TSX Venture Exchange: VSI
VANCOUVER,
Dec. 18, 2013 /CNW/ - VendTek Systems
Inc. (VSI - TSX Venture) ("Vendtek" and the "Company"), a developer
and licensor of software for the global prepaid and financial
services markets, announces that it has entered into an asset
purchase agreement (the "Agreement") with Payment Source Inc.
("PSI"). PSI is wholly-owned by George DeMarchi, the Company's current Senior
Vice President of Canadian Operations. Under the terms of the
Agreement, the Company has agreed to sell its Canadian business
(assets and associated liabilities) that constitute its Now Prepay
division to PSI in return for $4,500,000 and the assumption of up to
$1,500,000 of working capital
deficit, excluding cash (the "Working Capital"), for total
consideration of up to $6,000,000. The Purchase Price will be paid
as follows:
(a) a deposit of $200,000, which has already been paid;
(b) a cash payment of $3,850,000 on closing; and
(c) a further $450,000, to be paid within
90 days following the closing of the transaction.
The Purchase Price is subject to adjustment
based on the Working Capital of the Canadian business being either
(i) less than -$1,500,000 at closing,
in which case the Purchase Price will be reduced by the amount that
Working Capital is less than -$1,500,000; or (ii) greater than -$1,000,000 at closing, in which case the Purchase
Price will be increased by the amount that working capital is
greater than -$1,000,000. The
adjustment will take place within 90 days following the closing of
the transaction.
The Company intends to use the proceeds from the
sale for its ongoing operations and to further its growth plans in
Brazil. The Company believes that
its Brazilian operation holds tremendous potential. This proposed
transaction will allow the Company to focus its resources on this
important growth opportunity while simplifying its overall
operating structure. Over the long-term, Vendtek's strategy will be
to refocus on licensing its e-Fresh™ transaction processing
software internationally and move away from the direct operating
model, while retaining its established licensing relationships as
we have done with this transaction.
In connection with this transaction, PSI will
license and use VendTek's e-Fresh™ transaction processing software
to manage its Canadian operations for its suppliers and merchant
customers under VendTek's Now Prepay brand.
The transaction contemplated by the Agreement
will require the approval of the shareholders of the Company by way
of a special resolution in which two-thirds of the votes cast on
the matter vote in favour of the transaction. Such
shareholder approval will be sought at an annual and special
meeting of shareholders expected to be held in late January 2014.
The board of directors has carefully considered
all of the terms of the proposed transactions and unanimously
resolved to recommend that shareholders approve all necessary
resolutions to implement these transactions. The Company will
shortly issue a management proxy circular which will describe the
proposed transactions in more detail.
"We are pleased to be able to proceed with this
transaction with George DeMarchi's
company, Payment Source", said Mr. Buchanan, President & CEO of VendTek.
"Throughout what was a thorough and competitive bidding process,
Mr. Demarchi demonstrated his knowledge of the business, along with
his experience and strong reputation within the Canadian prepaid
market. These factors became compelling reasons to select George as
the preferred acquirer and successor in interest to VendTek's
Canadian operations. Following George's resignation from VSI to be
effective on the closing date, we are looking forward to a smooth
transition with PSI. We wish George the very best in his new
endeavour and are pleased that we will be able to continue our
business relationship," added Mr. Buchanan.
Completion of the transaction is subject to a
number of conditions, including receipt of all necessary
shareholder, stock exchange and regulatory approvals. The
Company expects that an annual and special meeting of shareholders
will be held in late January 2014
and, if all necessary approvals are received and all conditions are
satisfied, closing is expected to follow on or about January 31, 2014.
About VendTek
VendTek is headquartered in Vancouver, British Columbia, Canada, and
develops and licenses automated transaction system software and
supporting technologies that improve the efficiency of product
delivery, reduce costs to clients and offer superior safety
measures. VendTek's customers, its division, Now Prepay and its
subsidiaries are using e-Fresh™ software to build electronic,
prepaid services networks, which enable consumers to purchase
prepaid services via point-of-sale terminals (POS) and self-serve
terminals connected to a central e-Fresh™ server. This system
creates significant value through improved efficiencies compared to
the traditional distribution paradigm. e-Fresh™ reduces shrinkage
and inventory requirements while improving consumer access to
prepaid services by completely eliminating physical cards and
vouchers. For further information please visit the Company's
websites www.vendteksystems.com and www.nowprepay.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.
SOURCE VendTek Systems Inc.