the revised details Update on Orion Gateway / E-pay...

the revised details Update on Orion Gateway / E-pay acquisition
A$20 million capital raising condition removed; No cash consideration
SYDNEY 12 October 2005 – SkyNetGlobal Limited, (“SkyNetGlobal” or “the Company”) today
announced that most of the key material conditions for acquiring Orion Gateway Limited which
owns the controlling stake in E-pay (M) Sdn Bhd (“E-pay”), South East Asia’s leading provider
of electronic payment solutions and prepaid mobile top-up services, have been removed
under revised terms to the share purchase agreement. The amendments to the share
purchase agreement include:
- Capital raising condition removed. It is no longer a condition for SkyNetGlobal to
raise any capital to complete the acquisition. Under the original agreement,
SkyNetGlobal was required to raise a minimum of A$20 million to complete the deal.
This amendment eliminates the biggest challenge and uncertainty to the transaction.
Whilst it is not a condition to raise any capital, the Company intends to provide the
public an opportunity to invest in the fast growing E-pay business, through a
Prospectus share offer of about $7 million following completion of the acquisition.
Existing SkyNetGlobal shareholders will be offered a priority entitlement to this offer.
- No cash consideration. The initial consideration of A$28 million, of which A$8 million
was payable in cash under the original share purchase agreement, has been revised
to consist entirely of SkyNetGlobal shares with no cash payment. There is no change
to the A$14.5 million deferred share consideration and it is still subject to meeting Net
Earnings (net of taxes and minority interests such as the other 40% stake not being
acquired) milestones of A$4 million to A$6 million as previously announced. If the
consolidated entity achieves Net Earnings of A$6 million for the calendar year 2006,
the total purchase consideration value will be $42.5 million, representing a price to
earnings ratio of approximately 7 times.
- Vendor share pricing. Under the original agreement, the issue price of the purchase
consideration shares was based on either the capital raising price (the lowest issue
price) or the 21-day average closing price prior to completion, which ever is lower.
The issue price has now been revised to be fixed at either the Prospectus share offer
price, or if such price is not agreed prior to completion, the 21-day average closing
price prior to completion
Following the revised terms to the share purchase agreement, only two key conditions remain:
1) the issue of an independent expert report providing an opinion to SkyNetGlobal
shareholders on the proposed transaction; and 2) SkyNetGlobal shareholders approval.
SkyNetGlobal CEO Jonathan Soon said “The final revised terms represent a significant
improvement for all shareholders. The removal of the cash consideration and the capital
raising requirement means that the acquisition will proceed as soon as shareholder approval
is obtained, which we expect will happen within 45 days. The underlying E-pay business is
profitable and cash flow positive, hence the reduced capital raising will not impact the
consolidated entity’s ability to achieve its forecast Net Earnings of $5 million for the calendar
year 2006.”
- The End -