Iconic Labs (AIM:ICON ) has entered into a management services contract with Greencastle Capital, which has at the same time, completed its acquisition of the JOE media UK business.
The London-listed media and technology business announced that it was working with Greencastle Capital on a bid to buy the Joe media brand in Ireland and Britain last month.
The completed acquisition means that JOE media, which generates in excess of £10m of revenue per year, has now been taken out of administration by Greencastle Capital.
JOE media has previously been described as 'most influential publisher' by the BBC.
The social news brand aimed at young people in the UK and Ireland is best known for its most watched Rugby show in the world, 'House of Rugby' while currently, the company stands as the largest independent digital media company in the Republic of Ireland.
Under the contract, Iconic Labs will be paid a monthly management fee of £50,000 plus external costs, and receive 25% of all profits if certain revenue and profit targets are met.
Iconic Labs will immediately manage all operational and commercial aspects of the JOE media businesses in the UK and will do so in Ireland following regulatory clearance.
Shares in Iconic Labs have increased 100% following the news to 0.0.2p.
The management services contract which commences today is for an initial period of one year, following which it renews automatically every 12 months until terminated by both parties.
The group said it expects the contract to contribute a significant amount of revenue to the Company and will enable Iconic Labs to become operationally profitable within three months.
It is also expected that a one-company structure approach covering JOE media in Ireland and the UK will enable Iconic Labs to return the firm to profitability in 2021, or even before.
"The acquisition of the JOE media UK businesses by Greencastle Capital is by far the biggest deal we have been involved with as a Company so far. ” said John Quinlan, CEO of Iconic Labs.
He said, “Both the JOE media business and the management contract structure fit our strategy of leveraging scarce capital while operating the best brands in digital media.
With JOE media's credibility in specific areas like politics and sport, Iconic Labs now has access to some best in class assets through the management services contract.”
Iconic Labs believes that the step change in revenues, operations and prospects as a result of this management services contract allows for a strategic financial review of Iconic Labs itself.
Consistent with its previously announced intention, the group hopes that this will provide the opportunity to raise sufficient capital to be able to clean up its balance sheet.
“I hope this deal will provide an opportunity for the Company to raise sufficient equity capital to be able to look at the Company's options for more conventional equity raises and/or conventional debt in order to finance the Company's growth on a more conventional funding basis,” added Quinlan.
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