Placing to raise approximately £5.54 million and Notice of General Meeting

Posted: 29/11/2019

29 November, London – Blackbird plc (AIM: BIRD), developer and seller of the patented market-leading cloud video editing platform Blackbird, is pleased to announce an oversubscribed placing of 39,552,893 new ordinary shares of 0.8 pence each in the Company (“Placing Shares”) at a price of 14 pence per share (the “Placing Price”) to raise approximately £5.54 million before expenses (the “Placing”), to be undertaken in two tranches. The Placing was conducted by Allenby Capital Limited (“Allenby Capital”).

Transaction Highlights

• The Placing Shares have been placed with existing and new institutional investors, including existing shareholders, certain Directors and family of the Directors.
• Directors and family of the Directors have agreed to subscribe for approximately £0.43 million in the second tranche of the Placing.
• Of the funds raised, approximately £1.49 million is conditional, inter alia, on the approval of shareholders, at a General Meeting of the Company to be held at 10:00 a.m. on 16 December 2019 (the “GM”) of a resolution (the “Resolution”) to provide authority to the Directors to allot new ordinary shares otherwise than on a pre-emptive basis, further details of which are set out below.
• The Placing Shares will represent approximately 11.80 per cent. of the issued share capital of the Company as enlarged by the issue of the Placing Shares.
• The estimated net proceeds of the Placing, which will be £5.22 million, will be used by the Company to:
  • • increase marketing expenditure in the U.S. and grow the Company’s presence there on the back of recent contract wins;
    • bolster the team in the following areas: U.S. Sales, Operations, Support and R&D;
    • continue to develop the Company’s product offering and maintain a competitive advantage; and
    • strengthen the Company’s balance sheet, facilitating longer-term deals with new customers.
• The Directors believe that the Placing will significantly enhance the ability of the Company to deliver on its strategic plan.

Ian McDonough, Chief Executive Officer of Blackbird, said: “These are very exciting times for Blackbird as we gain serious traction with some of the world’s largest and most high-profile content producers. Our US focus is really bearing fruit as demonstrated by the longer term deals at the US Department of State and the recent announcement of our integration across the global Bloomberg operation. We hope this will continue to blossom as our OEM strategy really takes off. Early signs with IMG, Deltatre and particularly TownNews show that they can scale up very quickly.

“The raising of funds is primarily to strengthen our balance sheet as we enter into larger and longer contracts with bigger companies. In addition, we want to build on the momentum to raise our profile in the US market, to strengthen the team in key pinch points across the organisation including US sales, operational delivery, support and an additional head in the development team.”

A circular (the “Circular”), containing information in relation to the Placing and a notice convening the General Meeting, is expected to be sent to shareholders today. The General Meeting will be held at 10.00 a.m. on 16 December 2019 at Tuition House, 27-37 St. George’s Road, London SW19 4EU. The Circular will also shortly be posted on the Company’s website: www.blackbird.video.

Contacts

Blackbird plc

Tel: +44 (0)20 8879 7245
Ian McDonough, Chief Executive Officer
Adrian Lambert, Marketing Director

Allenby Capital Limited (Nominated Adviser and Broker)
Tel: +44 (0)20 3328 5656
Nick Naylor
Nicholas Chambers

About Blackbird plc

Blackbird operates in the fast-growing SaaS and cloud video market, and has created the world’s most advanced suite of cloud-native computing applications for video, all underpinned by its lightning-fast codec. Blackbird’s patented technology allows for frame-accurate navigation, playback, viewing and editing in the cloud. Blackbird underpins multiple applications, which are used by rights holders, broadcasters, sports and news video specialists, esports, live events and content owners, post-production houses, other mass market digital video channels and corporations.

Since it is cloud-native, Blackbird removes the need for costly, high end workstations and can be used from almost anywhere on almost any device. It also allows full visibility on multi-location digital content, improves time to market for live content such as video clips and highlights for social media distribution, and ultimately results in much more effective monetisation.

Blackbird® is a registered trademark of Blackbird plc.

Websites
www.blackbird.video

Social media
www.linkedin.com/company/blackbird-cloud
www.twitter.com/blackbirdcloud
www.facebook.com/blackbirdplc

Further details of the Placing

The information contained below has been extracted from, and should be read in conjunction with, the Circular. Terms defined in the Circular shall have the same meanings where used in this announcement.

Introduction

The Company announced earlier today a proposed placing to raise approximately £5.54 million (before expenses) through the issue of 39,552,893 new Ordinary Shares at the Placing Price in two tranches: the First Placing Shares and the Second Placing Shares.

The allotment of the Second Placing Shares is conditional, inter alia, upon the passing of the Resolution to be proposed at the General Meeting to provide sufficient authority to enable the allotment of the Second Placing Shares and disapply statutory pre-emption rights which would otherwise apply to the allotment of the Second Placing Shares. Notice of the General Meeting, at which the Resolution will be proposed, is set out at the end of this document.

This document also contains the Directors’ recommendation that Shareholders vote in favour of the Resolution. The Directors intend to vote in favour of the Resolution in respect of their own beneficial holdings in the Company (including in the case of the Investing Directors their respective family interests) which amount in aggregate to 85,634,224 Ordinary Shares and represent approximately 28.96 per cent. of the Company’s Existing Ordinary Shares.

The Directors believe that the Placing is the most appropriate way to raise additional funds for Blackbird. The Directors consider that the Placing provides greater certainty than other available means of raising additional funds in a timely fashion and minimises transactional costs.

The Placing Shares to be issued pursuant to the Placing are to be admitted to trading on AIM, which, in the case of the First Placing Shares, is expected to take place on 4 December 2019 and, in the case of the Second Placing Shares and assuming that the Resolution is passed at the General Meeting, is expected to take place on 18 December 2019.

Business overview

Blackbird operates in the fast-growing SaaS and cloud video market. It has created an advanced suite of cloud-native computing applications for video, all underpinned by its lightning-fast codec. The Company’s patented technology allows for frame accurate navigation, playback, viewing, editing and publishing in the cloud. Blackbird’s target audience is the news and sports sectors.

Since it is cloud-native, Blackbird removes the need for costly, high end workstations and can be used from almost anywhere on almost any device. It also allows full visibility of multi-location digital content, improves time to market for live content such as video clips and highlights for social media distribution, and ultimately results in much more effective monetisation.

Current trading and prospects

Revenue increased by 27 per cent. to £0.48 million for the six-month period ended 30 June 2019 compared to the corresponding period last year. Deferred revenue and contracted order book were £1.21 million at 30 June 2019, an increase of 86 per cent. compared to 30 June 2018 and of 113 per cent. compared to 31 December 2018.

In North America, revenue for the six-month period ended 30 June 2019 increased by 152 per cent. year on year to £0.16 million whilst revenue for the period from the sports sector increased by 64 per cent. year on year to £0.20 million reflecting the Company’s strategic focus on the sector.

Operating costs for the period were £1.42 million versus £1.29 million in the corresponding period last year, net of capitalised development costs of £0.20 million (2018: £0.11 million). The increase in costs has been driven through the strengthening of the Company’s staffing resources. The EBITDA loss for the period was £1.02 million versus £0.97 million in the corresponding period last year, whereas the loss for the period was £1.19 million versus £1.27 million due to a lower amortisation charge compared to the prior period.

Cash used in operations in the period was £1.04 million versus £0.90 million in the same period last year.

Financial and commercial outlook

Blackbird started the second half of the year in a strong position with contracted orders and deferred revenue at the highest level in the Company’s history at £1.21 million compared with £0.57 million at 31 December 2018. This includes the new multi-year deals with A+E Networks, which started post the period end, and the extensions with TownNews and IMG.

At the end of September 2019, Blackbird was chosen by the U.S. Department of State for video production, including the publishing of fast turnaround digital news to its own and other online news outlets. The contract awarded to Aperture Solutions Group, Blackbird’s U.S. partner, was for one year with multi-year extension options. The contract value is a six-figure U.S. dollar amount each year of the contract.

Recognition of Blackbird continues to grow. Blackbird exhibited at the Google Cloud Partner Pavilion during the IBC conference, one of the world’s leading media, entertainment and technology shows, in Amsterdam in September 2019. At this show Blackbird won a “What caught my eye” award which was only presented to six of the seventeen hundred exhibitors. In partnership with IMG, Blackbird was also nominated for a “Best in fan engagement” award at the Sports OTT summit in Madrid in November 2019 for its work on the Open Golf Championship.

On 26 November 2019, Blackbird signed a multi-year deal with Bloomberg Media. Bloomberg Media, a leading multi-platform global business and financial media company, will utilise Blackbird for simple, fast, collaborative video editing and publishing from the cloud. Annual revenues from this deal will be significant for Blackbird. After closing this deal, Blackbird’s contracted order book and deferred revenue stands at £2.01 million, a record level for the Company and three and a half times larger than at 31 December 2018.

Blackbird has a track record of landing and expanding with customers post contract wins. TownNews is on its fourth deployment of Blackbird in the last 18 months, and, by the end of the year, will be in forty-five local news stations compared to three in the summer of 2018. IMG, a leading global producer and distributor of sports media had already expanded before a new agreement earlier this year which was the first multi-year deal and for increased annual fees. Peloton, the Global fitness provider, started using Blackbird to edit its on-demand virtual classes in one studio in early 2019 and is now in four studios and a fifth one is planned. The Company is confident that, as Blackbird is deployed, this land and expand trend will continue with its recent contract wins.

Blackbird’s commercial team continue to i) directly sell Blackbird as a key infrastructure component in the technology stack of major media and entertainment businesses and ii) pursue deals with Original Equipment Manufacturers (“OEMs”), where Blackbird is sold as part of an end-to end solution to the OEMs’ customers. The Company has a strong pipeline with multiple ongoing discussions with large companies around the globe in these areas. As cloud adoption becomes more prevalent, with its strong Blackbird platform offering and with the right commercial team in place, the Company is well positioned to exploit this.

Reasons for the Placing and use of proceeds

Pursuant to the Placing, the Company will receive gross proceeds of approximately £5.54 million. The net proceeds from the Placing, which will be approximately £5.22 million, will be used by the Company to:

• increase marketing expenditure in the U.S. and grow the Company’s presence there on the back of recent contract wins;
• bolster the team in the following areas: U.S. Sales, Operations, Support and R&D;
• continue to develop the Company’s product offering and maintain a competitive advantage; and
• strengthen the Company’s balance sheet, facilitating longer-term deals with new customers.

The Directors believe that the net proceeds of the Placing will significantly enhance the ability of the Company to deliver on its strategic plan.

Details of the Placing and Admission

Under the Placing, the Company has conditionally raised approximately £5.54 million (before expenses) through a placing of 39,552,893 new Ordinary Shares at 14 pence per share with institutional and other investors, including the Investing Directors. The Company has entered into a Placing Agreement with Allenby Capital under which Allenby Capital has agreed to use its reasonable endeavours to procure Placees for the Placing Shares at the Placing Price. The Placing has not been underwritten.

The Placing Shares will represent approximately 11.80 per cent. of the Enlarged Share Capital. The Placing Price represents a discount of approximately 21.13 per cent. to the closing mid-market price on AIM of 17.75 pence per Existing Ordinary Share on 27 November 2019, being the last dealing day prior to publication of this document.

The Company currently has limited authority to issue new Ordinary Shares for cash on a non-pre-emptive basis. Accordingly, the Placing is being conducted in two tranches.

The first tranche of the Placing, to raise a total of £4,051,253.64 by the issue of 28,937,526 Ordinary Shares (being the First Placing Shares) at the Placing Price, has been carried out within the Company’s existing share allotment authorities. Application has been made for the First Placing Shares to be admitted to trading on AIM and it is expected that admission (First Admission) will take place on 4 December 2019. The allotment of the First Placing Shares is conditional, inter alia, upon First Admission and the Placing Agreement becoming unconditional in respect of the First Placing Shares and not being terminated in accordance with its terms prior to First Admission.

The second tranche of the Placing, to raise a total £1,486,151.38 by the issue of 10,615,367 Ordinary Shares (being the Second Placing Shares) at the Placing Price, is conditional upon, inter alia, the passing of the resolution to be put to shareholders of the Company at the General Meeting (granting the Directors authority to allot the Second Placing Shares otherwise than on a pre-emptive basis). In addition, the allotment of the Second Placing Shares is conditional, inter alia, on the Placing Agreement becoming unconditional in respect of the Second Placing Shares and not being terminated in accordance with its terms prior to Second Admission. It is expected that Second Admission will take place on 18 December 2019.

The Placing Agreement contains, inter alia, customary undertakings and warranties given by the Company in favour of Allenby Capital as to the accuracy of information contained in this document and other matters relating to the Company. Allenby Capital may terminate the Placing Agreement in specified circumstances prior to Admission, including, inter alia, for material breach of the Placing Agreement or any other warranties contained in it and in the event of certain force majeure events occurring.

The Placing Agreement is conditional so far as concerns the First Placing upon, inter alia, First Admission occurring by not later than 8.00 a.m. on 4 December 2019 (or such later time and/or date as the Company and Allenby Capital may agree, not being later than 8.00 a.m. on 18 December 2019). If such condition is not satisfied or, if applicable, waived, the First Placing will not proceed. The First Placing is not conditional upon the Second Placing proceeding.

The Placing Agreement is conditional so far as concerns the Second Placing upon, inter alia, Second Admission occurring by not later than 8.00 a.m. on 18 December 2019 (or such later time and/or date as the Company and Allenby Capital may agree, not being later than 8.00 a.m. on 2 January 2020). If such condition is not satisfied or, if applicable, waived, the Second Placing will not proceed.

The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared on or after the date on which they are issued.

It is expected that CREST accounts will be credited on the relevant day of Admission and that share certificates (where applicable) will be dispatched within 10 working days of each Admission.

Related Party Transactions

Premier Miton Group plc (“Premier Miton”), which currently owns 57,766,728 Ordinary Shares representing 19.54 per cent. of the Company’s issued share capital at the date of this Circular, has agreed to subscribe 5,000,000 Second Placing Shares as part of the second tranche of the Placing. As a substantial shareholder of the Company, Premier Miton is to be treated as a ‘related party’ in accordance with the AIM Rules and its participation is a related party transaction pursuant to Rule 13 of the AIM Rules. The Directors of the Company, having consulted with Allenby Capital, consider the terms of Premier Miton’s participation in the Placing to be fair and reasonable insofar as Shareholders are concerned.

The following Directors have agreed to subscribe for Second Placing Shares as part of the second tranche of the Placing:
[table id=13 /]
*and family interests

As directors of the Company, the Investing Directors are each to be treated as a ‘related party’ in accordance with the AIM Rules. Accordingly, the participation of the Investing Directors in the Placing is a related party transaction pursuant to Rule 13 of the AIM Rules. The Independent Director, having consulted with Allenby Capital, considers the terms of the participation of the Investing Directors in the Placing to be fair and reasonable insofar as Shareholders are concerned.

Application for Admission

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is anticipated that such admission will become effective and that dealings in the First Placing Shares will commence at 8.00 a.m. on 4 December 2019 and that admission will become effective and dealings in the Second Placing Shares will commence at 8.00 a.m. on 18 December 2019.

General Meeting

The notice convening the General Meeting to be held at Tuition House, 27-37 St. George’s Road, London SW19 4EU at 10.00 a.m. on 16 December 2019 is set out at the end of this document. At the General Meeting, Shareholders will consider a resolution, to be passed as a special resolution, to authorise the directors to allot the Second Placing Shares and disapply Shareholders’ statutory pre-emption rights which would otherwise apply to the allotment of the Second Placing Shares.

The Resolution, if passed, would also authorise the directors to allot Ordinary Shares free of shareholders’ pre-emption rights up to an additional nominal value of £236,549 (representing 10 per cent. of the Company’s issued share capital as at today’s date) to maintain the level of the Directors’ authority to allot Ordinary Shares other than on a pre-emptive basis granted at the Company’s annual general meeting held earlier this year.

Action to be taken by Shareholders

You can submit your proxy electronically through the website of the Company’s registrars, Link Asset Services, at www.signalshares.com. The electronic submission of proxy must be received at least 48 hours before the time of the General Meeting. To vote online you will need to log in to your share portal account or register for the share portal if you have not already done so and you will require your investor code. Once registered, you will be able to vote immediately. Voting by proxy prior to the General Meeting does not affect your right to attend the General Meeting and vote in person should you so wish. Further information regarding the appointment of proxies and online voting can be found in the notes to the Notice of General Meeting.

Instructions for voting by proxy through CREST are set out in paragraph 10 of the notes to the Notice of General Meeting.

In the case of non-registered Shareholders who receive these materials through their broker or other intermediary, the Shareholder should complete and send a letter of direction in accordance with the instructions provided by their broker or other intermediary.

In order for the Second Placing to proceed, Shareholders will need to approve the Resolution set out in the Notice of General Meeting. If the Resolution is not passed at the General Meeting, the Second Placing will not proceed in the form currently envisaged, with the result that the anticipated net proceeds of the Placing will be reduced and the Company will be unable to implement in full the anticipated use of funds set out above.

Directors’ Recommendation

The Board of Blackbird considers the Placing to be in the best interests of the Company and its shareholders as a whole and therefore the Directors unanimously recommend that shareholders vote in favour of the Resolution as they intend to do in respect of their own shareholdings (including in the case of the Investing Directors their respective family interests) of, in aggregate, 85,634,224 Ordinary Shares (representing approximately 28.96 per cent. per cent. of the Company’s existing issued share capital).

Total Voting Rights

Following First Admission, the Company’s enlarged issued share capital will comprise 324,623,725 Ordinary Shares, with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 324,623,725.

Following Second Admission, the Company’s enlarged issued share capital will comprise 335,239,092 Ordinary Shares, with voting rights. The Company does not hold any Ordinary Shares in treasury. Therefore, the total number of Ordinary Shares in the Company with voting rights will be 335,239,092.

These figures may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules.

MAR

The Market Abuse Regulations (EU) No. 596/2014 (MAR) became effective from 3 July 2016. Market soundings, as defined in MAR, were taken in respect of the Placing with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the Product Governance Requirements) may otherwise have with respect thereto, the Placing Shares have been subject to a product approval process, which has determined that the Placing Shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, investors should note that: the price of the Placing Shares may decline and investors could lose all or part of their investment; Placing Shares offer no guaranteed income and no capital protection; and an investment in Placing Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Placing.  Furthermore, it is noted that, notwithstanding the Target Market Assessment, only investors who have met the criteria of professional clients and eligible counterparties have been procured.  For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to Placing Shares.