Acquisition of Become Media Pty Ltd and share placement

BecomeMedia website

The Directors of InfoChoice Limited (ICH) advise that they have signed a heads of agreement to purchase 100% of the equity in BecomeMedia Pty Ltd, for 6.75m shares and 16m Options. Simultaneously, InfoChoice has agreed to make a placement of 18.75m shares to Become Media Holdings Pty Limited at eight cents per share, a premium to the current share price, raising $1.5m.

The Options are exercisable in three tranches subject to the InfoChoice share price increasing to 8.5c, 15c and 20c. On completion of the purchase, and prior to exercise of the Vendor Options, Become Media Holdings will own approximately 33% of InfoChoice and, after the exercise of all options, this will rise to 42%.

Become Media Holdings is backed by Macquarie Bank and Associated Media Investments (AMI) and headed by media executives, Rob Gamble and Tim Trumper. The pair established Become Media in late 2000 and, in early 2001, negotiated an exclusive licence with Screaming Media in the United States who are currently the world’s No. 1 digital content provider.

Under the agreement two of the current directors of Become Media Holdings, Chairman John Gerahty of Associated Media Investments, and Michael Traill of Macquarie Bank, will join the board of InfoChoice as non executive Directors. In addition, Tim Trumper, former Director and Group Publisher of Australian Consolidated Press and Rob Gamble, former CEO and Director of DMG Regional Radio in Australia will both join InfoChoice as Executive Directors.

The CEO and major shareholder of InfoChoice, Chris Gosselin, welcomed the move, adding that it created significant opportunities for the company going forward on a variety of fronts. “Firstly we are delighted that significant investors such as Macquarie Bank and AMI have decided to invest via the placement in InfoChoice in spite of the current climate for tech stocks. We believe that the relationship with these two significant investors will allow significant opportunities going forward.

“Secondly, Become Media is in the business of Content Creation and Syndication, providing Australian web sites with a valuable source of information. This fits well with our existing business of Information distribution, and offers opportunities to not only extract synergy for the two businesses, but also to create new revenue streams at minimal additional expense.”

“Finally Become Media adds significant strength to our management and Board. We welcome the experience of John Gerahty and Michael Traill to our board, and the founders of Become Media, Tim Trumper and Rob Gamble as Executive Directors. Both Tim and Rob have excellent credentials, and tremendous experience within both print and electronic media.”

Importantly the added management depth will allow InfoChoice to combine to develop new revenue streams that neither party would be able to create alone.

The growth of the content market is expected to create higher revenue, especially in 2003 and 2004. The placement of 18.75 m shares for $1.5m strengthens the InfoChoice balance sheet, and will provide opportunities to further expand the Company’s business and revenue base. After the placement the Company expects to retain in excess of $5m in cash, or approximately 7 cents per share on an undiluted basis.

InfoChoice recently announced that following a combination of strict cost control and increased sales revenue that it had made a profit in the month of April. Although this was not sufficient to enable it to record a profit for the June quarter, both the increase in sales and reduced expenses have made a significant impact on both the bottom line and cash position for the quarter.

Initially the acquisition of Become Media is not expected to be earnings positive for InfoChoice, with capital from the placement intended to overcome this, but synergies from both cost savings and revenue opportunities will occur.

Whilst recognising that there is still progress to be made towards sustained and substantial profitability, the Directors are confident that the acquisition will provide important critical mass to InfoChoice, and Become Media will form the basis for further expansion in a number of related areas as the combined businesses develop.

The transaction is subject to shareholder approval, and a general meeting of InfoChoice shareholders will be convened as soon as practicable.

For further information:

BecomeMedia website

Christopher Gosselin
Infochoice Limited
02 9247 6788
0411 537 830

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