- Creates the largest North American provider of walk-in bill payment services with a pro-forma revenue run-rate of over CAD$105 million
- Highly accretive: drives additional USD$37 million in revenue and USD$5 million in EBITDA
- TIO expects to utilize more than USD$30 million in Net Operating losses to reduce taxable income
- Combined companies process approximately 80M transactions per year valued at over USD$9B
- Silicon Valley Bank provided TIO financing in the amount of USD$5.7million in connection with the transaction
- TIO welcomes two new members to its Board of Directors from Napier Park Global Capital and Edison Partners
VANCOUVER, BC and FAIRFIELD, NJ, April 25, 2016 /CNW/ - TIO Networks Corp., (TSX-V: TNC) ("TIO"), North America's leading cloud-based bill payment processor, today announced the successful closing of the previously announced acquisition of Softgate Systems, Inc. ("Softgate"), a New Jersey corporation and a leading provider of consumer retail bill payment solutions.
Inclusive of its newly acquired subsidiary, TIO will become the largest provider of walk-in bill payment services in North America. TIO will also be one of the leading providers of payment processing and receivables management to national and regional utility, wireless, and cable bill issuers across North America.
"The acquisition of Softgate provides a unique opportunity for TIO to scale its business substantially and represents an important corporate milestone as we continue to grow and evolve to meet the needs of our customers," said Hamed Shahbazi, CEO of TIO Networks. "TIO has enjoyed an eight year relationship with Softgate, and with our cultural and commercial alignment an acquisition felt like a natural progression for our businesses. We expect to be able to expand and extend services towards our customer base across North America, with a strong focus on servicing the underbanked and unbanked population."
On a pro-forma basis the combined companies generated trailing 12-month revenues of more than CAD$105 million. The two companies (inclusive of other TIO subsidiaries), also processed approximately 80 million consumer transactions in the last 12 months, worth over USD$9 billion. As noted in our July 2015 announcement, TIO expects that the addition of Softgate will add more than USD$5 million in incremental EBITDA per year. Softgate also provides TIO with USD$30 million in Net Operating Losses, which TIO expects to use to reduce its taxable income over the next 16 years.
"Softgate is excited to join forces with TIO and to create an emerging competitor in the multi-channel bill payment marketplace," said Rick Auletta, CEO of Softgate. "This acquisition will be beneficial for our current and future customers, providing an increased level of service between the two companies. Both TIO and Softgate possess complementary products and distribution channels in the bill payment industry, and together we can provide a level of service second to none."
As previously announced on July 14, 2015, the consideration for the acquisition included the issuance of 25,000,000 shares to Softgate shareholders, the issuance of an aggregate of USD$4,128,103 in vendor take back promissory notes and the payment in cash of USD$4,617,488.
In connection with the transaction, TIO has secured a term loan through Silicon Valley Bank for USD$5.7 million. The loan is repayable over 5 years at an interest rate of prime + 1.5%.
"We're excited to be partnering with TIO to help finance its growth, and we look forward to a long relationship with the company," said Minh Le, Market Manager serving Washington and Western Canada for Silicon Valley Bank. "We aim to give innovative companies like TIO the financial tools they need at each stage of their development and corporate growth."
As previously announced, as a result of this transaction, Steve Piaker of Napier Park Global Capital and Joe Allegra of Edison Partners will join, and Brett Baris of InterAtlantic Group will step down from TIO's Board of Directors. "We thank Brett for all his service and support to TIO's Board and are pleased to welcome Joe and Steve," said Hamed Shahbazi.
About TIO Networks
TIO Networks is a cloud-based multi-channel bill payment processing and receivables management provider, serving the largest telecom, wireless, cable, and utility bill issuers in North America. TIO integrates with the back office of billing systems to accept, validate, and collect payments outside of the traditional bank channel, via self-service kiosk, retail walk-in, mobile, and web solutions. With over 66,000 endpoints in its processing network, TIO symbolizes fast, convenient, and secure access to expedited bill payment services.
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About Softgate Systems
Softgate provides reliable walk-in bill payment, domestic and international prepaid wireless, prepaid long distance, international top-ups and international bill payments through their PayXchange service. Established in 1993, Softgate connects world-class service providers and consumers through one of the largest networks of independent retail-based payment centers in the US.
For more information, visit www.softgatesystems.com
About Silicon Valley Bank
For more than 30 years, Silicon Valley Bank (SVB) has helped innovative companies and their investors move bold ideas forward, fast. SVB provides targeted financial services and expertise through its offices in innovation centers around the world. With commercial, international and private banking services, SVB helps address the unique needs of innovators.
For more information, visit www.svb.com
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.
FORWARD-LOOKING INFORMATION AND DISCLAIMERS
This news release contains certain forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable Canadian securities laws, including, without limitation, the effect of the acquisition on TIO including the expected strengthening of TIO's position in the bill payment industry providing TIO with a comprehensive national footprint; the nature of expected synergies; the expected market for the companies; the expected higher revenues and gross margins; the expected increase in the percentage of revenues; the expanded revenue base; the anticipated accretive nature of the transaction; and the formation of a key market leader. Forward-looking statements, which may be identified by words including, without limitation, "will", "anticipated", "expected", "to create", "to make", "to join", "look forward", and other similar expressions, are intended to provide information about management's current plans and expectations regarding the acquisition of Softgate.
Although TIO believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties that may cause actual results or events to differ materially from those anticipated and no assurance can be given that these expectations will be realized, and undue reliance should not be placed on such statements. Risk factors that could cause actual results or events to differ materially from the forward-looking statements include, without limitation, that TIO's assumptions in making forward-looking statements may prove to be incorrect; that future results may vary from historical results; and that market competition may affect the outcome of the acquisition of Softgate and the business, results and financial condition of TIO post-acquisition of Softgate.
Certain material factors or assumptions are applied in making the forward-looking statements, including, without limitation, the assumption that future results, including without limitation, sales and financial results, will be similar to past results; the expectation related to future general economic and market conditions; the assumption that no adverse material changes will occur in Softgate's business or the markets in general; and the assumption that the timing of events will occur as anticipated. Forward-looking statements and information are based on the beliefs, assumptions and expectations of TIO's management on the date of this news release, and TIO does not assume any obligation to update any forward-looking statement or information should those beliefs, assumptions or expectations, or other circumstances change, except as required by securities law.
Any websites referenced or linked in this press release are for convenience only and TIO does not endorse such websites nor assume any liability for the information contained therein.
SOURCE TIO Networks Corp.
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