7 April 2011
ITS Capital Investments Limited (ITS) to be renamed Yellow Brick Road Holdings Limited, and Yellow Brick Road Group Pty Ltd (YBR), (ITS and YBR collectively called YBR Group) and Nine Entertainment Co. Holdings Pty Ltd (Nine) are pleased to announce that they have signed a Heads of Agreement to build a new strategic alliance in the financial services industry.
Under the Heads of Agreement, Nine intends to invest in YBR Group $13m in cash and kind via a subscription for ordinary shares at a price of $0.40 per share to deliver Nine approximately 19.9% ordinary shareholding in YBR Group. 50% of the Nine Investment will be in cash with the other 50% being provided as contra advertising on Nine Group media properties over a period of five years, at such times and in such amounts and on such of the Nine Group companies and media as YBR Group determines.
The envisaged expanded share capital of YBR Group is set out in Annexure A based on the completion of the current merger of ITS and YBR to create the YBR Group, the proposed Public Raising as approved by the shareholders of ITS on 17 March 2011, and the Nine Investment.
It is expected that on completion of the Nine Investment that:
The Nine Investment is subject to a number of conditions precedent, including:
The parties have agreed to negotiate in good faith to conclude legally binding arrangements within 90 days and have agreed certain exclusivity and confidentiality arrangements surrounding the intended Nine Investment.
"Yellow Brick Road has entered into this strategic deal with Nine with the aim to catapult Yellow Brick Road as the non-bank leader in the financial services sector," says Yellow Brick Road Executive Chairman Mark Bouris. "Nine is a media giant and the convergence of their diversified experience with the imminent need for a people’s champion in retail financial services will put Yellow Brick Road on the path to change the way Australians build and manage their wealth."
"Nine Entertainment Co. has a reputation of creating and supporting recognisable and successful brands and Yellow Brick Road will be our first commitment into the finance market," says Nine Entertainment Co. CEO David Gyngell. "We have worked with Mark Bouris and his team before and had great success, and we are very confident that Yellow Brick Road has the people, the business model and the know-how to make a positive and crucial difference in the financial services sector."
"Yellow Brick Road was built from a disruptive business model, and we believe that having access to quality financial advice should be available to all Australians, not just the chosen few," says Bouris. "The partnership with Nine will enable Yellow Brick Road to build our brand with the backing of the best media company in the business, which will give us the strength and reach to make a substantial impact in the financial services category. Through this alliance, I believe we’ll see a great outcome for Yellow Brick Road, its shareholders, Nine, and most importantly the Australian consumer."
Envisaged Capital Structure of YBR Group on completion of the ITS/YBR merger, the intended Public Raising and the Nine Investment
| Entity | YBR Group Shares (#) | YBR Group Shares (approx %) Pre-Nine Investment |
YBR Group Shares (approx %) Post-Nine Investment |
|---|---|---|---|
| Golden Wealth Holdings (Mark Bouris entity) |
43,453,865 | 33.4% | 26.7% |
| Other ex-YBR Shareholders | 40,675,635 | 31.1% | 25.0% |
| Other ITS Shareholders (1) | 14,904,166 | 11.4% | 9.2% |
| Combined YBR + ITS Shareholders (pre-Public Raising) (1) |
99,033,666 | 76.0% | 60.9% |
| Add: Public Raising | 31,250,000 | 24.0% | 19.2% |
| YBR Group Post Public Raising (1) | 130,283,666 | 100.0% | 80.1% |
| Add: Nine Investment | 32,450,000 | 19.9% | |
| YBR Group Post Nine Investment (1) | 162,733,666 | 100.0% |
(1) Note - These numbers and percentages do not include the existing 133,334 unlisted options to subscribe for shares in ITS.
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