3radical Limited to be placed into administration

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 John Regan, CEO KRE Corporate Recovery Christopher Errington via Yellow Jersey 01189 977 357 Allenby Capital (Nominated Adviser and Joint Broker) Jeremy Porter / Piers Shimwell / Dan Dearden-Williams 020 3328 5656 Axis Capital Markets (Joint Broker) Richard Hutchison 020 3026 0320 GIS (Joint Broker) James Sheehan 020 7048 9400 Yellow Jersey PR Charles Goodwin/ Annabelle Wills/ Bessie Elliot 020 3004 9512 [e-mail]

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.

 

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