RGM announces $4m capital raising[Fri 23/04/2010 12:05:23]By...

RGM announces $4m capital raising

[Fri 23/04/2010 12:05:23]


By Brendan Swift

RGM Media plans to raise at least $4 million so that it can produce action film Point Break 2 and launch a TV joint venture with Mark Burnett International.

The capital raising will also be used to expand the former talent agency, founded by Robyn Gardiner in 1982, into a global media and entertainment business.

The company, which is in the throes of being listed on the Australian Securities Exchange after a reverse takeover of tech company Biosignal, released further details in a prospectus yesterday.

?The company?s goal will be to apply the capital raised to expand its artist management business both in Asia and the US, as well as kick start a number of planned feature films and television productions during 2010,? director Tim Boyd wrote in the prospectus.

RGM plans to release about five mainstream films (budgeted at under $US60 million each), per year and is currently focused on Point Break 2 ? the sequel to the 1991 hit starring Keanu Reeves and Patrick Swayze (not to be confused with Phil Avalon's Liquid Bridge, starring Ryan Kwanten, which was rebadged Point Break 2 for its European release in 2004).

The company is eligible to receive 25 per cent of any profits the film, which is due to enter production by mid-year, generates, as well as $US1 million in executive production fees.

RGM says it has secured pre-sale commitments of $US4.6 million against the $US25 million projected budget, a conditional commitment from a film financing fund and a preliminary completion guarantee bond.

However, it must also pay a separate entity called Batrax Entertainment just over $1.1 million in current liabilities related to the production, and it is also liable for up to $US675,000 in development and pre-production costs.

The expansion into production is a marked change for the company, which is best known for co-representing actors such as Cate Blanchett and Rose Byrne. The company generally takes a 10 per cent commission on artists' earnings and 12 per cent for literary clients.

RGM will use between $736,000 and $1.92 million of the capital proceeds to expand its artist management services, as well as increase the size of its content development and management teams. It will also use $2.4 million on the Point Break 2 project and between $300,000 and $1 million for its new TV joint venture with Mark Burnett International.

Burnett has produced TV shows such as Survivor and The Apprentice, although RGM will focus on developing and producing live events and TV content aimed at Asian markets.

?RGM will be able to plan for the development and production of two television products by the end of calendar 2010, increasing to four series in calendar 2011,? the prospectus said.

Incoming RGM directors Devesh Chetty, Jason Fisher and Robyn Gardiner will receive annual remuneration of $US249,996, the prospectus said. They will also receive the equivalent of a $US120,000 annual housing and car allowance and a $100,000 bonus once the RGM-Biosignal deal is completed.

Gardiner is also eligible for a bonus payment of $802,000 to be paid out over two years if the company achieves a market capitalisation of $35 million.

Biosignal shareholders also approved a lucrative deal in March for current chairman and director Tim Boyd, who arranged the RGM acquisition, after Biosignal posted three years of operating losses.

He will receive a success fee of $150,000, as well as 200,000 share options and 200,000 shares to a nominee company.

RGM?s talent management business posted a net profit before tax of $623,000 over the year ended June 30, 2009, according to independent expert WHK Horwath Corporate Finance.

The capital raising, which can be increased up to $6 million (at 20 cents per share), closes May 24.