Raising GBP 7.5 million

Yoomedia PLC
29 March 2006

            YooMedia plc / Ticker: YOO / Index: AIM / Sector: Media

29 March 2006

                   YooMedia plc ('YooMedia' or 'the Company')

                          Proposal to Raise £7,500,000
              Through Conditional Convertible Term Loan Agreements

Overview

  • Agreements with two international institutional investors to raise
    £7,500,000 via a Conditional Convertible Term Loan
  • Financing is part of YooMedia's strategy to continue the re-positioning of
    its product offering to capitalise on growing opportunities within the
    interactive media market
  • Proposed convertible loan structure will replace bank debt with
    equity-based convertible term loan agreements of a more flexible nature
    with, potentially, a lower cost of capital
  • Extraordinary General Meeting to be held at 10am on 24th April 2006

Chairman Michael Sinclair said:  'A number of initiatives have been undertaken
to focus the business on the markets the Directors believe have the greatest
growth potential. We have expanded our offering, secured a number of contracts
with blue chip clients and are positioning the Company to be the provider of
choice in the interactive content market. As part of this restructuring process,
the Board believes that the convertible term loan is the most effective
financial instrument to enable it to achieve its goals.  Not only will it
replace bank debt and strengthen its financial fundamentals, it will also
enhance the Company's investor base.'

Contacts

Neil MacDonald           YooMedia plc                       Tel: [phone]

Mark Percy               Seymour Pierce Limited             Tel: [phone]

Isabel Crossley          St Brides Media & Finance Ltd      Tel: [phone]



Introduction

YooMedia, the AIM-traded interactive media and games group, announces that as
part of the strategy to re-position its product offering and financial
structure, it has entered into the Convertible Loan Agreements with two
international institutional investors (the 'Lenders') pursuant to which, subject
to the passing of certain of the Resolutions at the EGM, the Lenders will lend
to the Company the aggregate sum of £7,500,000.

The two Lenders are Cornell Capital Partners LLP ('Cornell') and Platinum
Partners LLP ('Platinum').  Both Lenders have considerable experience in
structured equity financing for listed small and mid-cap companies in both the
US and UK.

The Company's working capital is currently funded predominantly via bank debt.
This proposed convertible loan structure will allow the Company to replace this
bank debt with an equity-based convertible term loan agreement of a more
flexible nature with potentially a lower cost of capital.  Under the Convertible
Loan Agreements, the loaned amount can either be converted into equity in the
Company or, at the Company's option, repaid.  The Directors believe that the
benefit to the Company from this proposed new convertible loan structure will be
material, in that it provides the potential to lower the cost of capital and
further reduce this cost through conversion of the outstanding debt into equity.

The Directors have examined a range of suitable fundraising options available to
the Company given its current stage of development.  After careful consideration
of all fundraising options, the Directors have entered into the Convertible Loan
Agreements as they believe these to be in the best interests of Shareholders as
a whole.

Under the terms of the Convertible Loan Agreements, the Company will receive
gross funds of £7,500,000.  The Directors estimate that the net proceeds of the
Transaction will be £6,775,000 and the Directors intend for such net amount to
be utilised to repay the Group's indebtedness to Lloyds TSB Bank Plc with the
balance being used for the Group's working capital purposes.

In undertaking the fundraising pursuant to the Convertible Loan Agreements, the
Directors have engaged the services of Tower Gate Capital, a company authorised
by the Financial Services Authority.  Under the terms of an engagement letter
between the Company and Tower Gate Capital the Company agreed to pay Tower Gate
Capital a fee equal to 6 per cent. of the gross amount of funds procured by it
(plus any applicable VAT) under the terms of any loan agreements together with
the grant of 11 million warrants to subscribe for new Ordinary Shares.
Accordingly the Directors are seeking the authority of Shareholders to
constitute the Warrant Instrument and to grant the Tower Gate Capital Warrants.

The Convertible Loan Agreements

The Company entered into the Convertible Loan Agreements on 28th March 2006,
pursuant to which it has conditionally agreed to borrow the aggregate amount of
£7,500,000.  The Convertible Loan Agreements are repayable on the second
anniversary of the date upon which the Resolutions are passed and interest
accrues at 5% per annum, compounded monthly.  The Lenders have the right to
convert any of the principal and interest due under the terms of the Convertible
Loan Agreements into new Ordinary Shares at a conversion price per new Ordinary
Share equivalent to the lower of 12 pence and ninety per cent. of the average of
the volume weighted average price ('VWAP') for the previous ten consecutive
Trading Days, subject to certain limitations during the first 30 days following
completion of the Convertible Loan Agreements.  Further, in any one week, each
Lender cannot convert more than 4 per cent of their respective loaned amounts.
The Company has the right to repay any amount of principal or interest due under
the terms of the Convertible Loan Agreements at any time although the amount by
which the principal sum is then reduced under the Convertible Loan Agreements
following such repayments is based on a formula.

The Convertible Loan Agreements are conditional upon:

(i)                        the execution of the Security Documents; and

(ii)                      the passing of the Resolutions.

In addition, under the terms of the Convertible Loan Agreements, the Company has
granted the Lender Subscription Rights, granting Cornell and Platinum the right,
exercisable at any time prior to the second anniversary of completion of the
Convertible Loan Agreements, to subscribe to up to 15,000,000 and 7,500,000 new
Ordinary Shares respectively at a price equivalent to the lower of the VWAP on
the date the Convertible Loan Agreements cease to be conditional as set out in
the above paragraph, or 90% of the VWAP on the date the Subscription Right is
exercised.  The Convertible Loan Agreements can be terminated by the Lenders in
certain circumstances and the Company has given certain covenants to each of the
Lenders.

The Extraordinary General Meeting

A notice convening the Extraordinary General Meeting of the Company to be held
at Northumberland House, 155-157 Great Portland Street, London W1W 6QP on 24th
April 2006 at 10am has been sent to Shareholders today.  At this Meeting
resolutions will be proposed to:

  • increase the authorised share capital of the Company;
  • approve the entering into of the Warrant Instrument;
  • authorise the Directors to allot up to 225,000,000 new Ordinary Shares
    pursuant to the Convertible Loan Agreements and to issue the Warrants and
    Subscription Rights in accordance with Section 80 of the Act; and
  • grant to the Directors authority to allot up to 225,000,000 new Ordinary
    Shares pursuant to the Convertible Loan Agreements and to issue the Warrants
    and Subscription Rights pursuant to Section 95 of the Act as if Section 89
    (1) of the Act did not apply to such issue or allotments.

A copy of the circular has been sent to shareholders today and is available from
the Company's registered office, Northumberland House, 155-157 Great Portland
Street, London W1W 6QP.

                                  * * ENDS * *


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