- 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.
Visit www.tionetworks.com or join the conversation on Twitter
andFacebook.
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.