CGHL Cosmedia

RNS Number:1681M
Cosmedia Group Holdings Limited
21 January 2008


                         Cosmedia Group Holdings Limited

                           ("Cosmedia" or the "Group")


Bank financing to exploit opportunities in 24 hour home shopping television, to
be guaranteed by major shareholders supported by option arrangements



As previously announced on 25 October 2007, the Group and its business
affiliates have entered into a series of agreements to launch a home shopping
business on a 24 hour home shopping channel in Mainland China.  This home
shopping channel is expected to be launched during the first half of 2008,
subject to the relevant regulatory approval of its application. In order to
allow the Group to proceed with this opportunity, the Group has entered into a
bank loan for the amount of HK$78,023,000 (approximately US$10 million) (the "
Bank Loan").



The Group still intends to investigate the possibility of raising equity finance
during 2008, to which end the Directors have been granted by its Shareholders,
pursuant to duly approved resolutions, the authority to issue up to one third of
the nominal value of the Group's total issued Ordinary Shares. Such funds raised
by any second round of equity fund raising ("Fund Raising") would be used to
enable the Group to repay the Bank Loan and further develop its investments in
24 hour home shopping television.



To facilitate the Group in procuring the Bank Loan to develop its interests in
24 hour home shopping television, Mr. Stanley Pong (Director and Executive
Chairman of Cosmedia's Board of Directors) and Heap Profit Investments Limited
(together herein referred to as the "Guarantors") have agreed to provide
personal guarantees for the full amount of the Bank Loan. In return for the
Guarantors agreeing to provide their personal guarantees, the Group has granted
them options ("Options") to subscribe for Shares in Cosmedia ("Option Shares")
("Option Agreement").



The principal terms of the Option Agreement are as follows:



*                    the Options may not be assigned by the Guarantors save to
certain connected persons (whoever owns the Options is herein referred to as "
Option Holder");



*                    upon completion of any subsequent Fund Raising, under which
at least sufficient funds are raised to pay off the Bank Loan plus accrued
interest thereon, Cosmedia will call the Options at a price per Share which is
calculated by applying a 15% per annum (i.e. 1.25% per month) discount to the
price per Share at which the Fund Raising is completed ("Option Price").
However, the resulting Option Shares issued to the Option Holder cannot exceed
4% of the outstanding Shares at the time of grant. Cosmedia would then repay the
Bank Loan out of the proceeds of the Fund Raising and/or exercising of Options.
It is envisaged that the Option Holders as part of the Fund Raising would sell
their Option Shares on a pre-placed basis to the new investors at the same price
per Share as the Fund Raising placement price per Share, or hold them if no such
pre-placement would be possible;



*                    if the Fund Raising would not provide sufficient funds for
Cosmedia to pay off the Bank Loan plus accrued interest thereon and/or
concurrently have all the Option Shares sold, the Options would lapse instead of
being called and the Guarantors may elect to either (i) have the Bank Loan
continue, and receive a guarantee fee negotiated with Cosmedia on fair and
reasonable commercial terms, or (ii) take over the Bank Loan and receive the
same interest therefrom as the Bank Loan;



*                    if the Bank Loan terminates before completion of the Fund
Raising, the Guarantors may elect to either (i) have Cosmedia pay off the Bank
Loan plus accrued interest thereon (provided Cosmedia has sufficient funds to do
so), at which time the Options lapse; or (ii) have the Guarantors themselves
acquire the Bank Loan, at which time the Options would not lapse; and



*                    the Option Period ends on the earlier of the completion of
the Fund Raising and 31 December 2008.  However, as long as the Bank Loan has
not yet terminated, in the event the Fund Raising is not completed by 31
December 2008, the Guarantors may elect either (i) to extend the Bank Loan (if
loan facilities are available to the Company on reasonable commercial terms) and
the Options to 31 December 2009 or such shorter time as then mutually agreed, or
(ii) repay the Bank Loan plus accrued interest thereon, have the Options lapse,
and have a claim against Cosmedia for past guarantee fees in an amount
negotiated to be fair and reasonable commercially, or (iii) assume the Bank
Loan, in which event the Bank Loan and Option would remain in place and can be
extended with the mutual consent of the parties.









For further information, please contact:


Cosmedia Group Holdings Limited
Stanley Pong/Antony Chan                                        +852 2136 8222


Collins Stewart Europe Limited - Nominated Adviser to Cosmedia
Adrian Hadden                                             +44 (0) 20 7523 8350


Catullus Consulting
Alex Mackey                                               +44 (0) 20 7736 2938



Notes to Editors:



Cosmedia's business



*                    Foreign ownership of television and broadcasting channels
in China is not permitted and all such Chinese channels are state-owned and
operated under the supervision of the Chinese government. Cosmedia has
established a long-term relationship with China Great Wall Art and Culture
Center ("Great Wall") a subsidiary of the Chinese State Administration of Radio,
Film and Television ("SARFT"), to act as exclusive advertising sales agent to a
Chinese television channel with nationwide broadcasting potential ("the Channel
").



*                    Cosmedia generates revenue by selling the Channel's
advertising airtime and providing integrated solutions to advertisers such as
programme title sponsorship, product placement and product messages embedded in
programmes, and from television home shopping. In the future, Cosmedia will look
to generate new media advertising income and home shopping revenue through, for
example, co-operation with the Channel's dedicated website, wireless operators
and service providers.



Market overview



*                    Television is currently the largest media sector in China,
both in terms of its reach and influence. With the benefit of new technologies,
the Chinese television industry has grown and diversified, developing into a
complex network of satellite, cable, video-on demand and Internet-based service
providers.



*                    According to ZenithOptimedia, China's television market is
the largest market in the Asia-Pacific region, with 355 million television
households representing a penetration rate of 95 per cent as of 2004. Of these,
128 million are cable households. In 2005, ZenithOptimedia forecast that by the
end of 2007 total television households and cable households would increase to
385 million and 164 million respectively.



The Company listed on AIM in order to raise the Company's profile as a quoted
company and to provide access to capital markets for future expansion.


ENDS



                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

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