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Coolabi

  • BY: Andrew Hore |
  • POSTED: 20/09/2011 |

Animations and intellectual property developer Coolabi says it has agreed in principle to a 7.75p a share bid from North Promotions Ltd, a company funded by Edge Performance VCT.

There would be a cash offer and a share alternative. North intends to incentivise Coolabi’s management in order to retain them if the deal goes ahead. The independent directors believe the offer is the best option available even though the share price closed at 9.25p last night. The shares had been trading at a 2011 low of 5.75p a few weeks before the bid talks were announced.

The shares have fallen 2.25p to 7p, valuing Coolabi at £3.89m.

In June, Edge subscribed for £552,000 of convertible loan notes in Coolabi and they are convertible at 6.75p a share. If these were converted then Edge would own 27.6% of Coolabi. That puts it in a strong position.

Interim revenue fell from £962,000 to £606,000, while the loss increased from £374,000 to £605,000 partly due to marketing costs for Poppy Cat. Most of the revenues came from licensing and merchandising. Revenues will be second half weighted but there is still a lot of work to do. Poppy Cat is doing well but the timing of deals is difficult to predict.

There was a cash inflow from operations but investment in programme production meant that debt increased. Net debt was £1.35m at the end of June 2011. That does not include £915,000 of production financing borrowings or the Edge loan notes.

Download the September 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFSeptember2011_24.pdf

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