REG - Electric Guitar PLC - 3radical Limited to be placed into administration

Electric GuitarAnnouncement

28/11/2024 07:30

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RNS Number : 0096O  Electric Guitar PLC  28 November 2024

28 November 2024

 

 

Electric Guitar PLC

("Electric Guitar", the "Company" or the "Group")

 

3radical Limited to be placed into administration pending sale as a going
concern

 

Electric Guitar PLC (LSE: ELEG), the digital marketing and advertising company
providing first-party data solutions, announces that the Board of 3radical
Limited ("3radical"), Electric Guitar's principal trading subsidiary, has
instructed Paul Ellison and Christopher Errington of KRE Corporate Recovery
Limited ("KRE") to market the business and assets of 3radical for sale, in
anticipation of their being appointed as 3radical's Administrators and
completing a pre-packaged sale of the business and assets on a going concern
basis to a successful purchaser.

 

This decision was made with the agreement of Electric Guitar's Board,
following the unexpected termination of its negotiations for substantial
further investment, coupled with revised trading projections by 3radical's
management that were presented to Electric Guitar's Board meeting on 26
November, and which would require more funding than was currently available to
the Group.

 

In the 7 months since acquiring 3radical in May 2024 (the "RTO"), Electric
Guitar has been actively working on its buy and build strategy. It
successfully completed the all-share acquisition of Mymyne Ltd in August which
resulted in significant synergies and cost-savings for the 3radical business.
Mymyne also brought additional IP which the Group is already starting to
monetise in combination with its new collaboration agreements achieved since
the RTO.

 

However, this acquisition was achieved despite the fall in the Company's share
price from soon after the RTO. Further planned acquisitions in consideration
for the Company's shares have been inhibited since then as the share price has
continued to decline.

 

The Group has nevertheless invested over £0.25 million since the RTO in sales
and marketing alone, and at the same time has invested in developing its Voco
Solutions Portal ("VSP") product, enabling 3radical's Voco to be installed by
clients in hours rather than months, as well as working with expert developers
on new AI-driven marketing communications products.

 

It has taken longer than expected to benefit from the fruits of such activity
although this is now starting to show. Therefore, the Board has been actively
seeking additional capital beyond its existing resources to be able to proceed
with its buy and build mission, beyond just bringing the 3radical business to
profit. However, the Company's declining share price has not only inhibited
its ability to pursue its buy and build mission, but has also made an equity
fundraising difficult at this time.

 

The Board has therefore been actively engaging in discussions with prospective
investors based mainly in Singapore where it has an existing presence, and
believed it had secured in principle very substantial new funds last week
before the most recent further decline in the Company's share price. However,
just before the Board meeting on 26 November and following the recent share
price decline, the Board was unexpectedly informed that the prospective
investors had ultimately decided not to invest in an AIM-quoted company as
they considered the market insufficiently liquid, despite continuing to be
interested in the Company's business in the future.

 

This combination of factors led the Electric Guitar Board to conclude that,
absent substantial additional funding in the short term that was not now
available, 3radical's business could not reasonably be expected to be able to
pay its historic and ongoing liabilities as they fall due, despite 3radical's
management's positive longer term outlook for the business.

 

KRE have therefore been instructed to seek buyers for 3radical with additional
resources to enable 3radical to continue trading and realise its longer term
potential.

 

The Board is taking further advice and exploring its options in relation to
Electric Guitar and its financial position and a further update will be
provided as soon as possible.

 

For further information:

 

 Electric Guitar PLC                                     via Yellow Jersey

 John Regan, CEO

 KRE Corporate Recovery                                  01189 977 357

 Christopher Errington

 Allenby Capital (Nominated Adviser and Joint Broker)    020 3328 5656

 Jeremy Porter / Piers Shimwell / Dan Dearden-Williams

 Axis Capital Markets (Joint Broker)                     020 3026 0320

 Richard Hutchison

 GIS (Joint Broker)                                      020 7048 9400

 James Sheehan

 Yellow Jersey PR                                        020 3004 9512

 Charles Goodwin/ Annabelle Wills/ Bessie Elliot         electric@yellowjerseypr.com

                           (https://appriver3651008983.sharepoint.com/sites/CompanyData/Shared%20Documents/Corporate%20Finance/Mandated%20Transactions/Electric%20Guitar/Announcements/electric@yellowjerseypr.com)

 

Notes to Editors

 

Electric Guitar PLC (AIM: ELEG) is the provider of first-party data solutions
for the marketing and advertising industry, empowering businesses to realise
the value of their first-party data. In an era of changing consumer attitudes
towards the use of their data, tighter privacy legislation, and the demise of
third-party cookies, first-party data is now the key to success in digital
marketing. Electric Guitar's strategy is to acquire and scale businesses that
help marketers maximise the value of first-party data by curating, managing,
and deploying it, and in doing so making Electric Guitar the industry standard
for first-party data solutions. As the first part of this strategy, Electric
Guitar acquired 3radical Limited, a company that utilises its Software as a
Service platform, 3radical Voco, to enable organisations to engage individuals
and request their data directly using interactive digital experiences. It has
since entered into collaborations with several other businesses operating in
the field, as well as a joint venture with Exelia Technologies Limited called
Marcomms.ai for producing AI-driven products and services for the digital
marketing and advertising industry.

For further information please visit www.electricguitarplc.com
(http://www.electricguitarplc.com) .

 

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