At last Vision Media Group (VMG) have finally gotten rid of TrainFX. In an RNS this morning they announced the sale of TrainFX to what we quite plainly see as a “vehicle” created by Mike Cottman, the Executive Chairman to extract the business from the Group at the lowest cash value possible!
And as the smart folks on the investor forums and bulletinn boards are correctly pointing out ‘with the majority of the consideration on the never never’ !!!
Many will also say that VMG shareholders have not got a good deal here (TrainFX sold too cheap) but we would argue that however the deal was cut, investors should just be pleased that they have got rid of the business (and all the costs associated with it).
We seriously doubt if any other company would have touched TrainFX as a stand alone business and so most probably the only way to get rid of it would have been through a related party transaction as it was!
We would expect VMG’s Derby office to go as a result of this transaction.
Vision Media Group (Intl) PLC
17 March 2008
Press Release 17 March 2008
Vision Media Group (International) plc
(“VMG” or “the Group”)
Sale of TrainFX assets
Vision Media Group (International) plc (AIM:VMG), the outdoor media contractor, announces that it has signed heads of agreement in respect of the sale of the assets of its UK transport division, TrainFX Limited (“TrainFX”) to New Planet Investments Limited (“New Planet”) for a total consideration of £1.5 million.
Based in London, New Planet is a recently formed company which has been established for the purpose of acquiring the TrainFX assets from VMG. The consideration will be paid in a combination of cash, loan notes and preference shares.
As announced on 28 September 2007, the Group has been in discussions to sell this transport division. This agreement with New Planet has provided VMG with an immediate non-refundable £50,000 initial deposit for specific working capital purposes surrounding TrainFX activity. In addition, New Planet will issue a loan note to VMG on completion for £300,000, less the amount of the initial deposit, totalling £250,000, which will carry interest of 8 per cent. per annum and is repayable on the earlier of 31 December 2008 or the listing of New Planet on either PLUS Markets plc (“PLUS”) or the AIM Market of the London Stock Exchange plc (“AIM”). Furthermore, New Planet will issue preference shares to VMG on completion for £1.2 million, carrying a cumulative coupon of 5 per cent. and being redeemable for cash on the earlier of a capital raising of no less than £2 million by New Planet either privately or via admission to either PLUS or AIM, or by 1 March 2011. In addition, VMG will also gain a beneficiary interest in New Planet which will be credited as fully paid and will represent 25 per cent. of that company’s issued share capital, thus effectively valuing the overall transaction at £2 million.
A further 25 per cent. of the issued share capital of New Planet will be owned by Mike Cottman, Executive Chairman of VMG. Mike Cottman is the only director of VMG with a holding in New Planet and, as Executive Chairman of VMG, the disposal is also a related party transaction under the AIM Rules. The Chief Executive Officer of VMG, who is deemed independent for this transaction, and the Group’s independent non-executive Director, having consulted with Seymour Pierce Limited, consider the disposal to be fair and reasonable insofar as shareholders are concerned and in the best interests of the Group and its shareholders as a whole.
In the last reported financial period, for the six months ended 30 June 2007, TrainFX made a net loss of £294,994 on turnover of £10,100. The division had gross assets of £552,835, gross liabilities of £1,916,864 and net liabilities of £1,069,035.
Dominic Brookman, CEO of VMG, said: “The sale of the assets of TrainFX represents the successful conclusion of several months of discussions to sell this area of Vision Media Group. This deal provides us with returns that will exceed the value of our investment in TrainFX to date. The immediate cash deposits, as well as realising the value of the loan notes over time, will contribute to the development of our already-established outdoor media offering.
In addition, we also retain a beneficial interest in the potential growth of TrainFX as New Planet develops this to exploit what remain major, but as yet unfulfilled, commercial opportunities within the transport sector.”