Acquisition of CAP (0669A)

TIDMELE

RNS Number : 0669A

Electric Word PLC

25 January 2011

ELECTRIC WORD PLC

("Electric Word" or the "Company")

Buyout of Partner in i-GB Affiliate Business

Further to the placing announcement on 16 November 2010, the Board of Electric Word is pleased to announce the buyout of its partner Affiliate Media Inc, in the i-gaming affiliate events and publishing business (the "Buyout"), for a cash consideration of GBP1.05 million.

In 2006, iGaming Business Ltd, Electric Word's 70 per cent. owned subsidiary, entered into business with Affiliate Media, Inc. ("Affiliate Media") to produce information serving affiliate marketing partners to the online gaming industry. This comprises a magazine and events business which are now branded iGB Affiliate and are wholly managed by Electric Word. Under the terms of the existing contract between Affiliate Media and iGB, Affiliate Media provides marketing support for the iGB Affiliate business in return for a fee. SBG Companies Limited, a wholly owned subsidiary of Electric Word, now plans to buy Affiliate Media out of its benefits and obligations under the existing contract.

Revenue for this business, which totalled GBP1.5 million for the financial year ended 30 November 2009, is currently recognised within Electric Word. Profits for iGaming Business Ltd. generated by this business totalled approximately GBP236k for the financial year ended 30 November 2009, after fees of GBP228k had been paid to Afffiliate Media. Following the Buyout, all fees previously payable to Affiliate Media will be payable to SBG Companies Limited.

The consideration for the proposed buyout comprises GBP1.05 million in cash, payable on completion of the Buyout. This represents a change in the phasing of the consideration as set out in the 16 November 2010 announcement, but the total consideration has been reduced by GBP0.05 million. The Directors believe that the Buyout will have a number of benefits for Electric Word, including a consolidation of the profits within Electric Word and reduction of management complexity in the business. The consideration will be paid from existing cash resources.

New Bank Facilities

Also further to the placing announcement on 16 November 2010, the Directors also announce that on 24 January 2011 agreement was reached with Electric Word's bankers, the Royal Bank of Scotland, to convert Electric Word's existing revolving credit facility for GBP1.5m, which was due to expire in May 2011, into a term loan repayable over four years with repayments starting in May 2011 and ending in November 2014 at an interest rate of 4.25% over LIBOR. Capital repayments will be spread equally across the four years, with one third of each year's payment made in May and two thirds in November in line with the Company's cash flow profile.

Julian Turner, Chief Executive, commented:

"Following on from our placing in November 2010, we are pleased to announce the completion of the planned buyout of our partner in the iGB Affiliate events and publishing business. This will increase Group earnings in the current year by consolidating our profits and improving the margins in this part of our Business Information division. Our partnership with Affiliate Media has been very successful for both sides and I'm pleased to say that we are continuing to discuss ways of working together on other projects in the future. I'm also pleased that the new agreement with RBS gives us security and visibility on the Group's remaining debt for over three years."

- ENDS -

Enquiries:

 
 Julian Turner, Chief Executive, 
  Electric Word                            020 7954 3470 
 Nicola Biles / Tim Spratt, Financial 
  Dynamics                                 020 7831 3113 
 Andrew Potts / Callum Stewart, Panmure 
  Gordon                                   020 7459 3600

This information is provided by RNS

The company news service from the London Stock Exchange

END

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