TIDMZATT
RNS Number : 9683K
Zattikka PLC
05 August 2013
For immediate release 5 August 2013
ZATTIKKA PLC
('Zattikka' or the 'Company')
Update re: insolvency proceedings, appointment of administrator
and sale of assets
Further to the announcements made on 22 July, 29 July and 1
August 2013, Zattikka is announcing today a series of events and
transactions.
Sneaky Games
The Company has agreed to sell Sneaky Games, Inc. (SGI) to Seal
Gaming LLC, a group led by David Godwin and David Jarvie, two
previous shareholders in SGI. The transaction is expected to
complete by 15:00 BST today.
The assets sold subject of the transaction include 100 per cent.
of the shares held by Zattikka in SGI, all games operated by SGI
including the recently launched Arena of Heroes (AoH), and a
license to use and adopt SNAP source code for internal purposes,
with no continuing obligations on Zattikka. For the year ended 31
December 2012 (pro-forma unaudited), SGI recorded revenue bookings
of $0.5m and attributable adjusted EBITDA loss of $0.8m. For the
six months ended 30 June 2013 (unaudited), the Directors of
Zattikka expect SGI to have recorded revenue bookings of $0.1m and
attributable adjusted EBITDA loss of $1.1m. While AoH is a
promising new game franchise, it will require a further period of
development, marketing and adaptation to achieve success, which
Zattikka can no longer finance.
The consideration received is the surrender and cancellation of
$1.2m of loan notes and accrued interest payable by Zattikka and
issued to the previous vendors of SGI in April 2012. These proceeds
will reduce the indebtedness of the Company. The transaction will
also include the return via blank stock transfer forms of 1.6m of
ordinary shares in Zattikka held by the previous vendors of SGI ,
representing approximately 7.3% of the outstanding shares of
Zattikka. Any transfer of these shares will be determined by the
administrator.
Intention to appoint Administrator
The Company announces its intention to appoint David Dunckley
and Ian Corfield of Grant Thornton as joint administrators (the
"Administrators") to complete the restructuring of the Company.
This appointment is expected to be approved by 16.30 BST today.
Immediate Next Steps
The Company is in advanced negotiation for the sale of Concept
Art House Inc. and certain assets of Hattrick Europe Limited which
are expected to close later today. As part of that process, the
Board will first appoint the Administrators to the Company and its
subsidiary, Hattrick Europe Limited, and shortly thereafter it is
anticipated the Administrators will complete the sales referred to
above. Both transactions are expected to close by 17:00 BST
today.
Concept Art House, Inc.
The Administrators anticipate that by 17:00 BST today the
Company will have completed the sale of Concept Art House, Inc.
(CAH) to CAH Holdings Group, Inc., a group led by James Zhang and
Matthew Le Merle, two previous shareholders in CAH. This disposal
does not require the approval of shareholders pursuant to the AIM
rules, as the disposal has arisen due to insolvency.
Certain of the holders of the CAH vendor loan notes, including
James Zhang, a substantial shareholder of Zattikka, are related
parties to Zattikka, for the purposes of Rule 13 of the AIM Rules
for Companies. The directors of Zattikka consider, having consulted
with Canaccord Genuity Limited, that the terms of the agreement to
dispose of CAH are fair and reasonable insofar as Zattikka
shareholders are concerned.
The assets sold subject to the transaction include 100 per cent.
of the shares held by Zattikka in CAH, all games operated by the
Zattikka AppStore to the extent transferable (excluding Hattrick)
and CAH's Shanghai based subsidiary, Yi Yi Ju (Shanghai) Software
Technology Co Limited. Specifically this does include the recently
launched Legacy of a Thousand Suns game (LoTS) and also includes a
license to use and adopt SNAP source code for internal purposes,
with no continuing obligations on Zattikka. For the year ended 31
December 2012 (proforma unaudited), CAH recorded revenue bookings
of $4.2m and attributable adjusted EBITDA of $0.1m. For the six
months ended 30 June 2013 (unaudited), the Directors of Zattikka
expect CAH to have recorded revenue bookings of $2.2m and
attributable adjusted EBITDA of $0.1m. The core art service
business continues to grow but with increasing pressure on margins.
While LoTS is a promising derivative of the Facebook game operated
by 5(th) Planet Games, it will also require a further period of
development, marketing and adaptation to achieve success, which CAH
and Zattikka can no longer finance.
The company has $2.4m of vendor loan notes payable to the
previous vendors of CAH, which in the Directors' opinion the
Company will unlikely to able to refinance when they become due.
The consideration received is the surrender and cancellation of at
least 97% ($2.5m) of the loan notes and accrued interest payable by
Zattikka and issued to the previous vendors of CAH in April 2012,
and $0.4m of cash. These proceeds will be available to reduce the
indebtedness of the Company. The transaction will also include the
return via blank stock transfer forms of at least 97% (4.3m) of the
ordinary shares in Zattikka held by the previous vendors CAH,
representing approximately 19.2% of the outstanding shares of
Zattikka. These shares may be transferred to any person other than
a director of the Company or anyone acting in concert (as defined
in the City Code on Takeovers and Mergers) with a director or any
connected person of a director. Any transfer of these shares will
be determined by the administrator.
Hattrick Europe Limited ("HEL")
The Administrator is further anticipating that by 17:00 BST
today the Company, HEL and Hattrick Holdings Ltd (a Gibraltar
subsidiary of the Company) will have completed the sale of certain
key assets in respect of the Hattrick and Popmundo games (HEL) to
Hattrick Limited, a group led by Mattias Soderhielm and Johan
Gustafsson, two previous leading shareholders in Hattrick Holdings
Limited (Vendors) which sold these assets to the Company in April
2012. This disposal does not require the approval of shareholders
pursuant to the AIM rules as the disposal has arisen due to
insolvency.
The assets sold subject of the transaction include HEL's
intellectual property rights, certain server equipment and various
key contracts. For the year ended 31 December 2012 (proforma
unaudited), HEL recorded revenue bookings of $5.5m and attributable
adjusted EBITDA of $1.4m. For the six months ended 30 June 2013
(unaudited), the Directors of Zattikka expect HEL to have recorded
revenue bookings of $2.8m and attributable adjusted EBITDA of
$0.9m. Despite a promising Q1, new global pricing structure, and
tutorial improvement being rolled out in Q3, the core Hattrick game
has continued to perform weaker than anticipated by the Directors
in regard to new subscriber growth later in Q2 and the outlook for
H2 now looks unachievable. In addition, the Vendors had an interest
payment due in June on the vendor loan note amendment which, in
view of the trading weakness and reduced cash flow the Company
cannot make.
The consideration received is the surrender and cancellation of
all of the EUR6.4m loan notes issued to the previous vendors of HEL
in April 2012 and all related accrued interest payable by Zattikka
(including accrued interest already demanded by the noteholders)
and Euros 1.2m of cash. These proceeds will be used first to repay
Barclays Bank plc who have security over the HEL shares and assets
and thereafter reduce the general indebtedness of the Company. The
transaction will also include the return via blank stock transfer
forms of 1.65m ordinary shares in Zattikka, representing
approximately 7.4% of the outstanding shares of Zattikka. These
shares may be transferred to any person other than a director of
the Company or anyone acting in concert (as defined in the City
Code on Takeovers and Mergers) with a director or any connected
person of a director. Any transfer of these shares will be
determined by the administrator.
Further Steps
The result of these transactions will be to reduce the
indebtedness of the Company by approximately $14.5m and the net
indebtedness of the Company will be approximately $2.5m as a
result. The cash from the disposals above will be used to settle
the costs of the Administrations of the Company and HEL including
the above transactions and then on a pari passu basis in accordance
with the statutory priority the remaining liabilities of the
Company and HEL, stemming largely from the original acquisitions,
listing and diligence on possible further acquisitions. As noted
above, the Company and HEL have therefore entered into
administration. The Company's shares will remain suspended from
trading on AIM.
Further announcements will be made by the Company as and when
appropriate.
For further information, please contact:
Zattikka
Mark Opzoomer, Chief Executive +44 (0) 20 7491
Officer 6410
Rob Gorle, Chief Financial Officer
Canaccord Genuity Limited
Nominated Adviser and Broker +44 (0) 20 7523
Simon Bridges / Peter Stewart 8000
For more information visit www.zattikka.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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