Media Square plc ("Media Square" or "the Group")

Conditional Asset Disposal

Media Square plc (AIM: MSQ), the international marketing communications group, today announces that the Group has exchanged contracts to sell the trade and certain assets of twentysix NewYork (the "Business") to Dynamics Ventures LLC (the "Transaction").  The Transaction is still subject to certain conditions being satisfied, including the assignment of key client and employee contracts.  Subject to these conditions being met, the Company anticipates that the transaction will complete in February 2010 and will provide a further update at that time.

twentysix NewYork (a wholly-owned subsidiary of Media Square) is a software consulting business which provides custom application development to clients, primarily in the North East of the United States.  As such, the Business is not core to Media Square's strategy of building a successful international marketing communications group.  Dynamics Ventures is a holding company whose strategy is to acquire and integrate similar companies, providing technology consulting services in the Microsoft space.

The initial proceeds from the disposal will be approximately US$2.25 million in cash, comprising an upfront consideration of $1.00 million on completion, $0.25 million to be received in two instalments over the six months post completion, and an estimated further net cash inflow of approximately US$1.0 million over the three months following completion from an unwinding of the working capital position, since Media Square will retain the majority of the existing net assets of the Business.  In addition, the consideration could rise by up to an additional $1.5 million in cash based on performance of the Business over the six month period post completion.

In its last reported financial year to 28 February 2009, twentysix NewYork generated turnover of US$6.8 million and pre-tax operating profit of US$0.3 million.  The Business' gross assets as at December 2009 were approximately US$1.3 million, excluding cash, goodwill and inter-company items. 

The proceeds of the transaction (net of disposal costs) will be applied to reduce the Group's debt. As of 31 December 2009, the company's unaudited underlying net debt was £17.4 million.

Peter Reid, Chief Executive of Media Square commented "This disposal is consistent with our stated strategy of focusing on our core marketing communications brands, while seeking to reduce the Group's overall level of debt." 

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Notes to Editors:

Hudson Technologies was founded in New York in May 1997.

In November 2000 it was acquired by Incepta plc for US$8 million.

In 2005 it was made part of the Marketing Services Group Ltd which was sold by Huntsworth plc to Media Square plc for £63 million.

In April 2006 it changed its name to 26 New York.