Ann: ASSET: SPY: SMARTPAY TO ACQUIRE LARGE EFTPOS

• Release Date: 12/12/12 11:26
• Summary: ASSET: SPY: SMARTPAY TO ACQUIRE LARGE EFTPOS TERMINAL BUSINESS
• Price Sensitive: No
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SPY
12/12/2012 09:26
ASSET

REL: 0926 HRS Smartpay Holdings Limited

ASSET: SPY: SMARTPAY TO ACQUIRE LARGE EFTPOS TERMINAL BUSINESS

SMARTPAY TO ACQUIRE LARGE EFTPOS TERMINAL BUSINESS

o SmartPay to acquire large EFTPOS terminal business to become market leader
o $3.7m of new equity raised from institutional and sophisticated investors
o ASX listing process well progressed, timeline extended due to acquisition

AUCKLAND, 12 December 2012 - SmartPay (NZX: SPY), a leading provider of
payments and transactional solutions in New Zealand and Australia, today
announced that it has entered into an agreement to acquire the business and
assets of Viaduct Limited, a leading provider of EFTPOS terminals and
solutions in New Zealand.

About Viaduct

Viaduct operates a large well established EFTPOS terminal fleet and is one of
the largest EFTPOS providers in New Zealand.  The company was founded eight
years ago by its two Directors and majority shareholders Mark Unwin and Marty
Pomeroy.  The Company is based in Wellington and employs 30 staff.
Following the acquisition SmartPay will become the owner and operator of the
largest EFTPOS terminal fleet in New Zealand both in terms of the number of
terminals and the number of merchants we service.

Managing Director of SmartPay, Bradley Gerdis said today "Just 12 months ago
we set a strategic vision for our New Zealand business to become New
Zealand's leading EFTPOS and payments business. Our emphasis in the New
Zealand market is to strongly grow our EFTPOS position and to deliver
innovative and competitive services via an established retail footprint.

"By combining Viaduct with our existing business we are confident SmartPay
will create a leading competitive force in the New Zealand payments industry.
Our increased scale will enhance our ability to deliver advanced
functionality and competitive products and services to the New Zealand
marketplace and beyond.  These developments combined with our growth
potential into Australia mean we are very positive about SmartPay's future."

The purchase price of $16.3m will be settled in cash of $14m and $2.3m of
SmartPay shares to be issued to the vendors at $0.15 each.  The cash
component of the purchase price will be funded through a mixture of internal
cash reserves, additional bank debt and a placement of $3.7m of new equity
also issued at $0.15.  The acquisition is expected to contribute around $6m
of revenue and around $3m of EBITDA to SmartPay on an annualised basis.
Final completion and settlement of the transaction is expected around late
January 2013.

Viaduct Founders to Join SmartPay

Pursuant to the deal, the two Founders and majority shareholders of Viaduct,
Marty Pomeroy and Mark Unwin will join SmartPay in senior executive roles and
will be responsible for the ongoing management and development of SmartPay's
New Zealand EFTPOS business.

Bradley Gerdis commented "We are extremely pleased to retain the skills of
Mark and Marty.  They have demonstrated their leadership and experience in
the New Zealand EFTPOS industry through building Viaduct to its current
position as a formidable player in the market".

Mark Unwin commented "We are extremely excited about the opportunities
resulting from the combination of these two market leading businesses. A
particular attraction to us of combining our business with SmartPay was the
opportunity to leverage SmartPay's technology and merchant solutions across
our own merchant base."

"Viaduct has always been a customer centric business and we have developed a
number of innovative products for our customers. This will be further
enhanced through the potential of SmartPay's new hardware range of
next-generation payments solutions, including their mobile Apple IOS and
Android based integrated payments terminals.  We believe our access to these
new technologies will provide us with a significant competitive advantage in
the merchant payments industry.  We are pleased to become shareholders of the
expanded SmartPay group as we regard the synergy and growth benefits of the
merger to be substantial over time".

In addition to their significant shareholdings in SmartPay through the equity
component of the purchase price, as a long term incentive under their
employment agreements, each of Mr Unwin and Mr Pomeroy will be entitled to a
long term incentive bonus of 2 million options to subscribe for shares in
SmartPay at 20 cents per share (exercisable on or after 31 December 2015) and
2 million options to subscribe for shares in Smartpay at 30 cents per share
(exercisable on or after 31 December 2017). Should these options be exercised
in full the company will receive additional equity of $2m in due course.

Capital Raising

The Board of SmartPay is pleased to confirm it has secured commitments for a
capital raising of $3.7m to support the acquisition.  The equity has been
raised via a private placement to institutional and sophisticated investors
at the same price as the shares issued to the vendors ($0.15).

The issue of the new shares will be subject to approval by SmartPay's
shareholders at a special meeting to be held during January 2013.  A Notice
of Meeting and Explanatory Memorandum will be dispatched once a meeting date
has been set.

ASX Listing Update
The Board is pleased to confirm that it has made substantial progress to list
on the ASX through a compliance listing process, however the acquisition of
Viaduct has resulted in an extension of the time frame which was originally
planned for this calendar year.  As under the ASX Listing Rules a company
seeking a compliance listing on the ASX is prohibited from raising capital
for 90 days on either side of the listing, with the capital raising to fund
the acquisition likely to complete in late January, SmartPay's ASX listing is
now expected to occur in the 2nd quarter of 2013.
ENDS

For further information contact:

Bradley Gerdis, Managing Director, SmartPay, + 64 9 442 2717
Ivan Hammerschlag, Chairman, SmartPay, + 61 417 44 29 29

About SmartPay Holdings Limited
SmartPay is a leading provider of integrated merchant services utilising the
Internet and broadband connectivity.

SmartPay's product set includes:
1. The provision of EFTPOS terminals and related payments services.
2. Transactional processing services, including for the taxi industry;
Prepayment products; Bill payment solutions and Online Payments.
3. Audio and video, music, messaging and media via its Retail Radio product
set.

For more information visit - www.smartpayltd.com
End CA:00231001 For:SPY    Type:ASSET      Time:2012-12-12 09:26:05