TIDMNEO
RNS Number : 8060Z
Neovia Financial PLC
20 January 2011
Press rele
Thursday 20 January 2011
NEOVIA Financial Plc
("NEOVIA" or the "Company")
NEOVIA announces the acquisition of Optimal Payments, a leading
online payments business
Deal creates international scale player in alternative
payments
NEOVIA Financial Plc (AIM: NEO)today announces the creation of a
true scale player in alternative payments through the combination
of leading businesses in stored value and straight through
processing ("STP").
NEOVIA has entered into of a definitive agreement to acquire the
online payments business and substantially all of the assets of
7012985 Canada Inc. ("OP Group"), a leading global payment
processor based in Montreal, (together "Optimal Payments"), for
consideration of up to US$ 50 million (GBP31.25 million) in cash,
shares, vendor debt financing and warrants (the "Acquisition").
Highlights
-- Optimal Payments is a leading provider of straight through
processing solutions to merchants in North America and Europe,
processing more than US$ 2.5 billion in transactions annually.
-- Strong strategic fit with NEOVIA's stored value ("NETELLER")
business and adds significant scale to NEOVIA's existing processing
capabilities ("NETBANX").
-- Dramatically diversifies and broadens NEOVIA's merchant base;
provides a strong North American presence and fuller exposure to
rapidly growing e-commerce markets.
-- Strong financial rationale: profitable and cash generative
business, providing operational synergies and increased scale.
-- Joel Leonoff, founder, President & CEO of Optimal
Payments, to join NEOVIA's board as an executive director on
completion. Senior leadership team of Optimal Payments to remain
and Danny Chazonoff to lead the combined STP business.
-- Proposed change of Company's name to Optimal Payments Plc and
ticker to OPAY.L.
Mark Mayhew, NEOVIA's President & CEO, commented:
"This acquisition provides a highly complementary fit for our
stored value business and is absolutely aligned with the "twin
pillars" strategy we outlined last year. We are excited about the
possibilities for growing the combined business and we see
substantial synergies in the near term. As we have come to know the
Optimal team members through the acquisition process, we have been
impressed by their achievements, their vision and their ambition,
and we look forward to working together to realise the strategy of
building a best-in-class global alternative payments business."
Joel Leonoff, President & Chief Executive Officer of Optimal
Payments, added:
"NEOVIA is an excellent strategic partner for the Optimal
business and will enable us to achieve the scale which is essential
in the payments market today. We believe this business combination
uniquely positions us in the payment space through our consolidated
technology and unparalleled comprehensive product offering. The
combined customer base, technology platforms and innovative
solutions of NEOVIA and Optimal make this a compelling transaction
for our customers, our employees and our end users globally. We are
excited by the opportunities this combination provides and share
Mark and his team's enthusiasm for what we can now achieve
together."
A presentation for analysts and investors will be held at 11.30
a.m. (London time) today at the offices of Citigate Dewe Rogerson,
3 London Wall Buildings, London Wall, London EC2M 5SY. Attendees
should contact Citigate on 020 7638 9571 if they wish to attend or
via email to investorrelations@neovia.com.
Enquiries:
NEOVIA Financial Plc
Mark Mayhew President & CEO (20 January only) + 44 (0) 20
7638 9571
Keith Butcher CFO
Andrew Gilchrist VP Communications + 44 (0) 1624 698 713
Email: investorrelations@neovia.com
Twitter: https://twitter.com/neovia
Optimal Payments
Joel Leonoff President & CEO (20 January only) + 44 (0) 20
7638 9571
Danny Chazonoff Chief Operating Officer
Citigate Dewe Rogerson + 44 (0) 207 638 9571
Sarah Gestetner / George Cazenove
Daniel Stewart & Co Plc + 44 (0) 207 776 6550
Paul Shackleton
* * * * *
About NEOVIA Financial
Trusted by consumers and merchants in over 160 countries to move
and manage billions of dollars each year, NEOVIA Financial Plc
operates the world's leading independent online payments business.
Through its Payment Suite, featuring NETELLER(R), NETBANX(R) and
Net+(TM) brands, NEOVIA specialises in providing innovative and
instant payment services where money transfer is difficult or risky
due to identity, trust, currency exchange, or distance. Being
independent has allowed NEOVIA to support thousands of retailers
and merchants in many geographies and across multiple
industries.
NEOVIA Financial Plc is quoted on the London Stock Exchange's
AIM market with a ticker symbol of NEO. Subsidiary company NETELLER
(UK) Limited is authorised by the Financial Services Authority
(FSA) to operate as a regulated e-money issuer. For more
information about NEOVIA Financial visit www.neovia.com or
subscribe at www.neovia.com/feeds/.
About Optimal Payments
Optimal Payments is a leading global payment processor that
provides credit/debit card and e-check (Direct Debit) solutions to
retail/point of sale, Internet, and mail-order/telephone-order
(MOTO) merchants in Canada, the United States, Europe, and the
Caribbean, processing in excess of US$ 2.5 billion in transactions
annually. In operation for over 10 years, Optimal Payments was one
of the first technology companies to provide services in the
electronic payment business. Its head office is in Montreal, with
additional offices in the United States; Gatineau, Quebec; and the
United Kingdom. Optimal Payments develops and maintains proprietary
software, which enables its merchant clients to interface with
various banks, credit and debit card providers and other entities
involved in the payment processing chain. Its software has advanced
and highly effective fraud- and risk-management components built
into it, allowing the company to assist clients in mitigating the
risk of fraudulent transactions. Its software and payment solutions
are tailored to the needs of individual clients so that the
services match their needs in a wide range of businesses with
varying requirements. Visit www.optimalpayments.com for more
information.
NEOVIA announces the acquisition of Optimal Payments
NEOVIA Financial Plc today announces the creation of a true
scale player in alternative payments through the combination of
leading players offering stored value and straight through
processing ("STP") services.
NEOVIA has entered into a definitive agreement to acquire the
online payments business and substantially all of the assets of
7029185 Canada Inc. ("OP Group"), a leading global payment
processor based in Montreal, (together "Optimal Payments"), for
consideration of up to US$ 50 million (GBP31.25 million) in cash,
shares, vendor debt financing and warrants (the "Acquisition"). The
Acquisition creates a true international player in alternative
payments, focused on the "twin pillars" of stored value and
straight through processing.
Information about Optimal Payments
Optimal Payments is a leading global payment processor that
provides credit/debit card and e-check (Direct Debit) solutions to
retail/point of sale, Internet, and mail-order/telephone-order
(MOTO) merchants in Canada, the United States, Europe, and the
Caribbean, processing in excess of US$ 2.5 billion in transactions
annually. In operation for over 10 years, Optimal Payments was one
of the first technology companies to provide services in the
electronic payment business. Its head office is in Montreal, with
additional operations in the United States; Gatineau, Quebec; and
the United Kingdom and has approximately 100 employees. Optimal
Payments is currently owned by a number of individuals including
certain of the Optimal management team.
For the 12 months ended 31 December 2009, 7012985 Canada Inc.,
the holding company of the Optimal Payments business, reported
consolidated revenues of $57.7 million, gross profit of $36.0
million and profit before tax of $5.1 million (profit before tax is
stated after certain shareholder-related expenses that are to be
discontinued following the Acquisition). As at 31 December 2009,
7012985 Canada Inc. had net assets of $5.9 million. This financial
information has been extracted directly from the audited annual
results of 7012985 Canada Inc. prepared in accordance with
IFRS.
Rationale for the Acquisition
The NEOVIA Board believes the Acquisition is a transformational
step in realising its strategy to achieve scale in the fast
evolving alternative payments market, providing a combined business
with much better balance in terms of products and services, as well
as vertical and geographic markets served. Optimal Payments'
success and expertise will support NEOVIA's development of payment
solutions to a broader spread of customers.
The senior leadership team, including Joel Leonoff and Danny
Chazonoff, will remain with the business. Joel Leonoff, founder,
President & CEO of Optimal Payments, will become an Executive
Director of the Company, assuming the role of joint CEO of NEOVIA
together with Mark Mayhew on completion of the Acquisition. Dennis
Jones will lead the stored value business while Danny Chazonoff,
Chief Operating Officer of Optimal Payments, will lead the combined
STP business.
The alternative payments market continues to evolve rapidly and
investment in people, products and platforms is a key driver of
success. Optimal Payments is a technology-rich, highly automated
operation focused on STP and the intention is to leverage NEOVIA's
investments in new technology with Optimal Payments' successful
business.
Further information in relation to Joel Leonoff's proposed
appointment as a director of the Company, including a short
biography and details of his proposed service contract with the
Company, is set out in the separate announcement made today.
Principal terms and funding of the Acquisition
Under the terms of the acquisition agreement, NEOVIA has agreed
to purchase substantially all of the business and assets of the OP
Group comprising Optimal Payments for an aggregate cash
consideration of up to US$ 50 million (GBP31.25 million) from a
consortium of investors including Joel Leonoff and a number of
other parties (the "Vendors"), subject to adjustment in accordance
with the terms of the acquisition agreement.
Initial consideration of approximately US$ 25.0 million is
payable in cash on completion and will be satisfied by the
Company's existing cash reserves and additional financing raised
from institutional investors. In addition, US$ 2.5 million of the
purchase price is to be satisfied by the issue of 2,641,424 new
NEOVIA ordinary shares at completion ("Consideration Shares") at a
price of 59.15 pence representing the average of the mid market
closing price for the 30 days prior to signing of the acquisition
agreement. A further US$ 2.5 million in cash will be paid to the
Vendors over a period of 18 months following completion, subject to
deductions for any price adjustments or indemnity claims under the
acquisition agreement.
An additional US$ 20.0 million in cash plus accrued interest
will become payable to the Vendors on or about April 2013 pursuant
to a loan agreement to be entered into by the Company with the
Vendors on completion, subject to any deductions for price
adjustments or indemnity claims under the acquisition agreement.
Such amount may also be reduced if certain performance conditions
relating to the purchased business are not met in each of the
calendar years 2011 and 2012.
On completion, the Company will also enter into a warrant
agreement with the Vendors pursuant to which the Vendors will have
the right after April 2012 to acquire NEOVIA ordinary shares at a
premium of 6% to the issue price of the Consideration Shares up to
a total subscription price of US$ 10.0 million plus interest, and
after April 2013 a further number NEOVIA ordinary shares at a
premium of 12% to the issue price of the Consideration Shares up to
a total subscription price of a further US$ 10.0 million plus
interest. The rights under the warrant agreement may only be
exercised, however, to the extent that the amount of the applicable
subscription price is then owing under the loan agreement and has
not been reduced due to failure to meet certain performance
conditions or due to indemnity claims or other adjustments under
the acquisition agreement. Both the Consideration Shares and any
ordinary shares issued as a result of exercise of the warrants will
be subject to orderly market provisions for a period of 12 months
and 3 months respectively from the date of their issue to the
Vendors.
The closing of the Acquisition is conditional upon, among other
customary closing conditions, the admission of the Consideration
Shares to trading on AIM and relevant consents under the
Acquisition Agreement being obtained which is anticipated to be
within a week of this announcement.
Funding of the Acquisition
The Company intends to finance the Acquisition from existing
cash resources, together with additional working capital being
raised from certain of the Company's existing institutional
investors and selected new investors. In aggregate, these investors
have subscribed US$ 2.5 million for 2,641,424 ordinary shares
("Subscription Shares") in the Company at a price of 59.15 pence. A
further US$ 8.0 million nominal of convertible loan notes ("Loan
Notes") have been issued to investors on substantially the same
terms as the warrants to be issued to the Vendors as set out above.
Interest on the Loan Notes is payable at the rate of 6% per annum.
In addition, Keith Butcher, CFO of the Company, has subscribed
GBP50,000 for 84,530 ordinary shares in the Company at a price of
59.15 pence. These shares, together with the Subscription Shares,
are expected to be admitted to trading on AIM in due course.
Current trading
The softness in the Company's revenues that was highlighted in
September is continuing as the effects of regulatory change from
earlier in the year were combined with a challenging poker market.
Total revenue in H2 is expected to be in line with the first half
with full year EBITDA broadly in line with market expectations,
following the successful implementation of the Business
Transformation programme.
Change of Company Name and General Meeting
As a result of the Acquisition, the Board of NEOVIA believes
that it is appropriate to change the name of the Company from
NEOVIA Financial Plc to Optimal Payments Plc (and the Company's
ticker to OPAY) to reflect better the nature and ambition of the
new entity.
A Circular including the background to and reasons for the
proposed change of name and containing notice of a General Meeting
of the Company at which a resolution seeking the above approval
will be proposed, is expected to be despatched to shareholders
shortly.
* * * * *
Forward looking statements
Certain statements in this announcement are forward-looking
statements. By their nature, forward-looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to differ materially from those expressed
or implied by the forward-looking statements. These risks,
uncertainties or assumptions could adversely affect the outcome and
financial effects of the plans and events described herein.
Forward-looking statements contained in this announcement regarding
past trends or activities should not be taken as a representation
that such trends or activities will continue in the future. You
should not place undue reliance on forward-looking statements,
which speak only as of the date of this announcement. Except as
required by law, the Company is under no obligation to update or
keep current the forward-looking statements contained in this
announcement or to correct any inaccuracies which may become
apparent in such forward-looking statements.
No statement in this announcement is intended to be a profit
forecast and no statement in this announcement should be
interpreted to mean that earnings per NEOVIA ordinary share for the
current or future financial years would necessarily match or exceed
the historical published earnings per NEOVIA ordinary share. Prices
and values of, and income from, shares may go down as well as up
and an investor may not get back the amount invested. It should be
noted that past performance is no guide to future performance.
Persons needing advice should consult an independent financial
adviser. Any statement to the effect that the Acquisition is
expected to be earnings enhancing for the Company should not be
interpreted to mean that earnings per NEOVIA ordinary share in the
first full year following the Acquisition, nor in any subsequent
period, will necessarily match or be greater than those for any
preceding financial year.
With the exception of historical financial information on
Optimal Payments, which has been converted at the appropriate
prevailing foreign exchange rates, where US Dollar amounts in this
document are followed by a pounds Sterling comparison such amounts
have been converted, for informational purposes only, into pounds
Sterling using an exchange rate of $1.6001:GBP1, being the
mid-market rate quoted by Thomson Reuters as at 4.30 p.m. on 18
January 2011. EBITDA in this announcement is defined as earnings
before other items including share option expense, foreign exchange
gain/loss, loss on investment, impairment loss and restructuring
costs.
The information contained in this announcement is regulated
information which is required to be disclosed under the AIM
Rules.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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