Business News
ROO Group Signs LOI to Acquire Kamera
Wednesday 19. March 2008 - Advance Payment of $300,000
ROO Group (BULLETIN BOARD: RGRP) today announced that it had entered into a Content Distribution Agreement (CDA) with Kamera Content AB, providing for a collateralized and callable advance payment by ROO of US$300,000. The CDA provides ROO with an exclusive time period during which to fully negotiate the acquisition of Kamera. The binding CDA was signed between the companies on March 12, 2008, at the same time as the execution of a non-binding Letter of Intent (LOI) for the purchase of 100% of the capital stock of Kamera by ROO.
Kamera is privately held and based in Stockholm, Sweden, with certain back-office operations in Cairo, Egypt. Through its proprietary software and content distribution agreements, Kamera enables corporate clients such as Vodafone, MSN, Orange, Telefonica, O2, Hutchinson and China Mobile to deliver IPTV channels to their customers over mobile and online networks. Kamera’s content library includes localized, ready-to-publish clips from ABC News, Associated Press (AP), SNTV and others, and its proprietary ingestion engine allows for video content to be transcoded into any mobile/digital format.
“We have recognized for some time that Kamera could benefit from associating itself with a more global platform,” explained Henrik Eklund, chief executive officer of Kamera Content. “We believe that our strength in the Eurozone and our deep mobile TV experience will help bring about the overall vision for international IPTV enablement that ROO has set out for itself.”
On an unaudited basis, Kamera generated approximately US$2.9 million of revenue in the 12 months ending December 31, 2007. Kamera management projects revenues of US$5.6 million in 2008.
Kaleil Isaza Tuzman, chairman and chief executive officer of ROO Group, commented, “Henrik and I have known each other for some time, and I have great respect for him and the Kamera team. Our companies have a like-minded approach to corporate clients. We value Kamera’s European footprint, and the potential combination of ROO’s interactive marketing and video enablement tools with Kamera’s mobile distribution capabilities can give us the ability to offer a full-suite IPTV solution. While Kamera is currently generating a very small operating loss, we believe the immediate elimination of overlapping overhead costs will bring this loss to a gain position.”
Isaza Tuzman continued, “The structure of the CDA gives us a great degree of flexibility and ensures ROO’s exclusivity in the negotiation-as we move from LOI to a Definitive Agreement. If we decide to proceed with the acquisition of Kamera, we will do so with an upfront cash amount which can be paid out of treasury and the previously disclosed KIT Capital investment, without the need for any further equity financing. The current LOI also contemplates certain equity payments to Kamera at future dates- based on performance thresholds being met, and priced at future ROO common stock trading levels.”
Unless otherwise amended, if either Kamera or ROO terminates the CDA before April 15, 2008, Kamera is obligated to pay back the cash advance in full plus an amount equal to an annual interest rate of 12 percent compounded daily, by June 30, 2008. The cash advance is also collateralized by Kamera’s source code and a substantial number of Kamera’s shares.