Zinc Media Group (AIM: ZIN ) has announced a proposed placing of around £4m at 60p per share via an accelerated bookbuild to further strengthen the business in the months ahead.
The TV and multimedia content producer said £0.5m of the proceeds will be used for talent acquisition, to take advantage of opportunities such as acquiring regional business winning TV talent, other business winning creative talent, as well as IP and format opportunities.
£3.3m will go towards general working capital, mainly as a result of losses incurred due to the Covid-19 pandemic which has delayed productions and commissioning during lockdown as well as to support new commissions and delivery of pipeline opportunities.
"I am delighted that our shareholders have given such a positive endorsement of the progress we have made on the transformation plan,” said Mark Browning, CEO of Zinc.
He added, “The Group has navigated Covid with great resilience. We will further strengthen our business winning creative teams in the months ahead, both in Zinc Television and the new Zinc Communicate, and look forward to growth in 2021."
Back in September 2019, the Company’s new management team laid out a transformation plan to drive significant long-term profitable growth and, following a $4.6m fundraising in January 2020, commenced implementation of the plan which included US growth plans.
Shares in Zinc Media have increased almost 6% since the beginning of September 2020 to open 1.64% lower this morning at 60.00p following the announcement.
As announced in September 2020, despite the impact of the Covid-19 pandemic, the Group has made ‘significant progress’ by completing phase one of this wider transformation plan.
Zinc has secured new commissions this year with new TV channels in the UK and US including, inter alia, CNN, A&E, UKTV and new commissioning departments in Channel 4.
Investments have been made in several areas to drive improved performance and long-term profitability including in new post-production facilities, human resources, improved financial practices as well as the relocation of the London businesses into a new creative HQ.
While the pandemic has made delivery of the transformation plan ‘significantly harder’, Zinc has restructured two loss-making divisions as part of a programme of permanent cost reductions which will generate savings of £0.7m per annum compared to pre-Covid-19 levels.
Zinc informed investors that phase two of its transformation plan, which will focus on creating a significantly enlarged media content production business with diversified revenues, will be built on the spine of the Company’s newly transformed core TV business.
The group said its pipeline for 2021 looks strong, with £4.1m of commissions booked and a further £23.4m of commissions at an advanced stage or in engaged discussions with clients.
Zinc believes that, given the completion of phase 1 of the transformation plan and the further opportunities outlined, the Company can deliver profit and be cash generative in the second half of 2021 even if revenue doesn't fully recover to pre-Covid-19 levels in 2021.
For more news and updates on Zinc Media: