This announcement is for information purposes only and does not itself constitute an offer for sale or subscription of any ordinary shares or other securities in the capital of the Company. This announcement has been issued by and is the sole responsibility of the Company.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES, AND THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE “UNITED STATES”), CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
18 December 2015
Rightster Group plc
(“Rightster”, the “Group”, or the “Company”)
Proposed Placing and Notice of General Meeting
Rightster Group plc (LSE AIM: RSTR), a specialist in capturing and creating advertising spend using its expertise in online video content and audience management, today announces details of a proposed placing.
On 27 November 2015, Rightster’s new board announced that it was concluding the strategic review process and focusing on seeking further investment in the Company. The board is now pleased to report details of a proposed placing of new ordinary shares in the Company.
Ashley MacKenzie, CEO, commented:
“Richard and I joined the Board just a month ago and shared our vision for the business with existing and new institutional investors. They embraced the change and are now investing £10 million so Rightster can move into a more exciting and commercially efficient direction. I’m hugely excited to be leading the company in to the next stage of its growth”
For further information visit www.rightster.com or please contact:
|Rightster Group plc||via Newgate|
|Ashley MacKenzie/Niall Dore|
|Westhouse Securities plc||Tel: 020 7601 6100|
|Andy Crossley/Robert Finlay/Richard Johnson|
|Newgate||Tel: 020 7653 9850|
|Tim Thompson/Adam Lloyd/Robyn McConnachie|
The Company announced today that it proposes to raise £10 million (before expenses) by means of a placing, with existing and new investors, of 200,000,000 Placing Shares at a price of 5 pence per new Ordinary Share. The Issue Price represents a discount of approximately 47.4 per cent. to the Closing Price on 17 December 2015, being 9.5 pence per Ordinary Share.
The Placing is conditional, inter alia, on the approval of shareholders at a general meeting expected to be convened for 6 January 2015.
The Company announced on 26 October 2015 that it intended to make certain changes to the Board of Directors of the Company. Supported by major shareholders, Rightster confirmed the appointment of a new management team on 17 November 2015, with immediate effect. Ashley MacKenzie, previously co-founder and CEO of Base79 Limited, was appointed Chief Executive Officer of the Company. Richard Mansell, previously co-founder and COO of Base79 Limited, was appointed Chief Operating Officer. Sir Robin Miller, formerly Chief Executive and Chairman of Emap plc, one of the UK’s leading media groups, was appointed as non-executive Chairman. Mark Cranmer, a former global executive director of Dentsu Aegis, was appointed non-executive director. Patrick Walker, stepped down as CEO and continued as an employee of the Company for the limited purpose of ensuring a smooth handover to the new management team. Patrick Walker will formally cease to be an employee of the Company on 31 December 2015 and will continue to serve on the Board as a non-executive director. Mark Lieberman (non-executive chairman), Michael Broughton (non-executive director) and David Mathewson (non-executive director) all stepped down from the Board. Niall Dore (CFO) and John Barnett (non-executive director) remain on the Board. Following Admission the SIP Agreement will be terminated by mutual agreement of the parties to that agreement and in accordance with the terms of that agreement.
In light of the Board’s evolving plans for the business, on 27 November 2015, the Company announced its decision to conclude the strategic review process and focus on seeking further investment in the Company.
Background to and reasons for the Placing and new Business Plan
With the skills and experience of the new board members, Rightster intends to transform the business from a third party technology provider to a business creating and capturing advertising spend using its expertise in online video content and audience management. The Directors believe that this will enable Rightster to become a leading social video manager and producer with significant global reach among Millennials (being persons born in the 1980s and 1990s) as well as the younger generations. To reach its objectives the management team will focus its efforts on following the path to profitability outlined below:
Rightster previously acquired 4 businesses in 18 months and the management team believes that the Company’s resource allocation is not focused on the right revenue opportunities and that the Company needs to be rationalised and re-focused on enterprise partners. The business will be simplified including by winding down investment in non-core operations.
To build defensible advantage and on-going equity value, the Company will invest in creating Owned and Operated Channels, targeting the Millennial generation and taking ownership of the audiences that these channels will develop. This will require the strengthening of the creative and production teams and investment in brand specialisations to strengthen the current commercial offering. The aim is to become a leading global player in video content marketing with particular emphasis on social talent.
The ability of the Company to create bespoke content for its clients will be leveraged by improved sales efforts that will focus on content marketing using video and benefit from the new management and board expertise in the digital content and marketing ecosystem.
The $230 billion global TV advertising market faces challenges as audiences move increasingly to multiple online video platforms through new devices. As advertising spend relentlessly follows the changing trends in media consumption, growth in the online video advertising market is strong and the budget for TV advertising is progressively shifting. A recent report by ZenithOptimedia predicts global advertising expenditure will reach $545 billion by the end of 2015. Within this global advertising expenditure, it is estimated that online video is growing faster than any other digital category or sub-category, growing 34 per cent. to $10.9 billion in 2014, and forecast to grow at an average of 29 per cent. a year to reach an estimated $23.3billion in 2017. However, online advertisers are challenged in improving ROI as ad-blockers are becoming a more prevalent technology among consumers and standard display and pre-roll advertisements are failing to engage consumers. Rightster’s re-positioning is in line with these trends as content marketing enables advertisers to mitigate ad blockers and banner noise by embedding their messages within the content being created.
The Directors believe that the Company is well positioned to capitalise on the opportunities in the market as many of the key components required to deliver on the vision are already in place. Brands can find some of the most influential content creators such as Remi Gaillard – one of the largest YouTubers in France by views – on the Rightster network, reach TV scale online audiences and benefit from the Company’s social platform expertise and its previous significant investment in its own technology platform. The added content creation and advertising creative capabilities will strengthen Rightster’s offering and provide additional credentials to the business.
Rightster’s business model is based around four core capabilities:
Rightster already manages large volumes of content and their attendant audiences. The Company aims to invest in more Owned & Operated Channels creating unique environments and audiences through which advertisers can communicate their messages.
Rightster’s platform can manage, distribute and protect complex international rights across multiple platforms and unify data from a wide range of sources to obtain valuable insights for both clients and the Company.
Rightster offers a number of professional services enabled by its technology platform across multiple territories helping enterprise clients maximise their audiences and revenues from their content investments.
Rightster supports a range of commercial models including revenue share, subscription, licensing and fee based services.
The Directors of the Company are planning to put in place a new option pool of up to 12.5 per cent. of the Company’s total issued share capital post completion of the Placing. Share options issued under the scheme will be subject to vesting arrangements as determined by the remuneration committee of the Board. The Company has the existing shareholder authorities necessary to grant options under the new option pool.
The executive directors will receive options equivalent to post Placing issued share capital as follows: (i) Ashley MacKenzie 3%; (ii) Richard Mansell 2%; and (iii) Niall Dore 1.25%, all exercisable at the Placing Price. The remaining options in the scheme will be available for issue, exercisable at the market price at the date of issue, to attract new members of staff and for the incentivisation of existing Company employees over the 10 year period of the scheme’s life.
Use of proceeds
The Placing is expected to raise gross proceeds of £10 million. The net proceeds of the Placing will allow the Company to invest in Owned and Operated Channels, enable the business to be restructured and provide working capital to fund the continued operations and improvements in the business.
The Board currently expects to use £5.5m of the funds raised to invest in Owned and Operated Channels and to provide working capital, £2.0m in restructuring costs and the remainder will be used to fund an employee benefit trust and provide for professional fees and contingencies.
The Company has conditionally placed 200,000,000 new Ordinary Shares at 5 pence per share with existing and new investors to raise £10 million before expenses, assuming the issue of all the Placing Shares. The Placing Shares will, when issued, rank in full for all dividends declared, made or paid after the date of their Admission and otherwise pari passu with the existing Ordinary Shares.
Certain of the Directors and their family members have committed to subscribe an aggregate amount of approximately £0.8 million for new Ordinary Shares in the Placing at the Issue Price.
The Placing Agreement
In connection with the Placing, the Company and Westhouse have entered into the Placing Agreement pursuant to which Westhouse has agreed to use its reasonable endeavours to procure subscribers at the Issue Price. The Placing is not underwritten.
The Placing is conditional upon, inter alia, the passing of the Resolutions at the General Meeting without amendment, the Company having complied with each of its obligations under the Placing Agreement and Admission of the Placing Shares taking place on or before 7 January 2016 (or such later time and date as the Company and Westhouse may agree, being no later than 29 January 2016).
The Placing Agreement contains customary warranties and an indemnity from the Company in favour of Westhouse together with provisions which enable Westhouse to terminate the Placing Agreement in certain circumstances prior to Admission (as applicable), including where any warranties are found to be untrue, inaccurate or misleading or in the event of a material adverse change in the financial position or prospects of the Group.
In consideration of Westhouse’s services under the Placing Agreement the Company has agreed to pay Westhouse a fee to be paid upon Admission. The Company has also agreed to pay all other costs, charges and expenses incidental to the Placing and Admission.
Settlement and dealings
Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. Assuming that the Resolutions are passed, it is expected that Admission will become effective and dealings in the Placing Shares will commence at 8.00 a.m. on 7 January 2016.
Related Party Transactions, Relationship Agreement and Directors’ Participations
As part of the Placing, it is proposed that James Russell DeLeon, IAML and WIM will subscribe, at the Issue Price, for 30,000,000 Placing Shares, 45,300,000 Placing Shares and 69,300,000 Placing Shares respectively. The proposed allotment and issue of the above Placing Shares to James Russell DeLeon, IAML and WIM will constitute a related party transaction for the purpose of AIM Rule 13 as a result of each of Vesuvius (in which James Russell DeLeon is beneficially interested), IAML and WIM being substantial shareholders as defined in the AIM Rules. As at the date of this announcement, Vesuvius holds 15.2 per cent., IAML holds 17.8 per cent. and WIM holds 11.9 per cent. of the Existing Ordinary Shares. As the Directors are either participating in the placing, as set out further below or, in the case of Jack Barnett, act as a nominee director appointed by Vesuvius, there are no independent Directors for the purpose of AIM Rule 13. In relation to the participation in the Placing by each of James Russell DeLeon, IAML and WIM, Westhouse Securities Limited, as the Company’s Nominated Adviser, considers that the terms of the participations are fair and reasonable insofar as the Company’s shareholders are concerned.
As at the date of this announcement, Vesuvius holds 15.2 per cent. of the Existing Ordinary Shares and is a party to the Relationship Agreement which regulates aspects of the relationship between the Company and Vesuvius. The only operative provision of the Relationship Agreement is the right of Vesuvius to nominate a director to be appointed to the Board, which right continues for so long as Vesuvius (together with its associates) have an interest in 10 per cent. or more of the issued share capital of the Company. The current nominated director is John Anthony Barnett. Certain other provisions of the Relationship Agreement which previously regulated aspects of the relationship between Vesuvius and the Company ceased to have effect when Vesuvius’ shareholding (together with that of its associates) in the capital of the Company ceased to represent 30 per cent. or more of all voting rights in the Company.
As part of the Placing, the following Directors will subscribe, at the Issue Price, for 6,050,000 Placing Shares in aggregate, as detailed below:
|As at the date of this document||Immediately following Admission|
|Existing Shares||Placing Shares||Shares||% of Enlarged Share Capital|
|Sir Robin Miller||1,193,243||500,000||1,693,243||0.30%|
The risks described below are not the only ones faced by the Group. In addition, further risks which are not presently known or are currently deemed to be less material, may also impair the Group’s business, financial condition, or results of its operations and its prospects would suffer accordingly.
The Group cannot be certain that it will achieve profitability
Any adverse events relating to the Group’s business, or a significant delay in the introduction of anticipated new revenue streams, or a shortfall in such revenue streams in relation to the Group’s expectations, would have an immediate adverse effect on the Group’s business, operating results and financial condition. There can be no assurance that the Group will be able to introduce identified cost savings or become profitable in any future period. The Group is subject to the risks inherent in the operation of a small and evolving business. It may not be able successfully to address these risks.
The Group’s competitors may take actions which adversely affect revenues, profits or the Group’s financial condition
The Group operates within competitive markets. The Board believes that it has adopted a competitive business strategy. However, the Group’s business, results, operations and financial condition could be materially adversely affected by the actions of its competitors. The Group’s competitors could bring superior scale, better known brands, deeper experience or more compelling products to bear against the Group’s existing and potential business. Intense competition could increase pricing pressure in the market manifested, for example, through declining revenue shares, or increased reliance on the payment of advances ahead of commercial deals. If the Group is not able to compete successfully against existing or future competitors, its competitive position, business, financial condition and results of operations may be adversely affected.
Technological innovation is progressing quickly and the Group may fail to keep pace or make the wrong choices
Customer preferences across the breadth of the Group’s platform and commercial offerings are subject to fast and relatively unpredictable change, as advances in technology progress. Recent changes have included proliferation of device types, operating systems, video formats and delivery methods and further changes are difficult to predict. If the Group fails to adapt sufficiently quickly to any changes, there is a risk that revenue will be lost and ultimately that its proposition will become less competitive in the market. Technology may progress to the point that in-house bespoke solutions become so efficient to build and adapt that the Group’s proposition may become obsolete, which would materially adversely affect the Group’s business, financial condition and/or operating results.
Failure to retain key executives, officers, managers and technical personnel could adversely affect the Group’s operating and financial performance
Retaining and motivating technical and managerial personnel is a critical component of the future success of the Group’s business. The departure of any of the Group’s relatively small number of executive officers or other key employees could have a negative impact on its operations. In the event that future departures of employees occur, the Group’s ability to execute its business strategy successfully, or to continue to provide services to its customers and users or attract new customers and users, could be adversely affected. The performance of the Group depends, to a significant extent, upon the abilities and continued efforts of its senior management. The loss of the services of any of the key management personnel or the failure to retain key employees could adversely affect the Group’s ability to maintain and/or improve its operating and financial performance
|Announcement of the Placing||18 December 2015|
|Posting of the Document and Form of Proxy||19 December 2015|
|Latest time and date for receipt of Forms of Proxy||10.00 a.m. on 4 January 2016|
|General Meeting||10.00 a.m. on 6 January 2016|
|Admission becomes effective and commencement of dealings in Placing Shares on AIM||8.00 a.m. on 7 January 2016|
(1) References to times in this announcement are to London time (unless otherwise stated).
(2) The dates and timing of the events in the above timetable and in the rest of this announcement are indicative only and may be subject to change.
(3) If any of the above times or dates should change, the revised times and/or dates will be notified by an announcement through an RIS.
|Market price per Existing Ordinary Share(1)||9.5 pence|
|Number of Existing Ordinary Shares in issue(2)||369,143,635|
|Number of Placing Shares to be offered by the Company||200,000,000|
|Issue Price of each Placing Share||5 pence|
|Discount to market price per Existing Ordinary Share(3)||47.4 per cent.|
|Estimated proceeds of the Placing (before expenses)(4)||£10 million|
|Estimated proceeds of the Placing (after Placing expenses)(4)||£9.4 million|
|Enlarged Share Capital following Admission(4)||569,143,635|
|Percentage of Enlarged Share Capital represented by the Placing Shares (4)||approx. 35.1 per cent.|
(1) Closing Price on AIM on 17 December 2015, being the last practicable Business Day prior to the date of this announcement.
(2) As at 17 December 2015, being the last practicable Business Day prior to the date of this announcement.
(3) Being the percentage discount which the Issue Price represents to the Closing Price on AIM on 17 December 2015.
(4) Assuming the issue of all the Placing Shares.
The following definitions and terms apply throughout this announcement, the Document and in the Form of Proxy unless otherwise stated or the context requires otherwise:
|“Act”||the Companies Act 2006, as amended|
|“Admission”||the admission of the Placing Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules|
|“AIM”||AIM, a market operated by the London Stock Exchange|
|“AIM Rules”||the AIM Rules for Companies setting out the rules and responsibilities in relation to AIM companies published by the London Stock Exchange as amended from time to time|
|“Board” or “Directors”||the directors of Rightster|
|“Business Day”||a day other than a Saturday or Sunday on which banks are open for commercial business in the City of London|
|“certificated form”||a share or security which is not in an uncertificated form|
|“Closing Price”||the closing middle market quotation of an Ordinary Share as derived from the AIM Appendix to the Daily Official List of the London Stock Exchange|
|“Company” or “Rightster”||Rightster Group plc, a company incorporated in England and Wales with registered number 8754680 and having its registered office at Third Floor, 1 Neal Street, London WC2H 9QL|
|“CREST”||the relevant system (as defined in the CREST Regulations) for paperless settlement of share transfers and the holding of shares in uncertificated form (in respect of which Euroclear is the operator as defined in the CREST Regulations)|
|“CREST Regulations”||the Uncertificated Securities Regulations 2001 (SI 2001/3755), as amended|
|“Disclosure Rules” or “DTR”||the Disclosure and Transparency Rules made by the UKLA in accordance with section 73(A)(3) of FSMA relating to the disclosure of information in respect of financial instruments which have been admitted to trading on a regulated market|
|“Document”||the document which, for the avoidance of doubt, does not comprise a prospectus (under the Prospectus Rules) nor an admission document (under the AIM Rules)|
|“Dollar” or “$”||the lawful currency of the United States|
|“Enlarged Share Capital”||the issued Ordinary Share capital of Rightster immediately following completion of the Placing|
|“Euroclear”||Euroclear UK and Ireland Limited, the operator of CREST or such other person as may for the time being be approved by HM Treasury as operator under the CREST Regulations|
|“Existing Authorities”||the authorities granted to the Directors to allot Ordinary Shares and to disapply pre-emption rights pursuant to (i) certain of the Shareholder resolutions passed at the annual general meeting of the Company held on 24 June 2015; and (ii) the Shareholder resolutions passed at the general meeting of the Company held on 26 May 2015; and (iii) the Shareholder resolutions passed at the general meeting of the Company held on 25 July 2014|
|“Existing Ordinary Shares”||each Ordinary Share in issue as at the date of this announcement|
|“FCA”||the Financial Conduct Authority|
|“Form of Proxy”||the form of proxy enclosed with the Document for use by Shareholders in connection with the General Meeting|
|“FSMA”||the Financial Services and Markets Act 2000 (as amended)|
|“General Meeting”||the general meeting of Rightster convened by the notice set out in the Document to be held at 10.00 a.m. on 6 January 2016 at the offices of Rightster, Third Floor, 1 Neal Street, London WC2H 9QL|
|“Group”||the Company and its subsidiaries from time to time|
|“IAML”||Invesco Asset Management Limited, a wholly owned subsidiary of Invesco Limited, acting as agent for and on behalf of its discretionary managed clients|
|“Issue Price”||“5 pence per Placing Share”|
|“London Stock Exchange”||London Stock Exchange plc|
|“Notice of General Meeting”||the notice of the General Meeting, which is set out at the end of the Document|
|“Official List”||the Official List of the UKLA|
|“Ordinary Shares”||ordinary shares of 0.1 pence each in the capital of the Company|
|“Owned and Operated Channels”||media channels, pages or websites which are owned and/or operated by the Company (or any of its subsidiaries)|
|“Placees”||subscribers for the Placing Shares pursuant to the Placing|
|“Placing”||the conditional placing by Westhouse as agent for the Company of the Placing Shares at the Issue Price pursuant to, and on the terms of, the Placing Agreement|
|“Placing Agreement”||the conditional agreement dated 18 December 2015 between Westhouse and the Company relating to the Placing|
|“Placing Shares”||200,000,000 new Ordinary Shares to be issued pursuant to the Placing|
|“Prospectus Rules”||the Prospectus Rules made in accordance with EU Prospectus Directive 2003/71/EC|
|“Registrars”||Capita Asset Services|
|“Relationship Agreement”||the relationship agreement dated 11 November 2013 between, inter alia, the Company and Vesuvius|
|“Resolutions”||the resolutions to be proposed at the General Meeting, as set out in the Notice of General Meeting|
|“Restricted Jurisdictions”||the United States, Australia, Canada, Japan, and the Republic of South Africa|
|“RIS”||a regulatory information service operated by the London Stock Exchange as defined by the AIM Rules|
|“Securities Act”||the US Securities Act of 1933, as amended|
|holders of Ordinary Shares
the consultancy and advisory agreement dated 11 November 2013 between Rightster Group plc, Sport Investment Partners LLP and Michael Broughton
|“Sterling” or “£”||the lawful currency of the United Kingdom|
|“UK” or “United Kingdom”||the United Kingdom of Great Britain and Northern Ireland|
|“UKLA”||the FCA acting in its capacity as the competent authority for the purposes of Part VI of FSMA|
|“uncertificated form”||recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST|
|“United States” or “US”||the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia|
|“Vesuvius”||Vesuvius Limited, a company registered in Gibraltar whose registered office is at Suite 2-1A, Leisure Island Business Centre, 23 Ocean Village Promenade, PO Box 1300, Gibraltar|
|“Westhouse”, “Nominated Adviser” or “Nomad”||Westhouse Securities Limited, a company incorporated in England and Wales with registered number 00762818 and having its registered office at Beaufort House, 15 St Botolph Street, London EC3A 7BB|
|“WIM”||Woodford Investment Management LLP|
The Document is expected to be sent to Shareholders shortly and will also be available on the Company’s website: http://rightster.com/about/investors