Futuremedia (FMDAY: PINK) Eliminates Over 2M GBP From it’s Balance Sheet via CVA (Company Voluntary Arrangement)

Futuremedia Highlights

The sale of FM Learning division (Oct ’08) and the successful completion of the Company Voluntary Arrangement (CVA) on April 7^th have considerably strengthened the company’s balance sheet. The CVA eliminated £2.2 million of unsecured debt from the balance sheet and established a 5 year payout plan for the remaining £750k of unsecured legacy debt.

After the first 6 months of fiscal 2009

• Revenues are up 16% compared to the prior year period.
• Audited figures for Spice division for the full fiscal year 2008 achieved ₤7.35 million in revenue.
• Gross margin was 42% and Spice division was EBITDA positive by £21k for the full year.
• Corporate operating overhead was reduced in 2008 full fiscal year by 46% compared to the prior-year period. In monetary terms, corporate overhead was reduced by over £1.58 million for the full fiscal year.

Recent & Upcoming Events

The company recently represented three clients at MIPIM (the world’s premier real-estate summit and four clients (NBC Universal, CBS Paramount, Al Jazeera, and the Discovery Network) at MIPTV. Looking ahead, the company will support clients at the Cannes Film Festival as well as the largest show and event of the year; the Lions International Advertising Festival.

What is a CVA and how does it affect shareholders?

After Futuremedia received several queries from North American shareholders all asking the same thing, I figured it would be a good idea to explain how exactly a CVA (Company Voluntary Arrangement) works.

But first, a little history; the CVA has been in UK law since 1986. In London alone, over 12,000 companies have taken advantage of this rescue option. In short, qualifying companies that are struggling with cash flow or excessive legacy debts can negotiate a deal with all its creditors at once that allows the company to repay some of its legacy debt out of future profits over an agreed upon period of time. The catch is that the company must demonstrate to the UK courts that it has a viable business plan going forward. Additionally, it may not pay out dividends during the CVA period and must receive approval from 75% of the unsecured creditors and 50% of the company shareholders. Speaking of shareholders, it is important to note that the shareholders’ ownership stake is in no way affected by a CVA. Also, the company’s directors remain in control and the company does not go into liquidation. It is strictly a deal between a company and its creditors.

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Congrats to our friend George O’Leary and their entire team. Time to get this news out into the marketplace.

Regards,
George