Entertainment One announces reverse takeover transaction with DHX Media



    
    Deal reinforces Entertainment One's status as a global leader in
    children's television and brings it on to the Toronto Stock Exchange

    Highlights:

    -   Enhances Entertainment One's presence in markets around the world
        with the addition of leading children's television company
    -   Creates one of the world's most valuable libraries of content with
        4,000 half-hours of television content and over 3,700 feature films
    -   Pro-forma combined revenue of approximately C$665 million and EBITDA
        of approximately C$56 million
    -   Secures a listing on the TSX for Entertainment One
    -   Key senior management of DHX will remain with the business
    

    TORONTO, Sept. 29 /CNW/ - Entertainment One Ltd. ("Entertainment One" or
the "Company") (AIM: ETO) today announces that it has entered into a
conditional agreement to combine its operations with those of DHX Media Ltd.
("DHX") (AIM & TSX: DHX) (together the "Enlarged Group").
    The combination will be structured as a reverse takeover of Entertainment
One by DHX (the "Proposed Transaction") and will require approval of the
shareholders of both companies. Following closing of the Proposed Transaction,
the Enlarged Group will be named Entertainment One. The Proposed Transaction
has been recommended by the boards of directors of both Entertainment One and
DHX and values the total issued share capital of DHX at approximately
C$68 million (the "DHX Value"), representing C$1.59 per share. It is intended
that the Enlarged Group will have a primary listing on the Toronto Stock
Exchange ("TSX") and a secondary listing on AIM.
    DHX is an international producer and distributor of television
programming and interactive content based in Canada with operations in the UK.
Focused on the children's and youth television market, DHX owns one of the
world's largest independent children's content libraries with over 200
customers worldwide, including: Nick Jr., Cartoon Network, Disney and Canal J.
    Darren Throop, CEO of Entertainment One, said:
    "The combination with DHX significantly expands our television division,
providing excellent production capabilities and a large library of titles
across mainstream and children's programming. The resulting primary TSX
listing will allow the Enlarged Group to access a significantly more developed
North American entertainment investor base in order to properly reflect the
underlying value of the group as it delivers on its strategy to build the
world's leading international independent entertainment content and
distribution business. In addition, the board will continue to actively
consider plans to move the UK listing of the Enlarged Group to the main market
of the LSE."
    The Proposed Transaction will boost Entertainment One's overall content
and distribution capabilities, adding approximately 60 original television
series and over 2,200 half hours of original programming to its existing
television division, including successful productions The Guard, This Hour Has
22 Minutes, Franny's Feet, Bo On The Go and Martha Speaks. Following closing,
the Enlarged Group will control a library of over 4,000 half-hours of original
television programming, alongside Entertainment One's existing feature film
library of more than 3,700 titles.
    In the year to 30 June 2008, DHX generated revenue of C$52.5 million and
adjusted pro-forma EBITDA of C$5.9 million. Based on the last audited
financial statements of Entertainment One and DHX and taking full account of
acquisitions made during the year, the Enlarged Group will have combined
pro-forma revenue of approximately (pnds stlg)350 million (C$665 million) and
adjusted EBITDA of approximately (pnds stlg)29 million (C$56 million).
    Darren Throop will be appointed as CEO of the Enlarged Group. Key senior
management of DHX are expected to remain with the DHX business which will form
part of the Television division of the Enlarged Group, overseen by Patrice
Theroux, Entertainment One President of Filmed Entertainment.
    Michael Donovan, CEO of DHX, said:
    "Joining forces with Entertainment One represents the next logical stage
in the development of DHX. The Enlarged Group will provide DHX with access to
the U.S. and international home entertainment markets and will offer further
distribution capabilities for its growing library. The consolidation occurring
in the media landscape increasingly requires scale to compete and to exploit
emerging opportunities. The Enlarged Group will also offer DHX shareholders
the opportunity to participate in one of the largest fully integrated
independent content creation and distribution companies in the world."
    Pursuant to the terms of the Proposed Transaction, Entertainment One
shareholders will receive one newly issued common share of DHX for each
Entertainment One share held. DHX shareholders will be offered the alternative
of receiving either 0.9409 newly issued common shares of DHX for each existing
DHX share held or C$0.3975 in cash and 0.7057 newly issued common shares of
DHX for each existing DHX share held.
    If all DHX shareholders elect the cash and share alternative, upon
completion of the Proposed Transaction, Entertainment One shareholders will
own approximately 83 per cent of the Enlarged Group. If all DHX shareholders
elect the all share alternative, upon completion of the Proposed Transaction,
Entertainment One shareholders will own approximately 79 per cent of the
Enlarged Group.

    Notes to Editors:

    Entertainment One Ltd. (AIM: ETO) AIM listed, Entertainment One's
strategy is to build the leading global independent entertainment content
ownership and distribution business that acquires films, television programs
and music content and exploits these rights in all media throughout the world.
Entertainment One has operations in Canada, the U.S, Holland, Belgium and the
UK. Entertainment One also owns Koch Entertainment, the largest independent
record label in North America and a leading independent distributor of music
and video in the United States. www.entertainmentonegroup.com

    DHX Media Ltd. (AIM / TSX: DHX) Aim listed, DHX is a leading
international producer and distributor of television programming and
interactive content with an emphasis on children, family and youth markets.
DHX shares trade on AIM and are listed on the TSX, the Toronto Stock Exchange.
DHX's production companies, Decode Entertainment, Halifax Film and Studio B
Productions, are the producers or co-producers of 17 original television
series and theatrical releases currently commissioned for production and
maintain a growing library of over 2,200 half-hours of mostly children and
youth-oriented television productions. www,dhxmedia.com

    The release, publication or distribution of this announcement in
jurisdictions other than Canada and the UK may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than Canada and the UK should inform themselves about, and observe, any
applicable requirements. This announcement has been prepared for the purpose
of complying with applicable Canadian law and the AIM Rules for Companies, and
the information disclosed may not be the same as that which would have been
disclosed if this announcement had been prepared in accordance with the laws
of jurisdictions other than Canada and the UK.
    Any person (including, without limitation, any custodian, nominee and
trustee) who would, or otherwise intends to, or who may have a contractual or
legal obligation to, forward this announcement and/or any other related
document to any jurisdiction other than Canada and the UK should inform
themselves of, and observe, any applicable legal and regulatory requirements
of that jurisdiction.
    For US securities law purposes, the transaction described in this
announcement will be made for the securities of a foreign company by means of
a scheme of arrangement under Part 26 of the 2006 Act. The offer is subject to
disclosure and procedural requirements of a foreign country that are different
from those which would apply in the United States. It may be difficult for you
to enforce your rights and any claim you may have arising under United States
federal securities laws, since each of DHX and Entertainment One is located in
a foreign country, and some or all of its respective officers and directors
may be residents of a foreign country. You may not be able to sue DHX or
Entertainment One or their respective officers or directors in a foreign court
for violations of US securities laws. It may be difficult to compel DHX or
Entertainment One or their respective its affiliates to subject themselves to
a US court's judgment. This document has not been reviewed by any federal or
state securities commission or regulatory authority in the United States, nor
has any such commission or authority passed upon the accuracy or adequacy of
this document. Any representation to the contrary is unlawful and may be a
criminal offence.
    Not for release, publication or distribution, in whole or in part, in or
into or from any other jurisdiction where to do so would constitute a
violation of the relevant laws of such jurisdiction.

    Forward-Looking Statements

    Certain statements herein relating to the Proposed Transaction are
forward-looking statements and represent DHX and Entertainment One's current
intentions in respect of future activities. These statements, in addressing
future events and conditions, involve inherent risks and uncertainties.
Forward looking statements can by identified by the use of the words "will",
"expect", "seek," "anticipate," "believe," "plan," "estimate," "expect," and
"intend" and statements that an event or result "may," "will," "can,"
"should," "could," or "might" occur or be achieved and other similar
expressions. Forward-looking statements involve significant risk,
uncertainties and assumptions. Many factors could cause actual results,
performance or achievements to differ materially from the results discussed or
implied in the forward-looking statements. These factors should be considered
carefully and readers should not place undue reliance on the forward-looking
statements. Although the forward-looking statements contained in this release
are based upon what management of DHX and Entertainment One believes to be
reasonable assumptions, DHX and Entertainment One cannot assure readers that
actual results will be consistent with these forward-looking statements. These
forward-looking statements are made as of the date of this release and DHX and
Entertainment One assumes no obligation to update or revise them to reflect
new events or circumstances, except as required by law. Many factors could
cause the actual results, performance or achievements of DHX and Entertainment
One to be materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking
statements, including: general economic and market segment conditions,
competitor activity, product capability and acceptance, international risk and
currency exchange rates and technology changes. More specific risks include
that the merged entity will not be able to realize some or all of the expected
synergies due to incompatibilities in the merging businesses, the inability of
management to bring about such synergies or a changing business environment
rendering such synergies inadvisable or uneconomical. After integrating the
businesses the suite of service offerings may not perform as expected if
shifting demand moves in a direction away from the expected business model of
the merged entity, if competitors are able to take market share away from the
merged entity or if changing technology adversely impacts the merged
businesses. In addition, while DHX and Entertainment One expects their
partners to continue and expand their relationship with the merged entity,
there can be no assurance that such relationships will continue as expected.

    Transaction Summary

    The terms of the Proposed Transaction are governed by an Arrangement
Agreement between Entertainment One and DHX (the "Arrangement Agreement").
    The Proposed Transaction will be implemented by way of a scheme of
arrangement under Cayman Islands law (in relation to Entertainment One
shareholders) ("the "Entertainment One Scheme of Arrangement") and a plan of
arrangement under Canadian federal law (in relation to DHX shareholders) (the
"CBCA Plan"). Notices of the shareholder meetings and a joint proxy circular,
together with the Admission Document prepared in accordance with Rule 14 of
the AIM Rules for Companies, will be sent to the respective shareholders of
DHX and Entertainment One in due course. Details of the proposed shareholder
resolutions will be set out in the respective notices and joint proxy
circular. It is expected that the notices will be mailed before the end of
November 2008 and the Proposed Transaction is expected to be completed by the
end of December 2008. Holders of DHX common shares that fail to make an
election prior to the designated closing date of the Proposed Transaction will
be deemed to have elected to exchange their common shares pursuant to the All
Share Alternative.
    Pursuant to the Arrangement Agreement, shareholders of DHX will have the
opportunity to elect either an "All Share Alternative" or a "Cash and Share
Alternative" in respect of all of their DHX common shares. Those DHX
shareholders who elect the All Share Alternative will receive 0.9409 of a new
common share of DHX in exchange for each old common share held, while those
shareholders who elect the Cash and Share Alternative will receive C$0.3975 in
cash and 0.7057 of a new common share of DHX in exchange for each old common
share held. Holders of Entertainment One ordinary shares will receive one
common share of DHX for each Entertainment One ordinary share held.
    Following closing of the Proposed Transaction, DHX will be the surviving
parent corporation and will be renamed "Entertainment One". It is intended
that the new common shares of DHX to be issued pursuant to the Proposed
Transaction will be listed on both AIM and the Toronto Stock Exchange.
    Pursuant to the CBCA Plan, all outstanding options and share purchase
warrants to acquire common shares of DHX will be exchanged for new options,
warrants and rights to acquire 0.9409 new common shares of DHX for each common
share previously subject to such options and share purchase warrants, and
otherwise having the same respective terms. All outstanding options, share
purchase warrants and other rights to acquire ordinary shares of Entertainment
One will, subject to receipt of the consent of the holders thereof, be
exchanged for new options, warrants and rights to acquire the same number of
new common shares of DHX having the same respective terms.

    
    Immediately following closing of the Proposed Transaction, assuming that:

    -   all DHX shareholders elect the All Share Alternative, approximately
        40,254,842 new common shares will be issued and there will be
        187,150,775 new common shares of DHX outstanding; and

    -   all DHX shareholders elect the Cash and Share Alternative,
        approximately 30,192,201 new common shares will be issued and there
        will be 177,088,134 common shares outstanding in DHX.

    The closing of the Proposed Transaction is subject to certain conditions
specified in the Arrangement Agreement, including:

    -   receipt of interim and final orders in respect of the Entertainment
        One Scheme of Arrangement in the Cayman Islands by the Grand Court of
        the Cayman Islands and the CBCA Plan by the Ontario Superior Court of
        Justice;

    -   receipt of approvals of the Proposed Transaction by the shareholders
        of both Entertainment One and DHX at special meetings to be convened
        following receipt of the above-mentioned interim orders;

    -   receipt by Entertainment One and DHX of consents of their respective
        significant lenders;

    -   receipt of approval of the TSX to the Proposed Transaction; and

    -   re-admission of the new common shares of the Enlarged Group to
        trading on AIM.
    

    The CBCA Plan will require the approval of at least 66 2/3 per cent of
the votes cast by DHX shareholders at the DHX meeting. The Entertainment One
Scheme of Arrangement will require (A) the approval of (i) 75 per cent of the
holders of Entertainment One ordinary shares present and voting, whether in
person or proxy, at the Entertainment One meeting, and (ii) 75 per cent of the
holders of Entertainment One Class S shares present and voting, whether in
person or proxy, at the Entertainment One meeting and (B) the approval of the
de-listing of Entertainment One ordinary shares from AIM by 75 per cent of
holders of the Entertainment One ordinary shares and the Entertainment One
Class S shares, in each case present and voting, whether in person or proxy,
at the Entertainment One meeting.
    Entertainment One has received voting support agreements from certain
members of Entertainment One senior management and Marwyn Neptune Fund LP to
vote in favour of the Proposed Transaction at the Entertainment One
shareholder meeting representing in aggregate 37,470,316 ordinary shares and
approximately 28.8 per cent of Entertainment One's total issued ordinary share
capital. In addition, holders of Class S shares have agreed to provide
undertakings to vote in favour of the Proposed Transaction at the
Entertainment One shareholder meeting, representing in aggregate 16,899,762
Class S Shares and 100 per cent. of the Entertainment One's total issued
Class S Shares. DHX has received voting support agreements from certain
members of DHX senior management to vote in favour of the Proposed Transaction
at the DHX shareholder meeting representing in aggregate 14,368,852 common
shares and approximately 33.6 per cent of DHX's outstanding common shares.
    GMP Securities L.P., financial advisor to DHX, has provided to DHX's
board of directors a fairness opinion that concludes that the Proposed
Transaction is fair to such shareholder from a financial point of view. DHX's
board of directors, based on the recommendation of an independent committee of
such board, has determined that the Proposed Transaction is in the best
interests of DHX and its shareholders. Entertainment One is being advised in
Canada by TD Securities Inc.
    Certain management and other shareholders of DHX and Entertainment One
have entered into lock-in undertakings in connection with the Proposed
Transaction, and will, subject to certain exceptions or to the consent of the
Enlarged Group, be restricted from selling shares held in the Enlarged Group
for twelve months from closing.
    A break fee equal to approximately 3.5 per cent of the DHX Value or
C$2.38 million may be payable by either party in certain instances, including
in the event that DHX enters into an agreement in respect of a Superior
Proposal to acquire DHX (as defined in the Arrangement Agreement) or
Entertainment One enters into an agreement in respect of an Acquisition
Proposal in respect of Entertainment One (as defined in the Arrangement
Agreement).





For further information:

For further information: Enquiries: Quiller Consultants for
Entertainment One (UK): John Eisenhammer, +44 (0) 20 7233 9444; Edelman for
Entertainment One (Canada): Freda Colbourne, (416) 979-1120; Entertainment
One: Giles Willits, +44 (0) 20 7004 2755; Kaupthing Singer & Friedlander
Capital Markets Limited (NOMAD to Entertainment One): James Maxwell / Marc
Young +44 (0) 20 3205 7500; DHX: David A. Regan, (902) 423-0260; Grant
Thornton UK LLP (NOMAD to DHX): Gerry Beaney, +44 (0) 20 7383 5100

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