Fluid Music Completes Acquisition of Mood Media Group

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TORONTO, June 7 /CNW/ - Fluid Music Canada, Inc. (TSX:FMN) ("Fluid") announced today that it has completed its previously announced acquisition of Mood Media Group SA ("Mood Media") in consideration for EUR160 million (the "Mood Media Acquisition"). Mood Media operates in 35 countries worldwide, employs over 550 full time employees and boasts annual revenue over US$130 million per year with annual EBITDA over US$31 million per year.

"This acquisition represents a significant milestone in our business plan," said Mr. Lorne Abony, Chairman and Chief Executive Officer of Fluid. "Mood Media is a market-leading business, with a track record of robust growth and profitability. Management believes that Fluid can drive additional growth at Mood Media through the use of its rights included music, a unique asset to Fluid, which will allow the combined entity to aggressively cut costs, grow margins and pursue new business. Mood Media's international customer base and network of regional offices will also expedite global expansion of Fluid's existing point-of purchase retail division, Somerset Entertainment."

Fluid also announced today that it intends to ask Mr. Philippe G. von Stauffenberg, the Executive Chairman and former significant shareholder of Mood Media, to join its board of directors as Vice Chairman following Fluid's June 25, 2010 annual meeting of shareholders. Mr. von Stauffenberg, through his investment vehicle Solidus Partners, has been financing and executing buy and build strategies in various industries throughout his career, most recently the consolidation of the European In-Site Media Industry. Prior to assembling Mood Media, Mr. von Stauffenberg executed buy and builds in electronics, radio, professional publishing and translation. He has served as principal and as a management affiliate of Hicks Muse Tate & Furst Incorporated, a US private equity firm from 1999-2004. Mr. von Stauffenberg holds Bachelor and Masters of Arts degrees from Harvard University and a Masters of Business Administration from Harvard Business School. Mr. von Stauffenberg is a German national, currently a resident of the United Kingdom, and is fluent in English, German, Spanish and French.

Mr. Abony added, "We are delighted that Mr. Philippe von Stauffenberg has agreed to join our Board of Directors as Vice-Chairman. His overall pedigree and the respect he has in the international business community is second to none. His decision to accept Fluid stock as compensation for his shares in Mood also speaks volumes for his confidence in the merged entity. Philippe's knowledge of and experience in our industry, particularly as the principal architect of the proposed DMX/Muzak merger will no doubt provide us with significant benefits as we seek to capitalize on future opportunities created by this transaction."

Fluid satisfied the EUR160 million purchase price attributable to the outstanding shares and debt of Mood Media as follows: (a) EUR142 million in cash, (b) EUR8 million by issuing (i) 4,780,660 Fluid common shares based on a price of C$1.60 per common share, which common shares shall be subject to a four month and a day hold period, and (ii) a promissory note in the amount of EUR1,976,647 due four months and a day after the closing of the Mood Media Acquisition, which can be repaid in cash or, at Fluid's election, Fluid common shares based on a price equal to the five day volume weighted average trading price of the Fluid common shares on the TSX at such time, and (c) a promissory note in the amount of EUR10 million which will be due on December 1, 2010 and can be repaid in cash or, at Fluid's option, Fluid common shares based on a price equal to the five day volume weighted average trading price of the Fluid common shares on the TSX at such time.

All of the release conditions for the previously announced private placement of 37,500,000 subscription receipts have been satisfied and on closing of the Mood Media Acquisition, the holder of each subscription receipt received one common share of Fluid without payment of additional consideration.

In connection with closing, Fluid has entered into a new three year senior credit facility with the Bank of Montreal for US$100 million, comprised of a US$85 million term acquisition facility that was drawn in connection with the Mood Media Acquisition, and a US$15 million working capital revolver. Interest rates are customary for transactions of this nature. The obligations of Fluid under the senior credit facility are secured by a first ranking lien on all of the assets of Fluid and certain of its subsidiaries.

Fluid also entered into a three and half year mezzanine acquisition facility with West Face Capital Inc. for an additional US$41 million. Interest rates are customary for transactions of this nature and the obligations of Fluid under the mezzanine financing are secured by a second ranking lien on all of the assets of Fluid and certain of its subsidiaries. The lenders of the new mezzanine financing also received compensation warrants which can be exercised for 4,100,000 common shares of Fluid at an exercise price of C$1.60 per common share for a period of 42 months from the date of issuance.

As previously announced, the terms of Fluid's outstanding 8.0% Convertible Unsecured Subordinated Debentures (the "Debentures") due November 26, 2012 (TSX symbol: FMN.DB) were amended in connection with the Mood Media Acquisition to provide: (a) for an increase in the principal amount of Debentures by 10% such that each C$1,000 principal amount of Debentures now represents C$1,100 principal amount of Debentures; (b) for an increase in the interest rate on the Debentures from 8% to 10%; and (c) that if the Debentures are not redeemed within 75 days following the closing of the Mood Media Acquisition, an increase in the conversion rate to 679 common shares per C$1,100 of Debentures which represents an effective conversion price of approximately C$1.47 per common share. As a result of these amendments, up to an additional 9,508,886 common shares of Fluid may be issuable upon conversion of the Debentures.

Effective at the opening on Wednesday, June 9, 2010, all of the issued and outstanding Debentures will be redesignated as 10% Convertible Unsecured Subordinated Debentures due November 26, 2012 of Fluid and will continue trading under the aforementioned stock symbol.

About Fluid Music Canada, Inc.

Fluid is a leading private label music aggregation and distribution company, providing music solutions to both business and individual consumers. Fluid has compiled a music library of five million songs from a diverse network of producers, including major label, independent and emerging artists. Trusonic, Fluid's wholly owned subsidiary, is a leader in Internet-delivered background music and messaging to the retail and hospitality sectors in North America. Fluid's retail point of purchase division, Somerset Entertainment Ltd. is the leading North American producer and distributor of specialty music sold through non-traditional retailers using interactive displays. It has an active network of over 24,600 interactive displays installed in 18,800 locations in North America. Somerset's customers include leading retailers such as Wal-Mart, Target, Costco, Bed Bath & Beyond and Shoppers Drug Mart. For further information about Fluid, please visit www.fluidmusic.com.

Mood Media Group SA

Mood Media provides in-store audio, video, media and marketing solutions to a wide range of businesses including specialist retailers, department stores, supermarkets, financial institutions and fitness clubs as well as hotels and restaurants. In total, the Mood Media group supports over 650 international brands in more than 116,000 commercial sites across 35 countries throughout Europe, Australia and Asia. Mood Media's services have a direct impact on consumer purchasing decisions at the point of purchase which makes in-store media a highly effective marketing tool. In-store media services enhance branding in real-time, drive impulse purchases and increase footfall by improving the shopping experience for customers.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements. The statements that are concerning Fluid's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of Mood Media, its subsidiaries and Fluid are forward-looking statements. The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of Mood Media and Fluid to meet their respective revenue targets; the ability to achieve cost synergies; general industry and economic conditions; changes in Mood Media's and Fluid's relationships with their customers and suppliers; pricing pressures and other competitive factors; and changes in regulatory requirements affecting the businesses of Mood Media and Fluid. Fluid has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While Fluid considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect.

Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to: general economic and business conditions; financing risk; risks inherent in the business of operating Mood Media and Fluid, including the inability to attract and retain qualified employees; competition; disruptions in business operations; interest rate and foreign currency fluctuations; existing governmental regulations and changes in, or the failure to comply with, governmental regulations; and liability and other claims asserted against Fluid. Furthermore, there is no assurance that foreign currency exchange rates will not fluctuate in a manner that is adverse to Fluid. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

All of the forward-looking statements made in this press release are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Fluid. Forward-looking statements are given only as at the date hereof and Fluid disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

For further information: Lorne Abony, Chairman and Chief Executive Officer, Fluid Music, [phone]