Heads of Agreement and Loan Update

RNS Number : 8719J

Parallel Media Group PLC

22 December 2015

 

22 December 2015

PARALLEL MEDIA GROUP PLC

("PMG" OR THE "GROUP")

Heads of Agreement and Loan Update

Parallel Media Group Plc (AIM:PAA), a leading event marketing and media agency, is pleased to announce that its music division, through PCM, has entered into a legally binding heads of agreement with Team Rock Limited ("TeamRock") whereby Parallel Contemporary Music International Limited ("PCMI"), a recently incorporated wholly owned subsidiary of PCM, will act as TeamRock's independent, commercial representative in Greater Asia and South Africa for negotiations in relation to the Classic Rock Roll of Honour and associated radio, licencing and merchandise rights.

As with the agreement relating to the 2016 Classic Rock Roll of Honour music event in Tokyo with Klab Entertainment Inc. which was announced on 12 November 2015, this agreement will result in PCMI receiving certain licence fees, commissions and a share of the net profit from any other event, if any. The agreement will terminate in the event that a fully-executed long form agreement is entered into or, if not, the agreement will terminate on the third anniversary if no extension is agreed between the parties within the six months prior to that date.  Alternatively, the agreement can be terminated in the event of certain breaches by either party.

As set out in the Group's final results for the year ended 31 December 2014, pursuant to the PCM Agreement, PMG will receive all the revenue which PCM (or its wholly owned subsidiaries) receives after the deduction of certain approved operating costs and any VAT. The effect of this arrangement with PCM is that the Group receives the economic benefit of the music division, while the costs associated with the joint venture arrangement are met by PCM rather than PMG.

The revenue generated in accordance with the Heads of Agreement is expected to exceed the approved operating costs and VAT as referred to above. Accordingly, this arrangement will result in revenue being received by the Group.

TeamRock is majority owned by funds managed by Harwood Capital LLP, which also own 28.23 per cent. of the ordinary shares in Parallel Media Group plc, and Tim Sturm, non-executive director of PMG, is a partner of Harwood Capital LLP and a non-executive director of TeamRock.  

Loan funding

In addition, the Company announces that David Ciclitira, the Chairman of the Company, and Parallel Contemporary Art Limited, a company under the control of David Ciclitira, have provided further additional loans to the Company totalling £129,000 in aggregate. The balance of loans now due to David Ciclitira and entities controlled by David Ciclitira, which includes these loans, amounts to £826,384.  

The loans have been made to meet contractual obligations of PMG on a short term basis and as yet there are no formal terms of these loans.

The provision of the loans is deemed to be a related party transaction under the AIM Rules for Companies. The independent directors, being Tim Sturm and Ranjit Murugason, consider that, having consulted with Sanlam Securities UK, the Company's Nominated Adviser, the provision of the loans is considered fair and reasonable so far as the Company's shareholders are concerned.

The definitions used in this announcement are as set out in the Group's final results for the year ended 31 December 2014.

Contact Details

For more information please contact:

Parallel Media Group Plc David Ciclitira www.parallelmediagroup.com	[phone]
Sanlam Securities UK Limited Virginia Bull - Corporate Finance www.sanlamsecuritiesuk.com	[phone]

Correction

In the announcement released on 12 November 2015 regarding the Heads of Agreement entered into with TeamRock and Klab Entertainment Inc., the arrangement between the Group and PCMI was incorrectly stated. As set out above, PCMI is a wholly owned subsidiary of PCM and, accordingly, is bound by the terms of the PCM Agreement.

 

END

 

 

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