BSM Technologies Inc. ("BSM")(TSX VENTURE: GPS) and Datacom
Wireless Corporation ("Datacom") (TSX VENTURE: DAT) are pleased to
announce that they have entered into a binding Letter Agreement
dated July 2nd, 2009 (the "Letter Agreement"), whereby BSM and
Datacom have agreed upon the terms and conditions with respect to a
proposed business combination of the two companies (the "Proposed
Transaction").
The Proposed Transaction
Pursuant to the terms of the Letter Agreement, and subject to
any regulatory, shareholder, director or such other approvals that
may be required, to the satisfaction by each of BSM and Datacom,
through a due diligence, that each of BSM and Datacom publicly
filed disclosure record represents full, true and plain disclosure
about their business and affairs and to other conditions contained
in the Letter Agreement, the parties intend to negotiate and enter
into a definitive agreement (the "Definitive Agreement") with
respect to the Proposed Transaction on or before July 22nd, 2009
and then close the Proposed Transaction on or about September 18th,
2009. The Definitive Agreement will contain customary
representations and warranties by BSM in favour of Datacom and by
Datacom in favour of BSM and such other terms, covenants and
conditions as would be customary for a transaction of this
nature.
As of the date hereof, the number of common shares in the
capital of Datacom (the "Datacom Shares") that are outstanding is
27,951,221. There are 1,068,791 Datacom Shares issuable upon
exercise of outstanding stock options of Datacom. The number of
common shares in the capital of BSM (the "BSM Common Shares") that
are outstanding is 85,907,730 (including 547,900 in escrow subject
to BSM's performance). There are 6,175,000 BSM Common Shares
issuable upon the exercise of outstanding stock options of BSM (the
"BSM Options"), 57,309,522 BSM Common Shares issuable upon the
exercise of outstanding common share purchase warrants of BSM (the
"BSM Warrants") and 56,309,522 BSM Common Shares are issuable upon
the conversion of outstanding convertible debenture of BSM (the
"BSM Debentures").
Immediately prior to completion of the Proposed Transaction,
subject to regulatory and shareholder approval as required, $1.75
million of the BSM Debentures and BSM Warrants, out of a total of
$3.45 million in principal value, held by certain holders, will be
purchased by some other existing debenture holders and other new
investors. Thereafter, BSM would amend its articles to establish
one class of convertible preferred shares (the "BSM Preferred
Shares"), exchange its outstanding BSM Debentures into the BSM
Preferred Shares and exchange BSM Warrants into BSM Common Shares
(the "BSM Pre Merger Reorganization").
As a result of the proposed BSM Pre Merger Reorganization, and
prior to the Proposed Transaction, the share capital of BSM will be
107,599,230 BSM Common Shares and 61,311,111 BSM Preferred Shares,
and there will be 6 175 000 BSM Options outstanding.
It is then expected that the Proposed Transaction will be in the
form of an amalgamation of Datacom with a wholly-owned subsidiary
of BSM, unless an alternative form of transaction is deemed
advisable. Each Datacom Share will then be exchanged for
approximately 4.1 BSM Common Shares such that, upon completion of
the Proposed Transaction, the former holders of BSM Common Shares,
BSM Preferred Shares and BSM options will own 59.5% (175,085,350
out of 294,261,093) of all BSM securities outstanding, on a fully
diluted basis, and former holders of Datacom Shares and Datacom
options will own 40.5% (119,175,743 out of 294,261,093) of all BSM
securities outstanding, on a fully diluted basis. It is intended
that BSM will continue to be listed on the TSX Venture
Exchange.
All options to purchase BSM Common Shares that are outstanding
at the time of the closing of the Proposed Transaction will remain
outstanding in accordance with their terms. Each option to purchase
Datacom Shares will be replaced with approximately 4.1 options to
purchase BSM Common Shares and the exercise price for such option
will be the original exercise price divided by approximately 4.1.
It will be the same conversion ratio as that used to convert
Datacom Shares into BSM Common Shares. A fairness opinion will be
obtained to confirm that the above exchange ratio reflects
appropriate value.
On completion of the Proposed Transaction, the board of
directors shall initially be comprised of seven or nine directors,
four of the seven or five of the nine will be nominees of BSM, the
others will be nominees of Datacom.
Description of Conditions to Closing
Completion of the Proposed Transaction is subject to a number of
conditions, including, but not limited to, acceptance from the TSX
Venture Exchange (the "Exchange") and other shareholders, third
party and regulatory approvals as may be required. In addition,
other necessary conditions to close the Proposed Transaction
include both parties entering into support agreement, the
completion of the Definitive Agreement setting forth the terms and
conditions set forth in the Letter Agreement, satisfaction, through
a due diligence, that each of BSM and Datacom publicly filed
disclosure record represents full, true and plain disclosure about
their business and affairs and the completion of BSM Pre Merger
Reorganization. The Letter Agreement provides for a reciprocal
break fee in the amount of $500,000 and notification by each party
of the receipt of alternative proposals from third parties. Each
party has agreed not to solicit other proposals but has reserved
the right for each board to exercise its fiduciary duties. BSM has
been advised by the Exchange that the Exchange will require BSM to
obtain disinterested shareholder approval for the issuance of BSM
Preferred Shares, the purchase of $1.75 million of the BSM
Debentures and BSM Warrants (held by certain holders) by some other
existing debenture holders and other new investors, the exchange of
BSM Debentures into BSM Preferred Shares and the exchange of BSM
Warrants into BSM Common Shares. Datacom needs its Shareholders'
approval for the amalgamation. No definitive agreements have been
reached other than the Letter Agreement. There can be no assurance
that the Proposed Transaction will be completed as proposed or at
all.
Description of the resulting corporations
The Proposed Transaction is expected to generate cost synergies
and drive an improved cost structure. Based on both corporations'
last reported financial results, it is expected that the resulting
corporations would have approximate pro forma assets of $11.3
million, and annual revenues of approximately $18 million.
Aly Rahmetulla, chief executive officer of BSM, will be CEO of
the resulting corporations. "The combination of the BSM and Datacom
business units will create value for all stakeholders. The
resulting corporations will have the scale, geographical coverage,
technology leadership, and platform for accelerated growth going
forward. I am delighted at the opportunity to lead the resulting
corporations and will move quickly to implement synergies and to
leverage the combined talents of both BSM and Datacom" said
Rahemtulla.
Pierre Belanger, acting president and CEO of Datacom said, "We
believe the business models of Datacom and BSM are highly
complementary. By combining the two corporations, shareholder value
can be created through synergistic benefits and leveraging on each
corporation's strengths. We are confident that the resulting
corporations, under the direction of Aly Rahemtulla, will achieve
value creation targets anticipated by our customers, partners and
shareholders."
About Datacom Wireless Corporation
Founded in 1999, Datacom has grown to become one of the Canadian
leaders in the design, development and marketing of mission
critical vehicle fleet management and theft prevention solutions.
Its products and services use wireless communications and
satellite-based tracking technologies (GPS) and a state-of-the-art
ASP information portal.
About BSM Technologies
BSM Technologies designs, manufactures and markets a
comprehensive line of AVSL ("Automatic Vehicle Security and
Tracking") solutions for Commercial and Government Fleet
Management, including Law Enforcement, through its subsidiary BSM
Wireless. The BSM line of products range from Fleet Management and
Consumer Vehicle Protection offerings to the full featured
"Stinger" product featured in news media worldwide as the key
technology behind the Bait and Covert application used by hundreds
of Law Enforcement agencies to deter vehicular, trailer and heavy
equipment theft.
Superior functionality, seamless switching between two separate
footprints, enhanced reliability, advanced security features, and
excellent value characterize BSM products. By incorporating
advanced wireless locating and mapping technology, and IP-based
communications protocols, the BSM line of products provides
sophisticated real-time monitoring and control of commercial and
personal vehicle assets to meet the demanding needs and stringent
requirements of today's mobile environments. BSM's unique end to
end solutions feature sophisticated wireless hardware, firmware and
software all developed by and proprietary to BSM. The BSM product
line can be easily adapted and customized to match any customer
user requirement while BSM's in-house support infrastructure
assures that all clients receive the premium AVSL solution in the
industry to meet their needs.
About SecTrack
SecTrack sells Inmarsat D+ transceivers and airtime subscription
to value added resellers around the world. These VARs are typically
local companies who have built a proper monitoring and tracking
service for end-users in a multitude of maritime and land based
sectors including nuclear transport monitoring, mining, security
tracking of trucks, trailers and other vehicles and tracking of
airplanes and rescue helicopters. The company's customer base is
spread over Europe, Asia, Africa and Central and South America
About Netistix Technologies
Incorporated in 2002, Netistix Technologies Corporation is
headquartered in Ottawa, Canada and has developed a comprehensive
and customizable wireless fleet management solution known as
"FleetPulse".
The Netistix "FleetPulse", Wireless Fleet Management System,
delivers actionable information that reduces fleet operation and
environmental costs, improves productivity and increases
safety.
For more information, please visit http://www.netistix.com
Except for historical information contained herein, certain
statements contained in this release constitute forward-looking
information. These statements relate to future events or future
performance. The use of any of the words "could", "intend",
"expect", "believe", "will", "projected", "estimated" and similar
expressions and statements relating to matters that are not
historical facts are intended to identify forward-looking
information and are based on BSM's or Datacom's current belief or
assumptions as to the outcome and timing of such future events.
Actual future results may differ materially. In particular, this
release contains forward-looking information relating to: the
intention of Datacom and BSM to enter into the Definitive Agreement
and the terms and conditions of the Proposed Transaction, including
securities to be issued pursuant thereto, the board composition of
BSM following the Proposed Transaction and the closing date of the
Proposed Transaction.
Various assumptions or factors are typically applied in drawing
conclusions or making the forecasts or projections set out in
forward-looking information. Those assumptions and factors are
based on information currently available to BSM or Datacom. The
material factors and assumptions include: the ability to obtain the
necessary director, shareholder and regulatory approvals; Exchange
policies not changing; completion of satisfactory due diligence;
and the structure of the Proposed Transaction being the most tax
efficient way of completing the Proposed Transaction. Risk Factors
that could cause actual results or outcomes to differ materially
from the results expressed or implied by forward-looking
information include, among other things: conditions imposed by the
Exchange, the failure to obtain the necessary directors' and
shareholders' approval to the Proposed Transaction; changes in tax
laws, general economic and business conditions; and changes in the
regulatory requirements. BSM cautions the reader that the above
list of risk factors is not exhaustive. The forward-looking
information contained in this release is made as of the date hereof
and BSM is not obligated to update or revise any forward-looking
information, whether as a result of new information, future events
or otherwise, except as required by applicable securities laws.
Because of the risks, uncertainties and assumptions contained
herein, the reader should not place undue reliance on
forward-looking information. The foregoing statements expressly
qualify any forward-looking information contained herein.
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.
Contacts: BSM Technologies Inc. Mr. Aly Rahemtulla President
& CEO 1-905-265-1200 aly@bsmwireless.com www.bsmwireless.com
Datacom Wireless Corporation Pierre Belanger, Acting President and
CEO 1-450-781-6020 pbelanger@datacom.com
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