Entertainment retailer EzyDVD invests in ReelTime

Stuart Corner
Monday, 24 September 2007 12:33

Your IT - Home IT

Struggling Internet video provider, ReelTime has secured investment and assistance from online DVD and entertainment retailer, EzyDVD.

Under the deal EzyDVD will initially acquire 6,000,000 Reeltime shares for cash and acquire a further 142 million shares by assisting Reeltime to meet a number of key milestones over the next three years. Its shareholding would then be on a par with ReelTime's largest shareholder, Movies Online Ltd. The purchase price was not disclosed, but ReelTime shares were trading at $0.017 prior to a voluntary suspension a week ago.

ReelTime says these milestones include cost reduction, revenue targets, market penetration/customer acquisition and extended content offerings. It claims that "benefits will flow to the Company within three months as the first of the milestones are reached."

Of the shares and options to be issued, 32 percent relate to ReelTime reaching three revenue targets, 31 percent upon it obtaining operational cost reductions & expansion of content offerings over 10 discrete milestones and 37 percent upon facilitation of marketing/customer acquisition targets.

"The alliance is especially attractive to ReelTime as EzyDVD will manage the following functions – core revenue growth through front of house web interface, marketing & promotion, customer service, as well as cost reductions through joint efficiencies & product buying power," ReelTime said. "It also provides ReelTime with both an online and bricks and mortar retail channel."

It added: "The alliance is also strategic for EzyDVD as it provides a digital platform for future and allows the 68 EzyDVD store's involvement in selling the ReelTime Media Centres & content bundles."

EzyDVD managing director, Jim Zavos, will join the RMA board. Following the announcement, ReelTime lifted the voluntary suspension in trading of its shares on the ASX.