TSX Venture Exchange: VSI
VANCOUVER, Dec. 18, 2013 /CNW/ - VendTek Systems Inc. (VSI - TSX Venture) ("Vendtek" and the "Company"), a developer and licensor of software for the global prepaid and financial services markets, announces that it has entered into an asset purchase agreement (the "Agreement") with Payment Source Inc. ("PSI"). PSI is wholly-owned by George DeMarchi, the Company's current Senior Vice President of Canadian Operations. Under the terms of the Agreement, the Company has agreed to sell its Canadian business (assets and associated liabilities) that constitute its Now Prepay division to PSI in return for $4,500,000 and the assumption of up to $1,500,000 of working capital deficit, excluding cash (the "Working Capital"), for total consideration of up to $6,000,000. The Purchase Price will be paid as follows:
(a) a deposit of $200,000, which has already been paid;
(b) a cash payment of $3,850,000 on closing; and
(c) a further $450,000, to be paid within 90 days following the closing of the transaction.
The Purchase Price is subject to adjustment based on the Working Capital of the Canadian business being either (i) less than -$1,500,000 at closing, in which case the Purchase Price will be reduced by the amount that Working Capital is less than -$1,500,000; or (ii) greater than -$1,000,000 at closing, in which case the Purchase Price will be increased by the amount that working capital is greater than -$1,000,000. The adjustment will take place within 90 days following the closing of the transaction.
The Company intends to use the proceeds from the sale for its ongoing operations and to further its growth plans in Brazil. The Company believes that its Brazilian operation holds tremendous potential. This proposed transaction will allow the Company to focus its resources on this important growth opportunity while simplifying its overall operating structure. Over the long-term, Vendtek's strategy will be to refocus on licensing its e-Fresh™ transaction processing software internationally and move away from the direct operating model, while retaining its established licensing relationships as we have done with this transaction.
In connection with this transaction, PSI will license and use VendTek's e-Fresh™ transaction processing software to manage its Canadian operations for its suppliers and merchant customers under VendTek's Now Prepay brand.
The transaction contemplated by the Agreement will require the approval of the shareholders of the Company by way of a special resolution in which two-thirds of the votes cast on the matter vote in favour of the transaction. Such shareholder approval will be sought at an annual and special meeting of shareholders expected to be held in late January 2014.
The board of directors has carefully considered all of the terms of the proposed transactions and unanimously resolved to recommend that shareholders approve all necessary resolutions to implement these transactions. The Company will shortly issue a management proxy circular which will describe the proposed transactions in more detail.
"We are pleased to be able to proceed with this transaction with George DeMarchi's company, Payment Source", said Mr. Buchanan, President & CEO of VendTek. "Throughout what was a thorough and competitive bidding process, Mr. Demarchi demonstrated his knowledge of the business, along with his experience and strong reputation within the Canadian prepaid market. These factors became compelling reasons to select George as the preferred acquirer and successor in interest to VendTek's Canadian operations. Following George's resignation from VSI to be effective on the closing date, we are looking forward to a smooth transition with PSI. We wish George the very best in his new endeavour and are pleased that we will be able to continue our business relationship," added Mr. Buchanan.
Completion of the transaction is subject to a number of conditions, including receipt of all necessary shareholder, stock exchange and regulatory approvals. The Company expects that an annual and special meeting of shareholders will be held in late January 2014 and, if all necessary approvals are received and all conditions are satisfied, closing is expected to follow on or about January 31, 2014.
VendTek is headquartered in Vancouver, British Columbia, Canada, and develops and licenses automated transaction system software and supporting technologies that improve the efficiency of product delivery, reduce costs to clients and offer superior safety measures. VendTek's customers, its division, Now Prepay and its subsidiaries are using e-Fresh™ software to build electronic, prepaid services networks, which enable consumers to purchase prepaid services via point-of-sale terminals (POS) and self-serve terminals connected to a central e-Fresh™ server. This system creates significant value through improved efficiencies compared to the traditional distribution paradigm. e-Fresh™ reduces shrinkage and inventory requirements while improving consumer access to prepaid services by completely eliminating physical cards and vouchers. For further information please visit the Company's websites www.vendteksystems.com and www.nowprepay.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.
SOURCE: VendTek Systems Inc.
For further information:
For more information about this transaction, please contact Irwin Studen, Interim CFO at 1-800-806-4958 or [email protected].
For more information about the Company, please contact Samantha White at 604-805-4653 or 1-800-806-4958 or [email protected].