News blog

Coolabi

  • BY: Andrew Hore |
  • POSTED: 28/10/2011 |

North Promotions has finalised the details of its bid for animations and intellectual property developer Coolabi.

North is backed by Coolabi’s biggest shareholder Edge Performance VCT. The bid of 7.75p a share is in line with previous indications. There is also a share alternative of 10 North shares for every 100 Coolabi shares. The 10 North shares will comprise seven preference shares and three ordinary shares. No more than £3.4m of North shares will be issued to Coolabi shareholders. The fully diluted value of the cash bid is £4.95m.  It would appear likely that Edge will take its consideration in shares for its 27.6% stake. The Coolabi management wants to take shares for the equivalent of 30.9% of the company’s fully diluted share capital.

Those shareholders will account for £2.9m of Cooloabi’s market capitalisation leaving the other shareholders with the potential to take £500,000 worth of shares in North.

The North preference shares yield 6%. There will be no dividend payments until December 2014 when the full amount rolled up by that date will be paid. After that distributions will be quarterly. The preference shares are redeemable at the end of 2016.

Coolabi directors Jeremy Banks, Tim Ricketts and William Harris have all invested in North management ordinary shares, equivalent to 15% of the ordinary shares of North, and Harris has been appointed a non-executive director.

If the company is sold or wound up then the holders of the North management ordinary shares will receive between 15% and 60% of the cash left after the preference are redeemed. The exact amount depends on the valuation achieved. These shares are entitled to 50% of ordinary dividends until the holders get an IRR of 18%.

North will raise £1m to provide working capital to Coolabi.

Management believes that there will be many consolidation opportunities in the sector. That will require more cash.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFOctober2011_25.pdf

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