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UKRD Group is bidding 2p a share for Local Radio Company, which values the local radio broadcaster at £1.44m.
The bid is at double the market price prior to its announcement and is the price at which UKRD bought its own stake. It has been launched in order to head off the proposal to raise £1.51m via a 42-for-five open offer at 0.25p a share.
The bid seems a bit late considering that the closing date for the open offer is on 27 March 2009 - the day that the bid has been announced - and the general meeting needed to issue the shares is on 1 April. UKRD says that it was surprised to hear the plans for the open offer and this is what sparked its decision to make a bid. UKRD is voting against the open offer at the general meeting.
Local radio broadcaster and software developer UKRD owns 13.5% of LRC and its chairman Trevor Smallwood owns a further 16%. UKRD will have to pay £1.25m in cash for the shares it does not own.
UKRD operates six radio stations and LRC a further 20 stations.
UKRD will get the cash it required to buy LRC from its own resources plus £820,000 of funding from the company’s directors.
Shares in LRC rose 0.5p to 1.5p each, which values the company at £1.08m.
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