ROYAL TUNBRIDGE WELLS, UK, Feb. 14, 2012 /CNW/ - Synchronica plc (AIM:
SYNC) (TSX Venture: SYN) ("Synchronica" or "the Company"), the
international provider of next-generation mobile messaging services,
announces an operational trading update. The Company also maintains its
advice to shareholders in respect to the firm offer for the entire
issued and to be issued share capital of Synchronica, announced
recently by Myriad Group AG ("Myriad").
Order from a New Handset Manufacturer Customer
Synchronica is pleased to announce that it has secured a contract with a
device manufacturer targeting the Americas. Under the terms of the
agreement, the device manufacturer will bundle Synchronica's
white-labelled Mobile Gateway onto its entry-level Smartphone devices.
This recurring-revenue deal is initially valued at US$250,000 for
hosting and professional services, while Synchronica will also receive
US$0.36 for each device sold.
Mobile World Congress and Product Repositioning
Having attracted some 60,000 visitors during 2011, Mobile World Congress
is the industry's most important annual trade event, featuring
prominent representation from mobile operators, device manufacturers
and vendors from across the world.
Synchronica intends to use Mobile World Congress as a platform to unveil
a new identity for its flagship product, Mobile Gateway. The Company
expects that the product's new identity - Unity - will showcase its competitive advantages to mobile operators and
device manufacturers in both developed as well as emerging markets.
In addition to several new features added to the flagship Unity product,
Synchronica expects to announce that it will have signed a letter of
intent with a Canadian RCS specialist to cooperate in the development,
sales and marketing of a next-generation Rich Communication Suite (RCS)
product which will be demonstrated during Mobile World Congress.
Synchronica has been transitioning from a period of growth, driven
primarily by acquisition, to one where the focus has shifted to
monetising its existing customer relationships.
In late 2011, with a view to aligning its costs with its revenue
billings, Synchronica informed Shareholders that it was implementing
several cost reduction initiatives across the entire business. Some
benefit from these cost reductions was seen in 2011 and the Directors
expect that a greater benefit from these cost reduction initiatives
will be recognised in 2012.
The Directors committed to manage the Company's cash carefully, in this
endeavour it has enjoyed the support of its customers, while also
seeking further funding opportunities which would accelerate the
business and drive shareholder value. The Directors continue to believe
that Synchronica will move into cash generation in the current year.
Synchronica's first repayment to Nokia for deferred consideration is due
in February 2012. This will be paid this month and the Board believes
that Synchronica will be able to continue to service this debt in the
A very high proportion of the Company's revenues are recurring.
Synchronica's customers are building their user numbers and increasing
the quality of Synchronica's earnings from recurring revenue. In
addition Synchronica continues to add new customers. Synchronica's
Board remains confident that it will successfully complete this
transition to the benefit of its Shareholders.
Letter of Intent with Intertainment Media for Co-development and
Investment in Synchronica
On 8 February 2012, Synchronica announced that it had signed a Letter of
Intent with Intertainment Media Inc. ("Intertainment Media") relating
to a co-development agreement and an investment in Synchronica.
Intertainment Media is prepared to make an investment of up to CND$10
million (approximately £6.3 million) in Synchronica in cash at a
minimum price of 16 pence (CDN$0.25) per unit. Each unit will comprise
one Share plus one warrant, exercisable at a price of CDN$0.40 (26
pence) per Share at any time within the next two years.
The proposed product co-development agreement with Intertainment Media
is consistent with the strategy of developing products and revenue
opportunities to enhance profitability for the benefit of the Company
and its Shareholders, while the proposed investment will improve
Synchronica's cash balance and be used to reduce its liabilities.
The proposed investment by Intertainment Media is conditional upon
Shareholder approval, under the provisions of the Takeover Code. The
Board will shortly be writing to Shareholders to seek their approval to
Indicative Offer from Myriad Group AG
On 31 January 2012, Myriad announced a firm intention to make an offer
for the entire issued and to be issued share capital of Synchronica
("Myriad Offer"), and must now formally make this offer to Shareholders
by 28 February 2012. The Synchronica Board, and its advisors BDO
Corporate Finance, believe that the Myriad Offer is opportunistic and
its terms undervalue the Company and its prospects, and the Board
recommends that Shareholders do not accept the Myriad Offer when the formal offer is finally made.
The Myriad Offer values each Synchronica Share at 13 pence on an all
share basis as at 31 January 2012, which valued the entire issued and
to be issued share capital of Synchronica at approximately £20.63
million. In contrast, Intertainment Media is prepared to make an
investment in Synchronica of up to CND$10 million (approximately £6.3
million), at a minimum price of 16 pence (CDN$0.25) per unit; valuing
Synchronica at approximately £25.4 million before the new money or
approximately £31.7 million after the new money.
Myriad's offer is an all share offer where Myriad shares are traded on
the SIX Swiss Exchange. Myriad has stated an intention to cancel the
admission to trading of Shares on AIM and on the TSX Venture Exchange,
and has also assumed that no warrants or options will be exercised as
identified in Appendix II of its offer announcement. Myriad Shares are
traded in Swiss francs, which would create a currency risk for
Shareholders. The Swiss franc has fallen against £ Sterling from around
1.17 in August 2011 to 1.44 on 30 January 2012. Any further weakening
of the Swiss franc would reduce the value of the Myriad Offer and the
new Myriad shares.
The Board of Synchronica has also held meetings with a number of
Synchronica Shareholders in the UK and Canada.
The Board believes that Synchronica has made good progress over recent
months and that the prospects are attractive. Consequently, Shareholders are again advised to take no action in
respect of Myriad's Offer. A further announcement, by the Board, will be made in due course. In
addition Synchronica will issue a circular to its Shareholders
following the posting of Myriad's formal Offer Document.
Synchronica plc is a leading developer of standards-based,
next-generation mobile messaging solutions for mobile operators and
device manufacturers. The Company's flagship product - Synchronica
Mobile Gateway - provides pre-RCS push email, synchronisation, instant
messaging (IM), and social networking services to any mobile phone
currently in use. Synchronica's patented transcoding technology uses
advanced streaming to download email attachments and dramatically
reduce the consumption of wholesale network bandwidth by as much as 90
Synchronica's white-labelled products are licensed by more than 100
mobile operator and device manufacturer customers from emerging and
developed markets, delivering mass market messaging services across the
entire customer base, providing competitive advantage, diversifying
revenues, and reducing churn.
Synchronica is headquartered in the United Kingdom and has a regional
presence in Canada, as well as the USA, Hong Kong, Spain, and Dubai.
Synchronica also operates dedicated development centres in Germany and
the Philippines. A public company, Synchronica is traded on the AIM
list of the London Stock Exchange (SYNC) and the Venture Exchange of
the Toronto Stock Exchange (SYN). For further information, please visit
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release. No
stock exchange, securities commission or other regulatory authority has
approved or disapproved the information contained herein.
The foregoing information may contain forward-looking statements
relating to the future performance of Synchronica. Forward-looking
statements, specifically those concerning future performance, are
subject to certain risks and uncertainties, and actual results may
differ materially from Synchronica's plans and expectations. These
plans, expectations, risks and uncertainties are detailed herein and
from time to time in the filings made by Synchronica with the TSX
Venture Exchange and securities regulators. Synchronica does not assume
any obligation to update or revise its forward-looking statements,
whether as a result of new information, future events or otherwise.
A copy of this announcement will be made available on the Company's
website at www.synchronica.com as soon as possible.
BDO Corporate Finance, a division of BDO LLP, which is authorised and
regulated in the United Kingdom by the Financial Services Authority, is
acting exclusively for Synchronica, as financial advisor in relation to
this announcement, and is not acting for or advising any other person
and accordingly will not be responsible to any other person other than
Synchronica for providing the protections afforded to the clients of
BDO LLP or for providing advice in relation to this announcement, or
any other matter referred to herein.
Sources and bases of information
In this announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used:
a) The number of Synchronica Shares in issue is 158,707,089 as at 13
b) The information relating to Synchronica has been extracted or
derived, without any material adjustment, from public sources.
c) The information relating to Myriad has been extracted or derived,
without any material adjustment, from public sources.
The following independent analysts publish research on Synchronica -
Northland Capital Partners Ltd, Equity Developments Ltd, Paradigm
Capital Inc. and Stonecap Securities Inc.
Disclosure requirements of the Takeover Code (the "Code")
Under Rule 8.3(a) of the Code, any person who is interested in 1% or
more of any class of relevant securities of an offeree company or of
any paper offeror (being any offeror other than an offeror in respect
of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the
announcement in which any paper offeror is first identified.
An Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
paper offeror(s). An Opening Position Disclosure by a person to whom
Rule 8.3(a) applies must be made by no later than 3.30 pm (London time)
on the 10th business day following the commencement of the offer period
and, if appropriate, by no later than 3.30 pm (London time) on the 10th
business day following the announcement in which any paper offeror is
first identified. Relevant persons who deal in the relevant securities
of the offeree company or of a paper offeror prior to the deadline for
making an Opening Position Disclosure must instead make a Dealing
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested
in 1% or more of any class of relevant securities of the offeree
company or of any paper offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of
any paper offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in,
and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any paper offeror, save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no
later than 3.30 pm (London time) on the business day following the date
of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a paper
offeror, they will be deemed to be a single person for the purpose of
Opening Position Disclosures must also be made by the offeree company
and by any offeror and Dealing Disclosures must also be made by the
offeree company, by any offeror and by any persons acting in concert
with any of them (see Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on the
Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when
the offer period commenced and when any offeror was first identified.
If you are in any doubt as to whether you are required to make an
Opening Position Disclosure or a Dealing Disclosure, you should contact
the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.
SOURCE Synchronica plc
For further information:
For Synchronica investor relations enquiries, please contact:
Investor Enquiries, UK
Walbrook PR Ltd
+44 (0) 20 7933 8780 firstname.lastname@example.org
Investor Enquires, North America
+1 416 815 0700 Ext 290
For Synchronica corporate information, please contact:
Chief Executive Officer
+44 (0) 1892 552 720
BDO Corporate Finance
Rule 3 Advisor
+44 (0) 121 352 6200
Northland Capital Partners
+44 (0) 207 796 8800
Media and Analyst Enquiries, UK
Walbrook PR Ltd
+44 (0) 20 7933 8780
Media and Analyst Enquiries, North America
+1 416 815 0700 Ext 290