Metrodome has acquired the loss-making Target Entertainment, which distributes shows including Taggart and Fifi and the Flowertots, in a deal worth £800,000.
The deal, which does not include Target's production subsidiary Greenlit, which makes Vexed and Foyle's War, consists of £400,000 in cash and £400,000 from the issue of convertible loan notes.
Target made a loss before tax of £727,000 last year, with £438,000 of that from exceptional items, with turnover of £13.8m.
Alison Rayson, the founder of Target, will remain as chief executive and take a seat on Metrodome's board.
Rayson said that the refinancing of Target had been a "tough and lengthy" process but that the Metrodome deal was a "superb outcome ... that makes it more than worthwhile for the company's client base and staff".
"Target's consolidation into the Metrodome group will provide the company with more firepower for rights acquisitions and with an enhanced back office service," she added.
Metrodome has said it intends to invest in Target with total investment, including the sale price of £800,000, of £3m. The Metrodome executive chairman, Mark Webster, has subscribed to £700,000 worth of loan notes to provide working capital for the enlarged company.
"Target will provide the company with penetration into a well established TV distribution library with circa 6,000 hours of content," said Webster. "As such I am confident that the strong global network of relationships will form the basis of Metrodome's future strategy of becoming a diversified media business, and furthermore will strengthen and enhance future earnings for the company."
Under the terms of today's deal, Metrodome has also acquired Target's film and entertainment production subsidiaries Pink Sands and Target US.
Metrodome said that the majority of Target's loss last year was due to "reorganisation costs and interest on borrowings".
Under the terms of the deal, Metrodome has acquired Target debt-free. Last year Target's earnings before interest, tax, depreciation and amortisation – in effect a measure of its day-to-day operational performance – ran at a loss of £70,000.
The Romanian media company Alerria Management is the largest shareholder in Metrodome with a 52.75% stake. Webster is the second largest shareholder with 12.85%.
Under the terms of Webster's £700,000 investment, he has the option in August 2012 of converting it into an increased equity in the business. This could see him own as much as 35% of Metrodome.
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