SACRAMENTO, Calif., Oct. 10 /PRNewswire-FirstCall/ -- Digital Music
Group, Inc. (Nasdaq: DMGI), a content owner and global leader in the
digital distribution of independently owned music, television, film and
video catalogs, today announced that it has scheduled a special meeting of
DMGI stockholders to consider and vote upon the proposed merger with The
Orchard Enterprises Inc. (Orchard). The special meeting will take place on
Tuesday, November 13, 2007, at 10:00 a.m., Pacific time, at the Company's
offices at 2151 River Plaza Drive, Suite 200, Sacramento, California 95833.
DMGI stockholders of record as of the close of business on October 5, 2007,
will be entitled to vote at the special meeting.
On July 10, 2007, DMGI and Orchard entered into an agreement and plan
of merger under which Orchard will become a wholly-owned subsidiary of DMGI
following the merger. Under the terms of the merger agreement, as amended
and restated on September 13, 2007 and on October 5, 2007, DMGI will issue
in a private placement 9,064,941 shares of its common stock and 448,833
shares of a newly created series of preferred stock in exchange for all
outstanding equity and equity interests of Orchard. Each share of DMGI
preferred stock will be convertible into, and will have voting rights
equivalent to, ten shares of DMGI common stock, with a liquidation
preference of $55.70 per share. If the merger is approved by DMGI
stockholders, the Orchard shareholders and holders of Orchard deferred
stock awards will own approximately 60% of the outstanding shares of DMGI
common stock (on an as converted basis) immediately following the closing.
In connection with the merger, DMGI has filed definitive proxy
materials with the Securities and Exchange Commission and has commenced the
mailing of such proxy materials to stockholders of record as of the close
of business on October 5, 2007. Stockholders and other interested parties
are encouraged to read in their entirety these definitive proxy materials,
which include the background and reasons for the merger as well as business
descriptions and financial information for both companies.
In addition to being asked to vote to approve the merger with Orchard,
DMGI stockholders are also being asked to approve a reverse stock split so
that shares of DMGI common stock may be approved for listing on the NASDAQ
Global Market upon completion of the merger. NASDAQ has deemed this
transaction to constitute a "reverse merger," which requires the combined
company to submit an initial listing application and, at the time of the
merger, to meet all the criteria applicable to a company initially
requesting NASDAQ listing (including a $5.00 per share minimum bid price
for DMGI common stock). DMGI is seeking stockholder approval of a reverse
stock split in the lowest reasonably practicable ratio possible in order to
satisfy such criteria and maintain the listing of its common stock on the
NASDAQ Global Market. The Board of Directors of DMGI is recommending that
stockholders vote in favor of the merger and the reverse stock split. In
the event the merger is approved by DMGI's stockholders but the reverse
stock split is not, the merger would still be consummated (assuming all
other conditions to closing are met), but shares of DMGI common stock would
not be listed on a national securities exchange.
About DMGI
Founded in 2005, Digital Music Group Inc. (Nasdaq: DMGI) is a content
owner and global leader in the digital distribution of independently owned
music and video content. As of June 30, 2007, DMGI had approximately
353,000 individual music recordings and over 4,000 hours of video content
under management. DMGI acquires the digital rights to media catalogs and
digitally encodes them into multiple formats for distribution to digital
entertainment services operating over the Internet and wireless, cable and
mobile networks. Our digital entertainment service partners include: the
iTunes Store, YouTube, AOL/In2TV, Joost, mSpot, Veoh, RealNetworks,
Napster, Wal-Mart Music, MediaNet, Verizon, Sprint, InfoSpace, Moderati,
Zingy, 9 Squared, and many others. For more information, please visit
http://www.dmgi.com.
Digital Music Group is a trademark of Digital Music Group, Inc. Other
names mentioned herein are the property of their respective owners.
About The Orchard
Orchard is a leading global digital distributor and marketer of music.
As of June 30, 2007, Orchard had approximately 600,000 individual music
recordings available for sale. Orchard currently has agents or employees in
over 25 countries and controls a catalog sourced from over 75 countries,
covering thousands of labels and a broad and deep array of music genres and
eras. Orchard supplies music to the leading digital music stores and mobile
operators throughout the world and executes global marketing and promotion
programs locally, with experts in major music territories managing
initiatives tailored to each country's unique dynamic situation. For more
information, please visit http://www.theorchard.com.
Forward-Looking Statements
This release contains forward-looking statements (including, without
limitation, information regarding DMGI's proposed merger with Orchard and
proposed reverse stock split) that involve risks and uncertainties that
could cause the results of DMGI to differ materially from management's
current expectations. Actual results may differ materially from those
anticipated in such forward-looking statements as a result of many reasons
including risks and uncertainties due to a number of factors including,
among others, the matters described in DMGI's most recent filings with the
SEC, including its Annual Report for 2006 on Form 10-K filed with the SEC
on March 30, 2007, its Quarterly Report on Form 10-Q for the six months
ended June 30, 2007 filed with the SEC on August 14, 2007, and its proxy
statement on Schedule 14A filed with the SEC on October 10, 2007. DMGI
assumes no obligation to update the forward-looking information contained
in this release.
Investor Relations Contact
Digital Music Group, Inc.: Cliff Haigler, Chief Financial Officer
Telephone: (916) 239-6010, ext. 2501
Email: chaigler@dmgi.com
SOURCE Digital Music Group, Inc.
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