Online Classics, the performing arts internet business, lost a fifth of its market value yesterday after announcing a heavily discounted £7.4m share placing.

Saying that new shares would be placed at 60p each sent the price of existing shares tumbling 17p to end the day at 67p.

Chief executive Christopher Hunt said the price had been set to ensure the placing's success. "We knew our share price would take a hit, but we wanted certainty. We are confident that the price will climb back in the near future."

The company, which is buying Mr Hunt's Iambic Produc tions for £5m in cash and shares, expects to announce further acquisitions and deals with other broadcasters soon.

Mr Hunt said the Aim-listed company would be looking for a full listing in "the longer term". He reported full year pre-tax losses of £986,294, against £14,738 profits the previous year.

The takeover of Iambic would take the company back into profitability and positive cashflow.

Online Classics provides performing arts content over the net. Iambic, a TV production company, will allow it to deliver content to other media.