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Week ending December 10, 2011

Mecom - Sale of Edda Media to A-pressen - December 5, 2011
from Anthony Carlisle for Mecom

Mecom Group plc (“Mecom” or the “Company”) today announces that it has agreed the sale (the “Sale”) of Mecom Europe AS (“Mecom Europe”), which is the holding company for Edda Media AS (“Edda Media”), Mecom’s media business in Norway to A-pressen AS (“A-pressen”) for an enterprise value of NOK1,725 million (€222 million), subject to the terms and conditions of the sale and purchase agreement (the "Sale and Purchase Agreement").

The enterprise value of NOK1,725 million (€222 million) represents 7.9 times Edda Media’s FY 2010 EBITDA and 7.2 times Edda Media’s FY 2011 consensus EBITDA. This is a significant premium to Mecom’s corresponding trading multiples.

After adjusting for certain minority interest, net debt and working capital items, the effective proceeds to Mecom for the Mecom Europe shares are expected to be approximately NOK1,800 million (€231 million) of which approximately NOK300 million (€39 million) will be represented by cash in Edda Media.

The Sale is conditional upon, amongst other things, the approval of Mecom’s shareholders (“Shareholders”) and the Norwegian Competition Authority (“Konkurransetilsynet”) not prohibiting the transaction.

A circular (the “Circular”) will be sent as soon as possible to Shareholders containing further details of the Sale, together with a notice convening a general meeting of the Company to consider and, if thought fit, approve the Sale (the "General Meeting"). The Board considers that the Sale is in the best interests of Shareholders as a whole, and intends to recommend that Shareholders vote in favour of a resolution to approve the Sale at the General Meeting.

Tom Toumazis, Chief Executive of Mecom, said:

“The sale of Edda Media is at an attractive valuation. It will allow Edda Media to benefit from consolidation in the Norwegian media market and crystallise substantial value for Mecom shareholders. In addition and importantly, I am delighted to say that we have agreed with A-pressen that we will continue to operate Sweetdeal together in Norway. We have also agreed that we plan to explore opportunities for co-investing in and exploiting digital product development. This alliance will benefit both companies and maintain links with the great team at Edda Media.

“The sale will of course materially improve our balance sheet. It will allow us to consider, in due course and subject to a refinancing, an enhancement to the Company’s cash returns to shareholders, to focus on our future strategy and to invest to improve profitability in the remainder of the Group.”

Thor Gjermund Eriksen, Chief Executive of A-pressen, said:

“A-pressen and Edda Media are a perfect fit for future success. The acquisition will strengthen both A-pressen and Edda Media in today’s challenging media market. Together with Edda Media, A-pressen becomes a solid media group with strengthened financials for joint development. The reinforcement is crucial for the long-term commitment to develop and build the Norwegian media industry. A-pressen has long and proud traditions to protect publishing values and editorial freedom. Edda Media’s traditions, fundamentals and editorial independence will of course be respected and retained.”

edited

Proposed Sale of Edda Media to A-pressen

Proposed Sale

Mecom today announces that it has agreed the sale of Edda Media to A-pressen for an enterprise value of NOK1,725 million (€222 million). The Sale will be effected by way of the sale of Mecom Europe, the holding company of Edda Media.

Completion is conditional, amongst other things, upon approval by Shareholders and the Norwegian Competition Authority (“Konkurransetilsynet”). Completion is expected to take place in January or February 2012.

The enterprise value of NOK1,725 million (€222 million) has been calculated on a cash and debt free basis and on the basis of there being a minimum level of working capital in Edda Media. The consideration will, therefore, be subject to customary adjustments, on a NOK for NOK basis, for the amount of cash, debt and working capital in Edda Media at Completion.

The Sale is of sufficient size relative to the size of the Company to constitute a class 1 transaction under the Listing Rules of the United Kingdom Listing Authority ("UKLA") and is therefore conditional upon the approval of Shareholders. A Circular will be sent to Shareholders as soon as possible setting out details of the Sale and containing a notice convening a General Meeting of the Company to consider and, if thought fit, approve the Sale.

The enterprise value of NOK1,725 million (€222 million) represents 7.9 times Edda Media’s FY 2010 EBITDA and 7.2 times Edda Media’s FY 2011 consensus EBITDA. This is a premium to Mecom’s corresponding trading multiples. The Board believes that this valuation compares favourably to the value that management could achieve over time for Shareholders through continued ownership of this asset.

In the opinion of the Board, as well as representing an opportunity for a substantial and certain value realisation, the Sale will allow the Company to reduce materially its borrowings and financial gearing and to consider, in due course and subject to a refinancing, an enhancement to the Company’s cash returns to shareholders and/or incremental investment in the ongoing business.

The Board considers that the Sale is in the best interests of Shareholders as a whole, and intends to recommend that Shareholders vote in favour of a resolution to approve the Sale at the General Meeting.

Information on Edda Media

Edda Media is a major player in the local media market in Norway, mainly positioned in the eastern and most populated part of the country. Edda Media was acquired by the Company in 2006 from Orkla ASA. Today, Edda Media operates through eight regional media houses as well as national and international operations. The product portfolio comprises 36 newspapers (dailies, weeklies and free-sheets) including Drammens Tidende and Haugesunds Avis and 35 websites in Norway. Edda Media’s publications have a readership of c. 1.1 million per week and its online operations attract 3.2 million unique online users per month. Edda Media operates three print plants which print both the Group’s own and third-party publications.

Edda Media generated revenues in the year to 31 December 2010 of €262.5 million (2009: €241.2 million) and profit / (loss) before tax of €15.9 million (2009: €(5.9) million). At 30 June 2011, Edda Media had net assets of €134.1 million and gross assets of €227.0 million.

Details of key individuals important to Edda Media

The following individuals are deemed key to the operation of Edda Media: (i) Karl Gunnar Opdal (Chief Executive Officer); (ii) Sigmund Kydland (Vice-President); (iii) Tom Helge Rønning (Vice-President); (iv) Stig Finslo (Vice-President); (v) Andreas Norvik (Chief Financial Officer); and (vi) Lene Finstad (Vice-President).

Use of proceeds and financial effects of the Sale on the Mecom Group excluding Edda Media (the "Continuing Group")

On Completion, Mecom is expected to receive net cash proceeds of approximately NOK1,800 million (€231 million), of which approximately NOK300 million (€39 million) will be represented by cash in Edda Media, subject to customary adjustments, on a NOK for NOK basis, for the actual net debt and working capital level in Edda Media as at the date of Completion.

Under the terms of the facilities agreement, the proceeds of the disposal of Edda Media (net of transaction costs and applicable taxes) must be applied in reducing outstanding indebtedness under Mecom's loan facility. Mecom's facilities agreement, which was entered into in 2007 and subsequently amended, comes to maturity in October 2013. The Continuing Group therefore expects to initiate a refinancing of its borrowing facilities during 2012.

Mecom is currently undertaking a strategic review of its operations, the results of which are expected to be announced in January 2012 and, in light of this, of its future capital structure. Once the review of the Continuing Group’s future strategy has been completed and subject to the terms of new banking facilities which the Group expects to be agreed in 2012, the Board intends to consider steps to achieve a financially efficient capital structure with an appropriate balance of equity and debt financing to support the Group’s operations in the prevailing climate. This could include maintaining appropriate financial leverage through: (i) enhancing cash returns to shareholders; (ii) further investment in the Continuing Group’s existing operations; (iii) acquisitions of complementary businesses which provide the opportunity to realise financial synergies; or (iv) a combination of these.

The Sale is anticipated to be earnings dilutive for the Company. The reduction in income from the disposal of Edda Media will be only partially offset by the interest cost saving from applying the proceeds against the Company’s outstanding debt.

Principal terms of the Sale and Purchase Agreement

Consideration

The enterprise value of the Sale is NOK1,725 million (€222 million), calculated on a cash and debt free basis and on the basis of there being a minimum level of working capital in Edda Media. The consideration will be subject to customary adjustments, on a NOK for NOK basis, for the amount of cash, debt and working capital in Edda Media at Completion. On Completion, the Continuing Group is expected to receive net cash proceeds of approximately NOK1,800 million (€231 million).

Conditions precedent to Completion

Completion is subject to the satisfaction or, if applicable, waiver by A-pressen of, amongst other things, the following conditions:

approval of the Sale by Shareholders, as required by the UKLA Listing Rules for a class 1 transaction; and

the Norwegian Competition Authority (“Konkurransetilsynet”) not prohibiting the transaction.

Undertakings

Certain customary covenants in relation to the conduct of Edda Media's business in the period between signing of the Sale and Purchase Agreement and Completion have been given. Furthermore certain customary restrictions have been agreed in respect of the business of Edda Media following Completion.

Representations, warranties and limitations on liability

The Sale and Purchase Agreement contains customary representations and warranties for a transaction of this nature. The warranties relating to title, capacity, authority and solvency matters will be repeated at Completion. Claims by A-pressen under the Sale and Purchase Agreement are subject to customary limitations, including as to quantum and time periods.

Termination and break fees

The parties have agreed that the Company shall pay A-pressen a break fee of NOK100 million if the transaction is aborted by the Company as a result of its Shareholders not approving the transaction if the Company agrees to sell Edda Media to a third party as a result of an offer submitted within three months from the date of signing of the Sale and Purchase Agreement.

Notification of Circular posting

The Circular will be sent as soon as possible to Shareholders containing further details of the Sale and a notice convening a General Meeting of the Company to consider and, if thought fit, approve the Sale. A further announcement will be made upon posting of the Circular.