Affinity Media International (stock symbol: [t]AFMI[/t]) is having trouble closing on its proposed transaction with Hotels At Home. As an incentive to its shareholders to approve the deal, the company has announced that it has obtained cash and stock concessions from the Hotels At Home shareholders, the AFMI founding shareholders, the underwriters and the advisors to the deal, and that most of these concessions will be distributed to the shareholders who do not vote against the transaction.
Affinity Media International Corp. Announces Amendment to Merger Agreement with Hotels At Home, Inc.
Thursday May 1, 12:44 pm ET
- Announces New Record Date and Date of Special Meeting of Stockholders
NEW YORK, May 1 /PRNewswire-FirstCall/ -- Affinity Media International Corp. (OTC: AFMI - News; "Affinity Media"), a special purpose acquisition company, today announced that it has negotiated an amendment (the "Amendment") to its January 14, 2008 Merger Agreement with Hotels At Home, Inc. ("Hotels At Home"), an industry leading publisher of in-room retail catalogues and hotel-branded e-commerce Web sites for luxury hotels and resorts worldwide. The parties have arrived at an agreement in principle with respect to the Amendment, but such agreement is subject to definitive documentation. Affinity Media also announced that stockholders of record as of May 7, 2008 (the "Record Date") will be invited to attend Affinity's special meeting of stockholders to be held on May 28, 2008.
Pursuant to the Amendment, the shares of Affinity common stock payable to the Hotels At Home stockholders (the "Hotels at Home Stockholders") at the closing of the Merger (the "Merger Shares") have been reduced by a value of $1 million from 2,456,571 Merger Shares to 2,281,571 Merger Shares. The parties have also agreed to reduce the cash pay out to the Hotels At Home Stockholders from $16 million to $15 million. The net income levels in the earn-out provision have been increased to $2.8 million (from $2.5 million) in 2008, $3.3 million (from $3.0 million) in 2009 and $3.9 million (from $3.6 million) in 2010. Hotels At Home Stockholders will also receive an additional 250,000 shares of Affinity common stock at each earn out level, for a total of 750,000 shares per earn out period. In addition, the aggregate annual salaries for Michael Ware, Robin Ware and Ray Romano have been reduced by $200,000 annually for the term of their contracts, which will be in effect until June 2010.
Pursuant to the Amendment, the founding stockholders of Affinity Media (the "Affinity Media Stockholders") have agreed to reduce their combined share ownership by 625,000 shares. In addition, the underwriters (the "Underwriters") of Affinity Media's initial public offering (the "IPO") have agreed to exchange $400,000 of their deferred underwriting cash fee for stock (for a total of 70,175 shares of common stock). An advisor to Affinity Media (the "Advisor") in connection with the business combination has also agreed to waive its right to $214,260 in cash and $185,740 in stock.
Affinity Media has also agreed, if the merger is approved, to extend the date upon which the warrants issued in the IPO expire by one year, to June 4, 2011.
Cash and Stock Dividend
The concessions made by Hotel's At Home Stockholders, Affinity Media Stockholders, the Underwriters and the Advisors will be distributed to certain stockholders of record as of June 16, 2008 in the form of cash and stock, provided that the merger is approved. Affinity Media will distribute $2.6 million in cash and 800,000 shares to stockholders of record that have not voted to redeem their shares. Commensurate with the cash and stock distribution announced today certain of managements stock and exercise hurdles have also been reduced.
The terms of the Amendment will be more fully described in a Current Report on Form 8-K to be filed with the Securities and Exchange once the definitive Amendment has been executed by the parties.
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