2000 or such later date as Schroders, SMG
and SMG (Jersey) may agree.
Conversion of the maximum possible number of Stock Units issued pursuant to
the Rights Issue into SMG (Jersey) Preference Shares and exchange of those
shares for new SMG Ordinary Shares pursuant to the Offer would result in the
issue of 6,506,374 new SMG Ordinary Shares (representing approximately 8.6
per cent. of SMG's diluted share capital, after taking account of the maximum
number of new SMG Ordinary Shares that may be issued pursuant to the
Acquisition and the Offer). The new SMG Ordinary Shares will be issued
credited as fully paid and will rank pari passu in all respects with the
existing issued Ordinary Shares, save that they will not rank for the final
dividend to be paid on 23rd May, 2000 in respect of the financial year ended
31st December, 1999. The dividend in respect of the six months to 30th June,
2000 will be paid in November 2000 to shareholders who are registered on the
SMG share register at a date to be fixed in October 2000. Provided that
conversion of the Stock Units has occurred prior to the record date relating
to this dividend payment, the new SMG Ordinary Shares will rank pari passu in
all respects with the existing issued Ordinary Shares in respect of this
dividend.
To enable funds advanced by SMG shareholders to be repaid if the Acquisition
is not completed, those Shareholders taking up their rights pursuant to the
Rights Issue will be entitled to units of convertible unsecured loan stock in
SMG (Jersey), a wholly-owned Jersey incorporated subsidiary of SMG. The
Stock Units are constituted by the Deed Poll. The Stock Units will be repaid
in the amount actually paid up on the Stock Units on 31st August, 2000, if
they have not been converted or repaid before that date together, in certain
circumstances, with interest.
It is the intention of SMG and SMG (Jersey) that, if the Acquisition
Agreement has terminated prior to that date, the Stock Units should be repaid
earlier. Should the amount paid up on the Stock Units be repayable, SMG
(Jersey) shall pay to holders of Stock Units interest on the amount repaid at
the overnight money market rates available to SMG (Jersey). In certain
circumstances no interest will be payable on repayment, including if the
Stock Units are converted in accordance with the terms of the Deed Poll or if
the Resolution is not passed. SMG has guaranteed all obligations of SMG
(Jersey) in respect of the Stock Units under the terms of the Deed Poll.
Principal terms of the CULS Offer
In accordance with the terms of the CULS, holders of CULS are also being
offered the right to subscribe for Stock Units on equivalent terms to the
Rights Issue. Acceptance in full of the CULS Offer by holders of CULS would
result in the issue of approximately 291,792 new SMG Ordinary Shares upon
completion of the Acquisition (representing approximately 0.4 per cent. of
SMG's diluted share capital, after taking account of the maximum number of
new SMG Ordinary Shares that may be issued pursuant to the Acquisition and
the Offer ). The CULS Offer is not being underwritten in any way.
Financial effects of the Acquisition
The directors of SMG believe that the acquisition of Ginger Media will be
earnings enhancing in the financial year ending 31st December, 2000,
excluding the impact of any exceptional items arising in relation to the
Acquisition and the impact of goodwill amortisation under FRS10. This
statement should not be interpreted to mean that SMG's future earnings per
share will necessarily be greater than its historical published earnings per
share.
Current trading and prospects
SMG
Although the financial results for the year ended 31st December, 1999 are not
scheduled to be released until 22nd February, 2000, the directors of SMG are
pleased to report that 1999 was another year of strong operational
performance for the Group, with good progress across both ongoing and newly-
acquired businesses.
ITV advertising revenues increased strongly and solid margin improvements
were achieved across the Group's publishing operations. The performance from
SMG's recently acquired outdoor and cinema advertising businesses has been in
line with initial expectations with future prospects encouraging.
In addition, the successful launch during the year of the Sunday Herald,
SMG's new quality Sunday newspaper, and S2, Scotland's first digital
terrestrial television channel, reinforced SMG's strong position in the
Scottish marketplace.
The directors of SMG are therefore pleased to report that 1999's financial
performance was in line with management's expectations and that the Group is
looking forward with confidence to another year of continued progress.
Ginger Media
The Ginger Media Group is performing to budget in the current financial year.
Ginger Media's trading since its audited results to 31st July, 1999 has been
strong, benefiting from the buoyancy in the radio market and a significant
increase in the number of commissioned television programmes, all of which
together underpin the positive prospects for the Ginger Media Group as a
whole.
Enlarged Group
Accordingly, the directors of SMG are confident of the outlook for the
Enlarged Group in SMG's current financial year.
Scheme of arrangement
SMG announces today that it proposes to establish a new holding company for
the Group which will be called SMG plc in order to reflect the broader
national media presence of the Group. The new company will encompass all of
the Group's existing and proposed operations. This will be effected by way
of a scheme of arrangement which is expected to be proposed to Shareholders
at the next Annual General Meeting of the Company, scheduled for May 2000,
and which will require shareholder approval.
Approvals
Extraordinary General Meeting
An Extraordinary General Meeting of the Company will be held at the offices
of the Company, Cowcaddens, Glasgow at 12.00 noon on 31st January, 2000, at
which a resolution will be proposed to approve the Acquisition, to increase
the authorised share capital of the Company and to authorise the Directors to
allot Ordinary Shares. It is a condition of the Acquisition that
Shareholders approve the Acquisition.
Radio Authority
Completion of the Acquisition is conditional on The Radio Authority
indicating that it does not object to the Acquisition. The Radio Authority
will be required, inter alia, to conduct a public interest test in accordance
with current cross-media regulations. A formal notification by the parties
concerned is being made to The Radio Authority today and it is expected that
The Radio Authority review process will be completed in March or April 2000.
The directors of SMG and Ginger Media are confident that the transaction will
receive the required approval.
Directors' intentions in relation to the Rights Issue
The executive directors of SMG intend to take up their full entitlements to
subscribe for Stock Units under the Rights Issue. The non-executive directors
of SMG intend to take up at least such part of their entitlements to Stock
Units as may be funded by the net proceeds of the sale of the balance of
their entitlements.
13th January, 2000
_____________________________________________________________________________
Press Enquiries
SMG 0171 404 5959 (on 13th January)
Andrew Flanagan, Chief Executive 0141 300 3300 (thereafter)
Gary Hughes, Group Finance Director
Callum Spreng, Corporate Affairs Director
Schroders 0171 658 6000
David Wormsley
Simon Gluckstein
Hoare Govett 0171 678 8000
Mark Astaire
Brunswick 0171 404 5959
James Hogan
A presentation to analysts and institutions will be held at 9.30 a.m. today
(13th January, 2000) at the offices of ABN AMRO Hoare Govett, 250
Bishopsgate, London EC2.
Schroders, which is regulated in the UK by The Securities and Futures
Authority Limited, is acting for SMG and SMG (Jersey) in relation to the
Acquisition and Rights Issue and for no-one else and will not be responsible
to any person other than SMG and SMG (Jersey) for providing the protections
afforded to customers of Schroders or for advising any other person in
relation to the Acquisition and Rights Issue.
Schroders has approved this announcement as an investment advertisement
solely for the purpose of section 57 of the Financial Services Act 1986.
Not for release, publication or distribution in or into the United States,
Canada or Australia. Neither the new Ordinary Shares or the Stock Units to
be issued under the Rights Issue nor the Provisional Allotment Letters have
been nor will they be registered under the United States Securities Act of
1933, as amended, or under the securities laws of any State of the United
States or any province or territory of Canada or Australia or under the
relevant securities laws of the Republic of Ireland and, subject to certain
exemptions, they may not be offered, sold, accepted, renounced or taken up or
delivered, directly or indirectly, in or into the United States, Canada,
Australia or the Republic of Ireland.
This summary should be read in conjunction with the full text of the
following announcement.
APPENDIX I
Expected timetable of events
2000
Record date for the Rights Issue and the CULS Offer 7th January
Posting of the circular and Provisional Allotment 13th January
Letters
Dealings to commence in rights to subscribe for Stock 14th January
Units, nil paid
Latest time for receipt of forms of proxy for the 29th January
Extraordinary General Meeting
Extraordinary General Meeting 31st January
Latest time for splitting Provisional Allotment Letters, 1st February
nil paid
Latest time for acceptance and payment in full 3rd February
Latest time for splitting Provisional Allotment Letters, 15th February
fully paid
Latest time for registration of renunciation of fully 17th February
paid Provisional Allotment Letters
Expected date for despatch of certificates for Stock no later than 24th
Units February
Expected date for completion of the Acquisition, March/April
conversion of Stock Units, completion of the Offer and
commencement of dealings in new SMG Ordinary Shares
APPENDIX II
Definitions
In this announcement, the following expressions shall have the following
meanings, unless the context otherwise requires:
'Act' the Companies Act 1985, as amended
'Acquisition' the proposed acquisition by SMG (Jersey) of the
entire issued share capital of Ginger Media
'Acquisition Agreement' the agreement dated 13th January, 2000 pursuant
to which SMG (Jersey) has agreed to acquire the
entire issued share capital of Ginger Media
'Admission' the admission of the Stock Units and new SMG
Ordinary Shares to the Official List
'CULS' the outstanding £23,213,030 convertible unsecured
loan stock due 2007 issued by SMG
'CULS Offer' the offer being made to Qualifying CULS holders
to subscribe for Stock Units on terms equivalent
to the Rights Issue
'Deed Poll' the deed poll constituting the Stock Units, to be
executed by SMG and SMG (Jersey)
'Directors' or 'Board' the directors of SMG
'Enlarged Group' the Group as enlarged by the Acquisition
'Extraordinary General the extraordinary general meeting of SMG to be
Meeting' or 'EGM' held on 31st January, 2000
'Flextech' Flextech plc
'Ginger Media' Ginger Media Group Limited
'Ginger Media Group' Ginger Media and its subsidiaries
'Hoare Govett' Hoare Govett Limited, a member of ABN Amro Group
'Issue Price' 910p per new SMG Ordinary Share
'London Stock Exchange' the London Stock Exchange Limited
'new SMG Ordinary Shares' the new Ordinary Shares to be issued, credited as
fully paid, pursuant to the Offer
'Offer' the offer by SMG for all the SMG (Jersey)
Preference Shares to be completed on conversion
of the Stock Units
'Official List' the Daily Official List of the London Stock
Exchange
'Ordinary Shares' ordinary shares of 10p each in the capital of the
Company
'Provisional Allotment the white and pink renounceable provisional
Letters' allotment letters relating to the Rights Issue
and the CULS Offer, being despatched to
Qualifying Shareholders and Qualifying CULS
holders respectively
'Qualifying CULS holders' holders of CULS on the register of CULS holders
on the Record Date, other than certain overseas
holders
'Qualifying Shareholders' shareholders on the register of members of the
Company on the Record Date, other than certain
overseas shareholders
'Record Date' the close of business on 7th January, 2000
'Resolution' the ordinary resolution of SMG contained in the
notice of the Extraordinary General Meeting
'Rights Issue' the proposed issue by way of rights of Stock
Units to Qualifying Shareholders
'Schroders' J. Henry Schroder & Co. Limited and any of its
affiliates, as the context so requires
'Shareholders' holders of Ordinary Shares
'SMG' or 'Company' Scottish Media Group plc
'SMG Group' or 'Group' SMG and its subsidiaries
'SMG (Jersey)' Scottish Media Group (Jersey) Limited, a wholly-
owned subsidiary of SMG incorporated in Jersey
which is issuing the Stock Units pursuant to the
Rights Issue
'SMG (Jersey) Preference fixed rate preference shares of 10p each in the
Shares' capital of SMG (Jersey)
'Stockholders' persons registered or entitled to be registered
as the holders of the Stock Units
'Stock Units' the units of convertible unsecured loan stock of
910p each in SMG (Jersey) to be issued pursuant
to the Rights Issue and the CULS Offer
'Underwriting Agreement' the conditional underwriting agreement dated 13th
January, 2000 between SMG, SMG (Jersey) and
Schroders
'United Kingdom' or 'UK' the United Kingdom of Great Britain and Northern
Ireland
