A Chinese fund is mulling taking a substantial share stake in Audioboom Group PLC (LON:BOOM).
The spoken word audio on-demand platform operator revealed it is in discussions with the unnamed fund, which is contemplating pumping up to US$8mln in the company; Audioboom currently has a stock market valuation of around £13.5mln.
The cash injection would include a loan of US$500,000 or so to chief executive officer (CEO) Rob Proctor, who would be obliged to use the money to subscribe for shares in Audioboom at the same price as the fund – currently expected to be not less than 2.5p a share.
Audioboom's shares closed at 2.62p last night.
If the share subscription comes to pass then the aggregate holding of the fund plus Proctor would be around 29.9%, which is just below the level that would trigger a mandatory bid for the entire issued share capital of Audioboom.
As per usual, the company stressed that there is no certainty that the cash injection will happen, but it does appear to have a use for the money, as it revealed it is currently considering the acquisition of SONR News Limited, primarily for the purpose of obtaining SONR's engineering team and neuro-linguistic programming and artificial intelligence algorithms.
Audioboom’s CEO Rob Proctor and former Audioboom non-executive director Nick Candy together hold around 27.6% of SONR's shares.
Candy’s departure from the board was announced today, along with another non-executive director, Michael Cooper.
At the same time, the company’s chief financial officer, David McDonagh, has been appointed to the board, where he will be joined by tax and investment specialist Steven Smith, who joins as a non-executive director.
“Steven has been a close adviser to the Candy Brothers for 15 years and currently runs one of their private investment funds. He has a strong understanding of Audioboom, having acted as an alternate director for Nick Candy on a number of occasions, and is already well known to the board,” revealed Malcolm Wall, chairman of Audioboom.
All of the above threatened to overshadow a solid first half update from the company in which it revealed it is on track to meet full-year expectations.
The company’s platform is growing in popularity, with the company revealing that booked revenue in the second half of the financial year already exceeds all of the revenue in the first half, which Totalled £329,000 versus £192,000 in the corresponding period of last year.
Total listens on the platform surged to 222mln in the six months to the end of May from 123mln in the corresponding period of the previous year.
“Fill rates and CPMs (cost per thousand listens that advertisers pay) are expected to improve further in all our major territories and content verticals over the next few months and beyond. We also have multiple technological upgrades to the Audioboom platform scheduled for H2 2016, which we believe will create increasingly large volumes of monetisable ad impressions,” revealed CEO Rob Proctor.
The company’s cash reserves at the end of May stood at £0.9mln.
The share price of Audioboom was volatile in the first hour of trading, initially rising to 2.94p from last night’s close of 2.62p before ebbing to 2.47p.