Issue of Equity

Parallel Media Group plc

Changes to business arrangements in Asia and restructuring of financing

On 16 August 2006, Parallel Media Group plc (the "Company" or "PMG") announced
that it had entered into binding heads of agreement (the "Heads") for a
rearrangement of its Asian golf interests and that it was seeking to raise
funds to repay loans and to provide working capital and progress towards
completion was indicated in an announcement dated 7 September 2006 and a
further announcement will be made in due course.

PMG and the other parties to the Heads (the "Malaysian Shareholders") agreed on
8 September 2006 that the agreement was capable of completion at that time but
that in order to ease the transition of certain banking arrangements, the
payment of the amounts defined in the Heads would now be scheduled for 28
September 2006. Save for this variation of timing no other terms of the Heads
were varied.

PMG announces that it has entered into commitments for the raising of £3.0
million by the issue of shares, convertible loans and loans to enable the
repayment of old loans now required on 28 September 2006 and to provide working
capital.

Full details of these arrangements are detailed below.

Background

Since 2003, PMG's interests in its PGA European Tour golf tournaments held in
Asia have been owned by an associated company, Parallel Media Asia (2003)
Limited ("PMA"), and its subsidiary. PMA was established with Malaysian
financiers and PMG holds a minority interest and receives commissions based on
the income of the tournament. It has become clear to the Board over recent
months that the original intentions of the establishment of this arrangement
were not being achieved and, in particular, the expansion of PMG's golfing
interests in Asia and the cash flow PMG was receiving from the existing
interests were not satisfactory.

The Board also established that this arrangement was not achieving the
objectives of our partners. Accordingly, negotiations were entered into with a
view to dissolving the partnership and sharing the events managed by the PMA
Group between the two groups. Notwithstanding the Dissolution, it is likely
that the two groups will work together in the future on specific projects.

In addition, the Board decided that the level of the Company's borrowings (much
in convertible form) was unacceptably high and unsustainable in the longer
term. As a result, the Board has held discussions with the major creditors
(including the Malaysian Shareholders) with a view to improving this situation
a further announcement will be made in due course.

Agreements with the Malaysian Shareholders

The detailed terms of the dissolution are being reflected in two agreements
(the "PMA agreements") to be entered into by PMG and the Malaysian Shareholders
reflecting the matters dealt with in the Heads. These terms are in summary:

  * PMG will transfer its shareholding in PMA to certain of the Malaysian
    Shareholders
   
  * PMG will acquire the rights to stage the UBS Hong Kong Open and the TCL
    Classic golf tournaments
   
  * Amounts due from PMA to PMG will be settled (in part by the novation of
    PMG's bank loan to PMA)
   
  * All shareholder agreements (including those whereby PMG receives
    commissions on the income of the tournaments run by PMA) will be terminated
   
Finally, and as part of the balance sheet restructuring further detailed below,
PMG will, at Completion, for £1.9 million, repay the convertible loans made by
the Malaysian Shareholders to PMG (net of cash received from PMA in respect of
the Dissolution) and by the end of November 2006 will repay the remaining £
376,684 of unsecured loans made by the Malaysian Shareholders to PMG. In
respect of the latter repayment, the Company has the option to satisfy it by
the issue of shares at a discount to the then market price of the Company's
Ordinary Shares.

Fund raising

The Company has entered into agreements with investors to raise an aggregate of
£3.0 million to enable the transactions outlined above to be completed and to
provide working capital for the Company. £0.49 million is being raised by the
issue, today, of 39,400,000 new ordinary shares of 0.5p per share at an issue
price of 1.25p (with 2 million new ordinary shares being issued in payment of
commissions on the funds raised, £2.13 million is being raised by the issue of
convertible loan stock which will convert at 1.65p (or 1.25p if interest
payments are waived) and the arrangement of new borrowing facilities of £1.1
million, £0.84 million of which is bridging finance and will be repaid from the
proceeds of the issues described in this paragraph.

The issue of the new ordinary shares was conditional upon the Heads becoming
capable of completion and the Board have concluded that this condition has been
satisfied.

While the above fund raisings and commitments will enable the Company to
complete the Malaysian Agreements and have sufficient working capital to trade
satisfactorily in the future, it is the Company's intention to issue further
new ordinary shares in the coming months to complete the process of stabilising
the Company's balance sheet and to ensure that future loan repayments can be
met when due.

Details of the convertible loans

PMG has agreed to issue four separate amounts of convertible loan, none of
which is expected to become publicly traded. Brief details of the principle
terms of these are:

 i. An amount of £1 million to be drawn down in four separate and equal
    tranches upon satisfaction of certain conditions over coming months. The
    conditions relating to the first and second tranches are completion of this
    funding round to the satisfaction of the investor. The Directors believe
    that they have satisfied the first condition already and will satisfy the
    second in due course. The third tranche is conditional upon the appointment
    of a new Chief Operating Officer (an intention referred to in the
    Chairman's statement accompanying the results to 31 December 2005). The
    fourth tranche is conditional on the Company's profit before interest and
    taxation for the first quarter of 2007 not being materially less than
    budget of £71,000 (for which a substantial part of the revenues have been
    committed already). The loan is repayable (if not previously converted or
    repaid) three months after the publication of the Company's accounts to 31
    December 2007. The investor may also require repayment of any part of the
    loan already drawn down if these conditions are not satisfied. The amount
    bears interest at LIBOR for Euros plus 2% and, up to 3 months before the
    final repayment date, is convertible (if interest is drawn by the investor)
    based on a price of 1.65p per share or (if interest is never drawn) based
    on a share price of 1.25p.
   
ii. An amount of £0.60 million which can be drawn down in two separate
    tranches, £600,000 on or before 28 September and £600,000 on or before 2
    December dependent upon the completion of this fund raising to the
    satisfaction of the investor. The terms as to interest and conversion are
    the same as those of the first amount.
   
iii. An amount of £0.18 million which can be drawn down immediately, bears
    interest at the same rate, conversion rate and repayment date as the two
    loans listed above.
   
iv. An amount of £0.35 million which is initially provided by way of interest
    free loan from David Ciclitira and which, if not repaid by 30 June 2007,
    may become at the election of Mr. Ciclitira an interest free convertible
    loan, convertible at any time until repaid on the basis of a share price of
    1.25p.
   
Financial effects

The immediate impact of the Dissolution upon the profit and loss account of the
PMG Group results from a number of factors. This is best exemplified through
the figures in respect of the year to 31 December 2005, the last completed year
of both the PMG Group and the PMA Group. PMG earned net commissions of £0.67
million from the five events run by the PMA Group and accounted for a loss on
the results of its investment in PMA of £0.39 million. In that same year and
based on the management accounts prepared jointly by PMA and PMG, the two
tournaments to which PMG would assume the promotion rights under the
Dissolution, had turnover of £3.5 million and, after allocating the overheads
of PMA between the tournaments but before charging the commissions which would
be terminated by the Dissolution, a profit before tax of £0.48 million.

Accordingly, based on these numbers, the simple effects of the Dissolution
would be beneficial to the profit and loss account of the PMG Group. The
Directors consider that the level of overheads which PMG will take on to run
these tournaments will be considerably lower than that apportioned by PMA to
these events. In addition, there would be a number of other benefits to the
transaction which should lead to increased trading profitability over coming
years resulting from:

  * PMG being released from an obligation to put all new tournaments and
    activities in Asia into PMA;
   
  * PMG being in control of its own cash flow from the two tournaments - to
    date there have been delays in the payment of commissions due to PMG from
    the PMA Group;
   
  * the outstanding amounts due from PMA to PMG being settled;
   
  * the bank loan which is currently on PMG's balance sheet (although PMA has
    assumed responsibility for funding interest and capital repayments as
    repayment of amounts otherwise due to PMG) being transferred to PMA or
    repaid.
   
Finally, the settlement of the substantial majority of the existing convertible
loans and certain creditors by the issue of shares should reduce the Company's
interest expense.

Application for Admission to AIM

Application has been made for 41,400,000 new Ordinary Shares of 0.5p each to be
admitted to trading on AIM and it is anticipated that such admission will
become effective and that dealings in the new ordinary shares will start on 12
September 2006.

For further information, contact:

David Ciclitira, Chairman, Parallel Media Group plc 020 7225 2000