WellPoint Systems Inc. completes acquisition of Bolo Systems, Inc. and USD$15 million acquisition financing



    CALGARY, Aug. 13 /CNW/ - WellPoint Systems Inc. ("WellPoint" or the
"Company") (TSX-V:WPS), today announced that it has completed its acquisition
of substantially all of the assets of Bolo Systems, Inc. ("Bolo"), a privately
held company with offices in Denver, Colorado and Houston, Texas, for
approximately USD$22,860,000. Bolo is a leading provider of integrated
multi-tiered financial, land and production accounting solutions for the oil
and gas industry in the United States. Bolo's more than 100 clients range in
size from start-up to large independents.
    "With the completion of this acquisition we have further strengthened our
position as a truly global energy software company by improving our access to
the sizeable U.S. market through the addition of expanded country specific
strategies, products, expertise and infrastructure," said Frank Stanford, CEO
of WellPoint Systems. "We are now well positioned to further penetrate the
U.S. market by accessing cross-selling opportunities as we leverage our
complementary operations, customer bases and service offerings."
    "Bolo has enjoyed significant growth over the last few years and we are
pleased to be able to build on that track record as part of the WellPoint
family," said Richard Slack, President and CEO of Bolo Systems. "Bolo has a
reputation for developing quality products and delivering high levels of
customer satisfaction and we expect to make a significant contribution to
WellPoint's back office product offering, while also being able to present new
high-value solutions to our existing clients."

    Details of the Acquisition

    The consideration paid by WellPoint to complete the acquisition consisted
of USD$14.5 million cash, 8,000,000 common shares of WellPoint issued pro rata
to the shareholders of Bolo at a price of USD$0.42 per share (being the
closing price of the common shares on August 10, 2007) and a promissory note
in the principal amount of USD$5 million. The note is due three years from the
date of issue, bears interest at a rate of 7% per annum and is secured by all
the assets of WellPoint and its material operating subsidiaries. The common
shares issued to Bolo and its shareholders are subject to a four-month hold
period from the closing date as well as other resale restrictions contained in
the acquisition agreement. Additional consideration of up to USD$4.5 million
may be paid to Bolo in either cash or common shares of WellPoint (at the
election of Bolo) if the acquired business achieves certain revenue and
earnings targets for the 24-month period following closing. If the additional
consideration is paid in common shares such shares will be issued at a deemed
price at $0.90 per share for the first year and at $1.60 per share for the
second year and will also be subject to a four-month hold period following the
issuance of those shares.
    The acquisition agreement was negotiated at arm's length and prohibits
Bolo from receiving additional common shares of WellPoint to the extent Bolo
would directly or indirectly hold 19.9% or more of the issued and outstanding
shares of WellPoint following receipt of those shares. Bolo's shareholders
together hold approximately 17.9% of the current issued and outstanding common
shares of WellPoint. Bolo and its shareholders have represented to WellPoint
that they have not entered into, or have any present intention to enter into,
any arrangements or understandings respecting the voting, control or direction
over the common shares to be issued to Bolo and the shareholders in connection
with the acquisition.
    In addition, the WellPoint acquisition subsidiary has entered into
employment agreement with certain officers and key employees of Bolo.
    A finder's fee in the amount of approximately USD$262,000 is payable to
Winston Sage Partners, Inc. in connection with the completion of the
acquisition.
    WellPoint expects to file a business acquisition report with the
applicable securities commissions within 75 days after the closing date, which
will contain financial statement information with respect to Bolo as well as
pro forma financial information of WellPoint after giving effect to the
acquisition of all of the assets of Bolo.

    Details of the Acquisition Financing

    WellPoint financed the acquisition by borrowing the sum of
USD $15 million from Crown Advisory Services Inc. ("Crown"). The loan must be
repaid in one balloon payment on August 10, 2010, or earlier as provided in
the credit agreement. The loan bears interest at a rate equal to 15% per
annum. Interest must be paid on the last day of each month at a rate equal to
10% per annum. The balance of the interest owing on the loan will continue to
accrue and be compounded monthly and payable on maturity of the loan. The
obligations under the loan are secured by all of the assets of WellPoint and
its material operating subsidiaries.
    In connection with the advance of the loan, WellPoint issued an aggregate
of 2.7 million common share purchase warrants to Crown and a US institutional
shareholder of Crown, each of which expires three years from the date of issue
(or earlier as described below) and entitles Crown and the US institutional
shareholder to purchase one common share of WellPoint at an exercise price of
USD$0.50 per common share. 900,000 warrants are exercisable immediately with
the balance to become exercisable in equal instalments on the sixth month and
twelve month and one week anniversary of the closing date. If the loan is
repaid prior to the warrants becoming exercisable, then those warrants which
are not yet exercisable will automatically terminate. If the loan is reduced
or repaid in full prior to maturity, the warrants will be reduced on a pro
rata basis. The warrants are non-transferable and the common shares issued on
the exercise of the warrants will be subject to a four-month hold period from
the closing date. The issuance of the warrants remains subject to the final
approval of the TSX Venture Exchange.

    Debenture Amendments

    In connection with the acquisition and related financing, WellPoint
agreed to amend the terms of the convertible secured debentures issued to
Quorum Investment Pool Limited Partnership and Quorum Secured Equity Trust in
March, 2007 to lower the conversion price by which such debentures will be
convertible into common shares of WellPoint from $0.65 to $0.55 per common
share, and to make certain other amendments as well. WellPoint also agreed to
reduce the maturity date of the convertible secured debenture issued to Quorum
Secured Equity Trust in the principal amount of $300,000 from April 12, 2012
to December 15, 2009. These amendments remain subject to final approval of the
TSX Venture Exchange.

    About WellPoint Systems Inc.

    WellPoint Systems provides premier software and related services for
managing critical operations within the energy industry. Aligning tightly with
Microsoft Corporation, WellPoint is the only Independent Software Vendor (ISV)
and Microsoft Dynamics partner dedicated to the energy sector. It is breaking
new ground with the creation of a more comprehensive, integrated energy
software suite based on existing Microsoft ERP technology that utilizes
state-of-the-art Dynamics AX(R) and .NET architectures. WellPoint became a
Microsoft Gold Certified Partner in 2005. Founded in 1997, Calgary-based
WellPoint Systems also has major operations in Houston, TX, Livingston, NJ,
Tampa, FL, Tunis, Tunisia and Moscow, Russia. WellPoint is publicly traded on
the TSX Venture Exchange under the symbol WPS.

    Forward Looking Statements

    This document contains forward-looking statements. Some forward looking
statements may be identified by words like "expects", "anticipates", "plans",
"intends", "indicates" or similar expressions. The statements are not a
guarantee of future performance and are inherently subject to risks and
uncertainties. The Company's actual results could differ materially from those
currently anticipated due to a number of factors, including, but not limited
to, successful integration of structural changes, including restructuring
plans, acquisitions, technical or manufacturing or distribution issues, the
competitive environment for the Company's products, the degree of market
penetration of the Company's products, and other factors set forth in reports
and other documents filed by the Company with Canadian securities regulatory
authorities from time to time.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.

    %SEDAR: 00013695E




For further information:

For further information: WellPoint Systems Inc., Frank Stanford, Chief
Executive Officer, (403) 538-3604, frank.stanford@wellpointsystems.com,
www.wellpointsystems.com; The Equicom Group Inc., Nick Hurst, Investor
Relations, (403) 538-4845, nhurst@equicomgroup.com, www.equicomgroup.com

Organization Profile

WELLPOINT SYSTEMS INC.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890