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Ingenious Live VCTs to exit successful Creamfields Festival investment

The Ingenious Live VCTs have agreed terms to exit from their respective investments in the Creamfields festival for a total consideration of GBP2.78 million. The Ingenious Live VCTs will also retain a share of further upside over the two years following the completion of the deal in the event that there is a sale of the Creamfields brand for an amount in excess of an agreed exit multiple.

The deal will see The Cream Group’s festival vehicle, CI (Events) Limited, acquire the whole of the share capital of CFDT Limited, a company which was set up by the Ingenious Live VCTs, The Young Vic Company and CI (Events) Limited in 2008 to help promote the festival when it switched from being a one day to a weekend camping event.

Under the proposed exit deal, CI (Events) Limited will acquire the shares of the Ingenious Live VCTs and The Young Vic Company for a total consideration of GBP1.084 million and will also repay the loan notes that were issued to each of the Ingenious Live VCTs under the original investment deal in the aggregate amount of GBP1.19 million, along with a premium of GBP510,000 (i.e. GBP255,000 payable to each of the Ingenious Live VCTs).

The exit is anticipated to give rise to a special dividend in excess of 20p being paid to shareholders of the Ingenious Live VCTs in February 2012.

The terms of the exit have been approved by the board of the Ingenious Live VCTs as the Ingenious Live VCTs approach their fifth anniversary, with a view to delivering strong returns to their shareholders in line with their stated five year liquidity strategy. The deal will represent a significant return on the Ingenious Live VCTs’ original investment in Creamfields.

The Ingenious Live VCTs currently retain investments in a number of other rapidly growing festival brands such as Rewind and Field Day, which are becoming highly profitable, as well as exhibitions such as Taste of Christmas and Golf Live that are also establishing themselves in the market place.
Ingenious Entertainment VCTs’ ‘G’ Share Offer

The announcement of the proposed exit from Creamfields by the Ingenious Live VCTs follows hot on the heels of the launch of the new joint ‘G’ Share Offer (the ‘G’ Share Offer) by Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc (the Ingenious Entertainment VCTs), on 21 November 2011. The ‘G’ Share Offer has the dual aim of securing venture capital style returns from investments as well as providing significant downside protection through the Ingenious VCT structure. The new offer has a fundraising target of £25 million, a five year liquidity plan, a target annual tax free dividend of 5-7p per annum from year one and a target tax free capital return of 120p.

Paul Bedford, Investment Director at Ingenious, says: “Our investment in Creamfields was agreed when the festival was attracting audiences only slightly in excess of 20,000 per day. There was a clear need to freshen things up and James Barton and his team have read the market brilliantly. They have developed a festival which has now sold out for three years in a row, culminating in the 50,000 per day capacity that we reached more than a month in advance of this year’s event.

“We are pleased that the Ingenious Live VCTs have retained a carried forward interest in the festival to benefit from the ongoing momentum demonstrated by the Cream Group. The proposed exit deal is a great result for the Ingenious Live VCTs and we will look to pay the shareholders of Ingenious Live VCTs a special dividend from the proceeds as soon as we are able. We also remain confident of further great deals on exits from the Ingenious Live VCTs’ investment portfolio in due course.”

James Barton, Chief Executive of the Cream Group, says: ‘We would like to thank the Ingenious Live VCTs for their support and their belief in our ability to grow the festival through a multi day strategy. The funding, experience and advice of the management team of the Ingenious Live VCTs has helped us enormously to create an event of which we are very proud. We are also pleased that they are retaining an ongoing interest, reflecting their confidence in the continued growth of our brand.”
 

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